Looming Job Cuts

With the impact of Covid-19 across the globe, there is anxiety in the country over impending job loses


Despite spirited efforts by the federal government to mitigate the harsh economic effect of the ravaging covid-19 in the country, the rampaging pandemic seems to have defied containment as it has shattered the world economy with Nigeria having its fair share. This has put the economy in the quandary resulting to serious threats on job cut across the strata of the economy. Nigeria, a country of about 200 million people with huge population of unemployed youths, faced with million job risks is certainly putting the country and its population on edge. Reports say the tourism sector, oil and gas, aviation, ports and harbour, private sector and many others are likely to be the worst hit. There are emerging signals that private sector employers may opt for job cuts to survive the effect of the coronavirus pandemic (COVID-19). Experts in various sectors of the Nigerian economy have given indications that the COVID-19 pandemic has hit the private sector negatively as many firms are struggling to survive.

The pandemic is already affecting businesses in advanced economies such as the United States and United Kingdom. For instance, the US Department of Labor recently announced that employers cut over 700,000 jobs in March. While there is yet no current statistics on job losses in Nigeria, the National Bureau of Statistics (NBS) reported that in 2019, Nigeria’s unemployment rate rose to 23.1% and underemployment to 16.6%. This might be further worsened by the effects of the pandemic, experts say.

NBS data indicate that over 20 million Nigerians are unemployed as at 2019 and looming job cuts as a result of COVID-19 will likely worsen the situation. An economist, Tope Fasua, said the recent partial shutdown of Nigeria’s commercial nerve centre, Lagos, and the administrative headquarters, Abuja, by President Muhammadu Buhari and other movement restrictions across the country as a measure to check spread of COVID-19 is likely to affect the prospects of many businesses. “Goods are acquiring demurrage at the ports and if the lockdown persists, many importers will simply abandon the goods - and many will go bankrupt,” he said.

On looming job losses in Nigeria, Fasua noted; “The bankruptcy that is already rolling abroad will soon make a landfall here (Nigeria).” Meanwhile, the International Monetary Fund (IMF) has predicted that the global economy will fall by 12% due to the impact of COVID-19. Already, businesses are already feeling the brunt of the pandemic even as the Nigerian economy is bleeding. The international price of oil has fallen far below the country’s bench mark upon which the 2019 budget was predicated. “Rating agencies have downgraded Nigeria to B Negative, almost the default zone, and the prognosis is not looking good at all. Foreign investors are listless right now,” Fasua said.

Workers in the aviation sector, hotels, oil and gas as well as the financial services sectors are likely to be affected the most. Findings show that key employers in the aviation sector have asked some of their staff to proceed on compulsory leave without pay pending when the situation improves. An employee of a top hotel in Abuja tis reported to have said that they were asked to go home without details of what to come next. He said they were categorically told that they would only receive half of their salaries in April, and what comes after that would be determined by the prevailing situation in the country.

The employee noted that operations at the hotel have virtually been grounded with more than 95 percent of the rooms now vacant, adding that the future of many of the company’s staff remains uncertain. Meanwhile, analysts have unanimously argued that banks and other financial institutions will almost certainly need to manage the earnings impact from the sudden COVID-19 pandemic which has forced a near shutdown of economic activities. An analyst said, “The COVID-19 pandemic could be the most serious challenge to financial institutions in nearly a century. As the economic fallout spreads, retail banks will find themselves juggling some big priorities that require concrete steps to reposition now while also recalibrating for the future.

But the National President, Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), Oyinkan Olasanoye, has faulted the assumption that some banks may retrench workers over the coronavirus pandemic crisis. Olasanoye said, “Presently, I am not anticipating banks laying-off workers because of this virus, because the moment we have a clearer condition of health, I know there will be a run on the banks. However, there is disquiet in the aviation sector over impending job losses occasioned by the COVID-19 pandemic which has triggered global decline in passenger flights with Nigeria inclusive.

As at March 27, all domestic flight operations were halted in response to the stay-at-home directive by the federal and state governments. And by May, another four weeks extension was handed to the sector as new cases of coronavirus continue to heighten. This extension however, increased the anxiety in the industry. All the domestic carriers operating in the county are now reeling over the huge losses they are likely to incur in the period of the shutdown more so when their facilities (aircraft) would still go for the compulsory checks whether they fly or not.

The fear of aviation workers became real when one of the domestic carriers, Max Air announced that it would not be able to continue with the payment of salaries to workers, citing the suspension of flights. A message sent to Max Air employees read: “It is regrettable to inform all staff that Max Air Ltd will not be able to further provide remuneration for the duration stated by the federal government and if the situation persists, the same applies as well. The House of Representatives has however intervened, asking the federal government to prevail on the airline and other private employers of labour in the aviation sector to be compassionate with their employees in this difficult time. It has been projected that the aviation sector in Nigeria would lose 3.5 million passengers resulting in a US$ 0.76 billion revenue loss for airlines and US$0.65 billion contribution to the Nigerian economy.

The International Air Transport Association (IATA) which made the projection said 91,380 jobs are at risk in Nigeria. The Airline Operators of Nigeria (AON) has however cried out over the development, calling on the government to come to their aid as the COVID-19 pandemic pushes them into near insolvency. Capt. Nogie Meggison, the Executive Chairman of AON, said this is the time government should bailout the industry to sustain the sector after the COVID-19.

“On the cargo side, airlines are doing whatever they can to keep global supply chains moving with vital shipments, including those for critical medical supplies. We will come together as an industry when the freedom to travel has been restored and we can focus on air transport’s critical role in driving the economic and social recovery from this unprecedented crisis.” While workers in the public sector may be less apprehensive on job cuts and payment of remunerations, workers in the private sector are pensive.

Fasua advised the federal government to reopen the economy and adopt alternative approaches to stem the spread of COVID-19. He recommended that Nigeria should set up a war room with smart people to strategize deeply on the next steps to take. Also, an industrial relations expert and former President of Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and Deputy President of Trade Union Congress of Nigeria, Dr. Brown Ogbeifun, predicts more troubles for workers and trade unions in Nigeria if the pandemic continue to escalate. According to him, Pandemics are not new to the world, what is, however, new is that we do not tend to have used the experience of the past to get the world ready for the aftermaths of pandemics, which might snowball into recessions and depressions. Let us look at the simple scenarios playing out in the world. Economies are managed and nurtured by people. When those people are sick, they cannot offer their services. When this involves a large aspect of the populace, consumption of medical products become relatively high with abysmally low corresponding production levels in other sectors, thereby triggering a wide gap between supply and demand.

Governments will evoke a lockdown, like they have done in order to curtail the spread of the disease. When this happens, people would be out of job, border closures will occur which have attendant effects on aviation, shipping and land transportation, schools, industries and productive ventures outside the health systems. With inadequate supportive public utilities, which in our clime are almost near zero, lack of a robust system to provide the shock absorbers for the COVID 19 shocks, the economy would seriously take the hit.

If the 1918 Spanish flu is anything to go by, apart from the huge and tragic human losses, experts have estimated that the COVID 19 outbreak could cost the global economy up to $3 trillion. Under the current circumstances, businesses are likely to default in their loan repayments, naira to the dollar has moved astronomically, banks’ lending rates would drop, consumption of non-medical products would drop and so it is with the GDP. These and many other factors could trigger economic shock which, if not addressed quickly, could also trigger a recession.

It is for the above reasons that economic experts are urging governments to pump money into their economies, if not, the world might witness a worse post-2008 economic meltdown. That is why a country like the United States of America shall be giving about $1,000 to her about 330 million citizens per month in addition to bailouts to manufacturers and SMEs. Hong Kong has been quoted to be giving 10,000 Hong Kong dollars ($1,287) to her citizens. Other nations are either doing the same or are releasing bailout packages that would give people spending power to help the economy. Nigeria’s scenarios, first, Nigeria started the race against COVID-19 at a disadvantage. The Group Managing Director, GMD, of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari, had earlier warned Nigerians on what to expect.

He said 50 cargoes of Nigeria’s crude and over 12 LNG cargoes globally were yet to find buyers. With the drop in oil price below $30, coupled with the present oil war between Russia and Saudi Arabia, Nigeria has so many rivers to cross. For a country that runs a monolithic oil-driven economy, dependent on dollar-driven importation of petroleum products, having scores of unsold cargoes and a price slump to about $24-$25, we need prayers and luck to overcome. There is nothing on the horizon that provokes serious optimism, that something drastically positive will emerge soonest. If this COVID-19 prolongs and companies successfully experiment and succeed with the ‘work from home method’, many that have been seeking ways of reducing their structures to a lean and mean frame would now have excuses to execute their plans over a long term period. We are likely to have more short term contracts looming, adoption of flexible working hours and working from homes, thereby reducing overheads on recurrent expenditures.

All the employer needs to do is to increase the bandwidths of their communication facilities and make them available to the staff. For the oil and gas sector, except the situation reverses soon, there are likely to be multiple redundancies, which may strain union and management relations. Furthermore, most interactions in the workplace are likely to be reduced to electronic transmissions of information, increasing virtual meetings with the aid of video and phone conferencing. The goods and services deployed in the process of physical meetings would be automatically scrapped, thereby putting at risk those companies in that chain of businesses.

Companies are likely to curtail flying or commuting in and out of stations for meetings, thereby saving costs on travels and out of station allowances, etc. Incidentally, some of these might cause breaches on already signed collective bargaining agreements. This could also cause large scale frustrations among employees who could turn against their union officials. The union officials, in turn, will make life difficult for management. All these could cumulatively become conflict stimulants which, in the end, will provoke strained relationships between labour and management. Even as the federal government has continued to reassure its citizenry, the palpable fear of job loss has not abated.

President Buhari in his address at the 2020 Workers’ Day celebration said that he was aware of the anxiety that has plagued the minds of workers over the possibility of job losses due to economic downturn caused by the pandemic and lockdown. He said that a Presidential Economic Sustainability Committee (ESC) with the objective of developing a credible sustainability plan for repositioning the Nigerian economy now and post COVID-19 crisis period has been set up. “The ESC is required to specifically explore ways and means of growing our non-oil sector – all in a bid to minimize the adverse effects of the current crisis and to also protect existing jobs and even create new jobs to help absorb the teeming army of the unemployed in the country.