Nigerian employers are fighting to keep staff on their payrolls amid the financial pain inflicted by the COVID-19 pandemic, according to the Nigeria Employers’ Consultative Association (NECA), the umbrella organisation of employers in the Organised Private Sector.
Economic activity in Nigeria, like in other countries, has been hammered by the pandemic, but businesses in the West African country may be faring worse than in countries where government palliatives from tax holidays to other forms of support have helped soften the blow of the pandemic.
Staff layoffs in the private sector, which employs some 90 percent of the country’s total workforce, will worsen what is already a precarious economic situation for Africa’s most populous country already grappling with high unemployment and poverty rates.
It’s been difficult for employers to cope amid these trying times, according to Timothy Olawale, director-general of NECA.
“Some companies have outstanding loan facilities with banks, imported goods with increasing demurrage at the ports, ongoing salary obligations to their employees and other financial obligations to other stakeholders despite their dwindled revenue,” Olawale said in an interview with BusinessDay.
“Thus, it has been quite difficult for employers to cope with the economic impact of COVID-19, without any form of palliative or stimulus package to address these challenges,” he said.
Despite the harsh consequences of the pandemic, many employers have kept their employees on their payroll while those that couldn’t completely meet their obligations to employees have been engaging them in order to adopt a more humane option in a bid to save jobs.
“Some that cannot meet up and in a bid to remain afloat, are now engaging cost-cutting measures which include, sadly, reduction in the number of staff, negotiation and agreement on the terms of salary or other benefits for adjustments with their employees and renegotiation of different contracts,” Olawale said.
Some employers have also redesigned their standard operating procedures (SOPs) to meet the demands of the new normal and have been trying to operate, albeit, not up to capacity.
Those that are not in manufacturing have taken to new strategies, from working-from-home (WFH) to teleworking, to continue to remain afloat and meet their obligations.
“We advise that employers should continue to evaluate the impact of COVID-19 on their businesses, taking lawful measures necessary to protect their business and employees, and seek advice where in doubt,” Olawale said.
The economic impact of the COVID-19 will see the Nigerian economy contract 3.4 percent this year, according to estimates by the International Monetary Fund (IMF). That’ll be the worst contraction since 1987.
Olawale said the impact of the pandemic has been particularly gruesome for some sectors of the economy among which are aviation, hospitality, tourism, real estate and manufacturing.
A survey done by the Lagos Chamber of Commerce and Industry (LCCI), which captured business operators across various sectors of the economy, also revealed that airlines, manufacturers, agro-processors, Small and Medium Enterprises and the hospitality sector were the worst hit by the pandemic.
According to the survey, 81 percent of sampled businesses said they were ‘severely’ affected by the lockdown while 17 percent indicated moderate impact on their business.
The survey also revealed that the lockdown had severe impact on over 50 percent of businesses in the services sector after necessitating lower demand for services by individual and corporate clients.
It further indicated that during the lockdown, clients prioritised food and essential items ahead of ‘relatively less important’ services, and corporate clients ran skeletal operations, which depressed demand for non-essential services.
As a result of the economic impact of the pandemic, business owners in the country have demanded a one-year tax break from the government to enable them to recover.
Apart from one-year tax relief, businesses are also asking for the suspension of the implementation of the new Value Added Tax regime rate till year-end, particularly for the worst-hit sectors.
