Fear of job losses as FX scarcity persists, oil prices crash further

Fear of massive job losses in the new year (2016) is sweeping through workers in public and private sectors of Nigeria’s economy amidst the continued fall in the price of crude oil which has slid to $37.28 against the Federal Government’s projected $38 in the 2016 budget.

Nigeria’s economy receives almost 80 percent of her foreign exchange earnings from crude oil but the continued slide in oil prices at the international market is putting pressures on the critical sectors of the economy.

With manufacturing said to be in recession following two consecutive quarters of decline and other sectors finding it difficult to access foreign exchange, analysts say the future looks bleak for the economy this year, with the likelihood of job losses.

Besides, some analysts see a further slide in the price of oil, as Iran, the world’s fifth largest producer of crude is to begin supply in the first quarter of 2016 following the lifting of the ban placed on it by the United States of America and the European Union over perceived nuclear weapons infractions.

Many state governors have hinged the continued payment of the subsisting N18,000 minimum wage on cutting down the workforce in their respective states, arguing that the dwindling allocations to states from the federal account can no longer sustain the minimum wage which was signed into effect in 2011 by former President Goodluck Jonathan.

This has heightened tensions in workplaces and in the labour market, with the organised labour becoming agitated and issuing warnings to resist any large scale job cuts by government and private employers.

Experts say the fall in crude oil price, along with stifling economic policies triggered a gale of retrenchment in virtually all sectors of the economy since the second quarter of 2015 and this will continue in 2016 as there are no indications of any immediate rebound in the economy.

In the last few months, over 120,000 jobs may have been lost in the oil and gas sector, while in the construction sector, close to 100 jobs are gone.
Solomon Ogunbusola, president of the Federation of Construction Industry, (FOCI), the umbrella body for major construction companies operating
in Nigeria, recently lamented that the industry was at a crossroads.

According to Ogunbusola, various construction firms in the country are owed over N600 billion for projects already executed, a development leading to massive lay off of workers.

Amechi Asugwuni, president of the National Union of Civil Engineering Construction, Furniture and Wood Workers, (NUCECFWW), also bemoaned massive job losses in the industry, describing it as worrisome.

Asugwuni said since July 2015, close to 70,000 workers had been laid off by construction companies, and there is nothing to give hope of reprieve in 2016.

“This is very worrisome for an economy with a large population of youths,” he said.

BusinessDay gathered that the banking sector is planning to lay off staff through what an inside source called “appraisal”.
Already, a number of staff had been given letters of termination in one of the banks where the Federal Government has a substantial interest, and their terminal benefits paid into their accounts.

The real subsector is likewise groaning under the yoke of harsh business climate.

Remi Bello, President, Lagos Chamber of Commerce and Industry (LCCI), said the Central Bank of Nigeria’s (CBN) foreign exchange policy restricting access to the dollar has taken a toll on members and resulted in the loss of about 40,000 jobs in the manufacturing sector.

Segun Oshinowo, director-general of the Nigeria Employers’ Consultative Association (NECA) in an interview with BusinessDay, warned that members of the association would be forced to lay off staff to survive, owing to the difficult operating environment and over-regulation by Federal Government agencies which impose crushing taxes and fines on enterprises .

Oshinowo pointed to other impediments such as cost of borrowing, poor infrastructure, absence of reliable power and multiple taxation, which he described as a huge burden for employers. NECA members cut across all sectors of the economy.

Disturbed by the trends, Bobboi Kagaima, president of the Trade Union Congress of Nigeria (TUC) who doubles as the president of the Association of Senior Civil Servants of Nigeria (ASCSN) has urged the Federal Government not to use the “proposed staff audit” as a ploy to sack workers.