Christmas greetings offer no cheer as firms cut staff

This season of cheer is lost on John Umoh, who has struggled to survive since he got laid off work in September, as companies in Africa’s most populous nation shed jobs at the fastest rate in six years.

Umoh, 38, is one of 554,311 persons who, according to the National Bureau of Statistics (NBS) crawled into the unemployment bracket within the first nine months of 2016.

“I think I have too much on my plate to be amused by mails wishing me a merry Christmas,” said Umoh, who worked as an accountant with a manufacturing firm. “There’s nothing to cheer amid Christmas festivities when you are out of work and you have a family of five to feed and cater for,” he added.

The NBS report noted that Nigeria’s unemployment rate climbed to 13.9 percent in the period, the highest since 2010; while job creation is at a five-year low.

The recent International Labour Organisation (ILO) forecast of a global unemployment rate of 5.9 percent for both 2016 and 2017 implies that Nigeria’s unemployment rate of 13.9 percent is already significantly higher than average.

“It is a difficult time for the country and for its people,” said Taiwo Oyedele, head of regulatory services at PriceWaterhouseCoopers (PWC) by phone.

“Unemployment and underemployment are soaring and purchasing power is contracting as a result of rising inflation, so households are not as enthused as they are during Christmas season,” Oyedele said. “Consistent and market-driven policies targeted at attracting private capital are needed to drive the economy and create jobs.”

Exxon Mobil on 16 December, sacked about 150 of its workers, which sparked a strike by Labour Unions in the oil and gas sector, to force the company to reverse the decision. Though the workers were offered generous severance packages, the unions felt they were not fairly treated. The oil and gas sector has been one of the most affected in staff lay-offs, with many oil firms, especially indigenous firms, closing shop in the face of low oil prices and militant activities in the Niger Delta.

“My firm has not been able to pay us since February this year. My house rent is already overdue. Christmas is the least of my problems” said a staff of one of the oil services firms based in Port Harcourt, Rivers State.

Manufacturing firms, which are usually big employers of labour have also been affected by the downturn in the economy. Many of them are currently producing below their installed capacity, as they struggle with access to dollars to buy raw materials and equipment. Many of them have had to let go hundreds of staff, in line with their lower capacity utilisation.

Frank Jacobs, chairman of the Manufacturers Association of Nigeria (MAN), whose sector accounts for almost a third of total jobs created in the country, said over 5,000 jobs have been lost so far.

“About 272 manufacturing companies have folded up,” Jacobs said, “And the outlook for 2017 is gloomy in terms of job creation if government has no response to the challenge of dollar scarcity, power supply and high borrowing costs.”

Jacobs observes that most manufacturers source dollars needed for critical inputs at the parallel market, where the naira trades at N490 for one US dollar, over double the cost before the big devaluation in Nigeria on June 20.

This has pushed up operating expenses for the sector, leaving it with no option but to seek cost reduction from retrenchment.

From manufacturing to banking, agriculture and construction, jobs are under fire. It got so bad that Nigeria’s labour minister, Chris Ngige, threatened to revoke the operating license of companies that retrenched more than 50 percent of their workforce at a go.

A banking sector source told BusinessDay that banks have resorted to transferring a good chunk of their staff to the marketing department in the form of a subtle retrenchment exercise.

“Some banks are phasing out some workers by moving them to the marketing department; setting ridiculous targets they can never meet, just to boot them out in the end,” the source said on condition of anonymity.

The agriculture sector, however, which accounts for the bulk of jobs by sector, is reinforcing the workforce instead of laying off staff. Emmanuel Ijewere, vice president of the Nigeria Agric Business Group (NAGB), says the sector has created more jobs.

“In the agric sector, more jobs have been created, as retrenched workers try their hands on the agric value chain. Whether it is farming, food processing, preservation or logistics,” Ijewere said.

Christmas is only two days away and it is in a mood of celebration that pleasantries are exchanged through emails or gift cards, but the current economic hardship, along with falling incomes have meant many Nigerians are having none of it (Christmas celebrations).

“It is expected that Christmas celebrations will be bleak this year because people do not even have the money to spend,” said Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI). “Many have lost jobs while others are owed salaries for months.”

Average income in Nigeria contracted for the first time in seven years in 2015, and fell further in the first nine months of 2016, pushing many households into poverty.

Factoring Nigeria’s economic contraction in the first three quarters of 2016, divided by a population growing at an average of 3 percent (185 million, according to World Bank), per-capita income dropped 3 percent to $2,599 in 2016 from $2,640 in 2015, as a slump in economic output but steady population growth rate saw per-capita income slump into negative territory.

Shrinking incomes have been met by rising cost of food and energy.

Analysts at Financial Derivatives Company (FDC), however, forecast domestic commodity prices to taper down in January, which may bring some respite to Nigerians.

 

LOLADE AKINMURELE