The mass sack in the banking industry led by three lenders and the plan by others to follow suit has not only sent shock waves to the economy but already signposted an outcome on the second quarter Gross Domestic Product (GDP).
For emphasis, GDP calculation is replete with individual contributions of all economic agents, including those of the employees in the private sector, like banks, which are currently under “siege”.
And the prevailing developments in the economy do not offer any hope of fiscal stability.Already, no fewer than 1,415 workers have been sacked. The layoff workers will join the army of unemployed struggling every day to eke out a living.
Each of the 1,415 sacked workers is estimated to have two dependants, and by multiplier effect, the figure climbs to 4,245. This invariably has a huge impact on the consumer spending capacity on the aggregate level; the Human Development Index; the turnover of companies, especially those in the consumable segments; the growth of the economy; and ultimately, GDP figures, upon which the economy’s status rests.
A top source from CBN told our Correspondent that the ugly development in banks is the result of the challenging macroeconomic situation in the country, as well as policy choices like the Treasury Single Account (TSA), which has taken a toll on the industry.
While agreeing that the only way to get the economy back on its feet is to increase and sustain employment, as well as production, to engender consumption spending and positively impact on GDP, the source said no one can force workers on the banks because they are private enterprises that are established to make a profit.
Specifically, Diamond Bank said it has retrenched 200 staffers, while Ecobank Nigeria off-loaded 1,040 and Skye Bank followed suit with 200. The challenge still remains if only these figures affirmed by the disengaging banks are not more than their respective claims.
Of course, the development, like the proverbial chicken that finally came home to roost, serves as affirmation to the biting economic challenges, particularly the oil price crisis-induced foreign exchange situation difficulties, that have shut out several business opportunities for the banking industry.
It also laid credence to experts’ assessments that the implementation of Treasury Single Account would lead to the sack of workers in banks as all the bank had relied on the “cheap” public funds for day-to-day operations at the expense of their main function.
The Minister of Labour and Productivity, Dr. Chris Ngige, in reaction to the serial mass sack, ordered the banking industry chieftains to put a stop to the trend.
“Following the high spate of petitions and complaints from stakeholders in the banking, insurance, and financial institutions, I hereby direct the suspension of the ongoing retrenchment in the sector pending the outcome of the conciliatory meetings in the industry,” Ngige said.
Unfortunately, three days after the order, Skye Bank defied odds and pushed 200 more into the “labour market.”
Diamond Bank was the first to lay-off over 200 members of staff, saying it a core strategic exercise in line with the bank’s growth objective and the will to continue the drive to optimize cost and enhance value for the shareholders at the end of the business year.
“With this trim-and-fit workforce, the bank is sure to meet its target for the current business year,” the bank said.
However, while Ecobank said it converted over 200 outsourced personnel to permanent employees of the bank, as part of the bank’s drive to attract and reward talent while also repositioning for improved efficiency; on the other hand, it disengaged a disproportionate number of 1,040.
Again, Ecobank Nigeria said its renewed drive for optimal performance and realigned roles bank-wide was aimed at ensuring efficiency, necessitating the sack, adding that they have been adequately compensated.
The Managing Director of the bank, Charles Kie, said:
“Our focus is to improve the quality of service to our customers as well as our operational efficiency. We understand that people are our key asset, so we have emphasized the need to reward our best performers… at the same time, based on our repositioning plan, we had to disengage some staff while ensuring that, in line with industry standards, they are treated fairly.
“The yearly appraisal is a general industry standard and enables banks to prune their workforce and prudently allocate resources for optimum result.”
All eyes are now on First Bank of Nigeria Limited, which reports said it earlier threatened to cut down the number of its employees by 1,000.
The National Bureau of Statistics (NBS), in the third quarter employment report, affirmed that the economically active population or working age population (persons within ages 15-64) increased from 105.02 million in the fourth quarter (Q4) 2015 to 106 million in the first quarter (Q1) 2016. Surely, the second quarter figure has already increased by at least 1,440 from the banking sector, if only this is the last mass sack before the end of this month.
In Q1 2016, the labour force population (those within the working age population and are willing, able and actively looking for work) increased to 78.4 million from 76.9million in Q4 2015, representing an increase in the labour force by 1.99%.
This means that additional 1,528,647 economically active persons within 15-64 years, entered the labour force between January 1, and March 31, 2016.
Analysis of the report showed that these new entrants consisted of newly qualified graduates, new entrants into the economically active population.
Within the same period, the total number in full-time employment (did any form of work for at least 40 hours) decreased by 528,148 persons or 0.97 percent. This consists of people who lost their jobs and were either forced or for various reasons chose to move from full-time employment to underemployment.
Further analysis showed that the drop in full-time employment between Q4 2015 and Q1 2016 was predominantly those between the ages of 15 and 24, accounting for a decline of 560,000; followed by ages 55-64 years, 90,000; ages 45-54 years, 60,000; and ages 35-44 years, 20,000. On the other hand, the number of those in full-time employment between Q4 2015 and Q1 2016, within ages 25-34 increased by 220,000.
Affirming the declining numbers in employment records, the Purchasing Managers Index (PMI) for May, a monthly report of CBN, showed that the employment level index in business activities declined for the fifth consecutive month in May 2016.
“At 44.6 index points, the employment level declined at a slower rate when compared with the 43.3 recorded in April. 15 sub-sectors (under business activities) recorded declines in employment in the order: management of companies; information and communication; utilities; construction; health care and social assistance; and agriculture.
“Finance and insurance; professional, scientific and technical services; real estate, rental, and leasing; water supply, sewage and waste management; transportation and warehousing; wholesale trade; educational services; and repair, maintenance/washing of motor vehicles and arts, entertainment and recreation,” the report noted.
