More Nigerians left in poverty as 40% of informal sector workers owed salaries

… Ondo, Abia, Ebonyi, top states owing wages

Forty percent of employees in Nigeria’s informal sector, are owed wages, a situation that is worsening poverty in Africa’s largest economy, according to a new report by SBM Intelligence, a Lagos-based geopolitical risk analysis firm.

Delayed and unpaid salaries is a recurring problem in Nigeria’s labour market but it has become worse at this time when the Covid-19 pandemic eroded the revenue of businesses leaving millions poorer.

According to the report titled ‘Between the Lines: A Look into Delayed & Unpaid Wages in Nigeria’s Informal sector’ which surveyed 3,416 respondents, the sector is largely unregulated; making many malpractices go unnoticed, tucked away from the public discourse, and often without consequence.

“Given the seeming absence of regulation in the sector, the payment of wages is greatly dependent on the discretion of employers,” the report further stated.

Damilola Adewale, a Lagos-based economic analyst adds that people being owed salaries might lead to higher incidence of poverty because they will struggle to pay for the basic needs of life. “It is devastating at a time where we are seeing sustained increase in the prices of commodities and services.”

Unlike the informal sector, the issue of unpaid wages in the formal sector is reported. This is because its workers are covered by labour laws, have more organised work unions, and are mostly aware of their rights, things that informal sector workers lack.

Read Also: Improving credit access for Nigeria’s informal sector using data, collaboration

A breakdown of the report showed that out of the respondents who were owed wages, 43 percent were owed wages for up to three months followed by 29 percent owed between four-six months, 15 percent were owed between seven-10 months wages and five percent were owed between 16-20 months salaries.

Also, Ondo, Abia, Ebonyi, Plateau, Imo, Bauchi, Enugu, Oyo, Ekiti and Benue are the states with the highest percentages of informal workers who are owed wages.

“Employees are largely unaware of their rights and prevailing labour laws. In cases where the employees are knowledgeable about extant laws, they are discouraged by the cost of justice (resources and length of time) and unequal power dynamics between them and their employers,” the report stated.

The report also highlighted that owed salaries led to cases where employees resort to stealing, running parallel businesses (side hustles) and other problematic behaviours, in a bid to compensate for their unpaid or delayed wages.

A 42 year-old male respondent told SBM field researchers that “he must go out every day as he cannot risk staying at home”. He expressed hope that in the course of his current job, he would find better opportunities which, according to him, would be unavailable if he were not working.

Another respondent, a 24-year-old sales girl, complained that her employer had not paid her because they were unimpressed by the volume of sales and would only do so when the market picked up.

Jennifer Oyelade, director of Transquisite Consulting, a UK and Nigerian registered Recruitment and Training Consultancy advised that each government constituent needs to enforce some form of policy or body like a labour union to govern the informal sector that is the only waythey can have some sort of regulatory processes to ensure that they are paid.

In addition to establishing policies and regulatory bodies designed to operate as checks to the informal sector, SBM recommends that creating awareness as to the rights of employees is a major way to ensure that policies are adhered to, considering that many employees in the sector are unaware of their protection by labour laws.

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