The total number of banks’ staffs increased by 1.80 percent quarter on quarter (QoQ) to 104,669 in the fourth quarter (Q4) 2018 from 102,821in Q3 2018 according to the National Bureau of Statistics (NBS) on Wednesday.
This is seen by analysts in the financial services sector as a positive development considering the high unemployment rate in the country.
The unemployment rate has remained high at 23.10 per cent as at the third quarter of 2018, compared with 22.73 per cent during the previous quarter.
The increase in the number of bank staff in the quarter under review may not be unconnected with improved operating environment enabled by stable foreign exchange market and lower inflation rate said, Uche Uwaleke, professor of finance and capital markets, chair, banking and finance department, Nasarawa State University Keffi, Nasarawa State.
A breakdown of the NBS report released on Wednesday showed that the Nigerian Deposit Money Banks (DMBs) employed a total of 197 executive staff in the sector in the Q4 2018.
Further breakdown revealed that commercial banks employed 171 executive staff, merchant banks 16 and non-interest banks 10 staff.
“Increase in the number of staff members in the banking industry is a positive development as this will help to reduce the unemployment rate in Nigerian”, said Ayodele Akinwunmi, head, of research, FSDH Merchant Bank Limited, said.
More so, there have been reports of job losses in the financial services sector as a result of innovations in financial technology.
The International Monetary Fund (IMF) said on February 14, 2019 that sub-Saharan Africa has become the global leader in mobile money innovation, adoption, and usage, with close to 40 out of 45 sub-Saharan African countries actively using this new financial technology (FinTech).
IMF said technological innovation and infrastructure development can play key roles in allowing the continent to transform its demographic dividend into jobs, growth, and rising living standards for all.
“Real estate, education, and manufacturing sectors all are labour intensive sectors that can absorb people”, Akinwunmi added.
An analysis by BusinessDay from the report indicated that Nigerian banks are cutting down on their top echelon workers but adding more to the numbers of both their junior and contract staffs, as they devise measures in countering high administrative cost that might weigh down their earnings.
Despite an overall increase in their staff numbers by 1.08 to 104,669 as at the December 2018, the strength of its executive staffs fell by 5.63 per cent to 210 from 213 in the previous quarter, with commercial banks executive staffs falling the most amongst others.
On the other hand, both contract staffs and junior staffs were up 1.69 per cent and 1.77 per cent respectively in the quarter under review.
The combined staffs of both contract and junior were 86,349 in Q4 2018 from 84,879 in the last quarter, while those of both the executive and senior staffs was 18320 from 17942, according to latest NBS data
Analysts say the reduction in top-heavy staff was aimed at reducing cost amid improvement in the level of technology as banks have realized they could maintain deposit levels with fewer locations in a digital age where customers often prefer banks’ mobile applications and ATM.
However, some argued that the reduction was as a result of age retirement that was witnessed in the sector.
Johnson Chukwu, managing director, Cowry Asset Management Limited, said the reduction in the headcount at the top level Management of banks may be as a result of efforts to reduce costs by submitting high-cost senior managers with lower cost middle managers in response to the harsh economic environment.
“Similarly, many banks have deployed technology to provide routine services and in some other instances use contract staff to man such other non-intellectually demanding jobs,” Chukwu told BusinessDay by email.
Commercial banks had the highest hit with the number of its executive staffs falling 6.1 per cent to 170 from 181 as at end of 9 month period last year. Its contract staffs rose 1.7 per cent to 44,124.
Executive staff strengths in Merchant banks fell a number to 21, while those of non-interest banks remained the same at 10.
Uwaleke explained that the reduction in Deposit Money Banks’ Non Performing loans has also helped to improve liquidity in the banking industry putting them in a stronger position to employ more staff.
For him, the high unemployment rate of 23.1 percent does not imply that jobs are not being created. It is due more to the fact that the rate of employment lags far behind the huge number of people entering into the labour market.
“So, it is not surprising that despite the fact that some sectors, including the financial sector, may have recorded higher number of staff, it may not be at a level sufficient to significantly influence the unemployment rate”, Uwaleke said.
Regarding the effect of FinTech on staffing needs of banks, he said much as this may reduce the number of staff in say operations department, banks will still require qualified staff in the areas of marketing/deposit mobilization, relationship management, credit appraisal, audit etc where disruptions by FinTech are yet to be felt in the financial industry.
Taiwo Oyedele, head, Tax and Regulatory Services, PWC, said the growth in banking employment is a good sign of economic recovery but there is still a long way to go for the employment in the banking sector to be fully restored to the pre-recession levels. Although banking jobs are relatively well paying, the total employment in the sector is not significant enough to impact the overall unemployment rate which remains very high and rising.
