EFFECT OF INCREASE IN WAGES AND SALARIES ON WORKING CAPITAL MANAGEMENT OF A MANUFACTURING FIRM (A CASE OF OLUFOAM AND PLASTIC INDUSTRIES LTD.)

This study was designed to examine the effect of increase in wages and salaries on working capital management of a manufacturing firm in Nigeria, The objective of the study is to examine the effect of wage and salary increase on employee effectiveness on manufacturing firm in Nigeria. The choice of ex-post facto research design for the study is due to its strength as one of the most available design for study that uses secondary sources of data. The population of study comprises of 40 Employee of Olufaom and Plastic Industries LTD. During research, the researcher used primary data. The secondary data was obtained from the annual audited report of Olufaom and Plastic Industries LTD. The study indicate wage and salary increases motivate me to put in more effort at work, and a higher salary directly enhances the quality of my work. Regular wage increments boost my commitment to achieving the company's goals and increase my likelihood of staying with the company longer if these increases continue. Moreover, the frequency of salary increments has a significant impact on the effectiveness of my work. In conclusion, as labor costs rise, firms must effectively manage their working capital to maintain liquidity and ensure operational efficiency. Higher wage expenditures can lead to an increase in fixed costs, necessitating careful planning and forecasting of cash flows to avoid liquidity shortages. Based on recommendation, Manufacturing firms should conduct a thorough analysis of their cost structures to identify areas where expenses can be minimized without compromising productivity or quality.