- One-way school run
- Salary cut
- Reduction in overhead
- Changing of children’s schools
- Stopping of school feeding allowance
The economic recession in the country seems far from being ebbed. Companies, like individuals, are still groaning. Despite government’s assurances that Nigeria has technically exited it, many of these establishments such as multinationals, banks, insurance firms, and media houses, have had to downsize their staff strength, while others simply sliced their workers’ salaries to remain in business. ISIOMA MADIKE, who has been tracking this trend, reports
Nigerians, just like companies are groaning, as recession continues to grip national economy in 2017. The economic crisis has, indeed, forced many businesses to continue to invent different strategies to remain afloat. While some had cut their staff strength, others have had to slash salaries. Banks, insurance firms and the media, are in this category.
Saturday Telegraph gathered that a number of banks including the “big” ones have had to lay off thousands of workers since January even as many firms operating in other sectors of the economy were said to be compiling names of those to be fired. Source at most of these companies told one of our reporters that most of those sacked cut across, especially those that have subsidiaries. First Bank of Nigeria Limited, with its contractor, Whyte Cleon, is believed to have sacked over 1,000 workers via text messages and telephone calls, not too long ago.
It was gathered that the bank has been silently laying off staff across the country. The sacking, which started in August, is yet to abate, according to sources close to the bank, as more are said to be on the verge of being sent home, which might come as their New Year gift. Some of those affected by the purge, said they were engaged by In-Sourcing Limited, located on 18, Keffi Street, Off Awolowo Way, Ikoyi, Lagos State.
Insourcing Limited, formally a subsidiary of the First Bank Group, commenced operations in Nigeria in July 2008. The company was established to provide support staff solutions, first to the bank, subsequently to the group and then to other businesses. First City Monument Bank was also believed to have sacked over 400 of its workers.
There have also been unconfirmed reports that other banks have retrenched employees, though on a small scale. There are those that resorted to cutting salaries and delay payments; sometime well into the next month, while some are still finding it difficult to even pay at all.
Construction firms are not left out as over 65,000 workers were said to have been sacked following the economic recession plaguing the nation. This followed their inability to meet up with their obligations to the workers as the recession hits the sector with over N600 billion debt, which the federal and state governments is believe to owe the sector.
President of Federation of Construction Industry (FOCI), Solomon Ogunbusola, explained that the 135 construction firms registered and operating under the association were being owed, a situation which had compelled some to lay off their staff.
Unlike what happened in First Bank Plc, and First City Monument Bank, however, a source at Heritage Bank confirmed a different strategy. It said: “Our staff have been getting half pay since March as authorised by the management of the bank. All staff across board had their salaries slashed into half; is either you take it or you resign.
The bank took the decision so as not to sack anybody and so as to stay afloat. But that didn’t work because it started sacking almost thereafter. Our problem started since the implementation of the Treasury Single Account (TSA). The bank has been struggling to keep its books in check ever since.” Apart from Heritage, a number of other banks in the country are said to have closed many of what they described as unprofitable branches, as the situation bites harder.
It was similarly gathered that most of these banks had equally laid off hundreds of their workers. According to the information gleaned from the sector, Unity Bank Plc alone has laid off about 300 workers, while Diamond Bank Plc, Ecobank and Skye Bank Plc, had earlier in the year sacked over 3,000 members of their workforce also. It was learnt that the affected banks could no longer justify their existence as cost analysis had shown that they were spending more on salaries and overheads than the income from most of their branches.
Some of the workers of the banks, who confided in Saturday Telegraph under the condition of anonymity, said more banks might be forced to relieve more workers of their duties in the coming year if nothing serious is done to arrest the situation. An executive director in one of the banks said: “We have laid off some of our staff members but that seemed not to be enough. Many branches just exist for the sake of being there. They are not generating enough income. What they are bringing in is far less than what the bank is incurring as costs on them.
We may have to close such branches in the coming year. I know a number of other banks that are planning something similar.” The executive director did not stop there. But added: “It is an ongoing administrative thing in the banking industry. Banks will want to rationalise branches, especially in a difficult economy.
They just have to cut costs. Branch rationalisation is normal but the Central Bank of Nigeria (CBN) has to be notified.” The sector, no doubt, has been battling a number of challenges in recent time. The un-abating financial crisis, which has led to a high rate of non-performing loans in the banking system, made many of them to nosedive in their profit earnings, especially in the preceding year.
For instance, Ecobank Transnational Incorporated, Guaranty Trust Bank Plc,Unity Bank Plc and Diamond Bank Plc, recorded a combined decline of N17 billion in their Profits Before Tax (PBT) for the three months ended March 31, 2016, when compared with the corresponding period of 2015, according to the results of the financial institutions posted on the website of the Nigerian Stock Exchange.
When compared with the PBT of N30.52 billion, N32.65 billion, N4.26 billion and N7.94 billion recorded by the banks in the first quarter of 2015, the combined PBT of the four banks dropped by N17 billion from N75.4 billion in the first quarter of last year to N58.4 billion in the same period of this year. While Ecobank’s PBT fell from N30.52 billion in the first quarter of 2015 to N20.63 billion in a similar period of this year, GTBank’s dropped from N32.65 billion to N30.68 billion. That of Unity Bank dropped from N4.26 billion to N1.05 billion, while Diamond Bank’s came down from N7.94 billion to N6.04 billion. In terms of their Profit After Tax (PAT), the four banks recorded a decline of N14 billion.
Before now, banks in the country had been posting sharp increases in profits before tax and profits after tax since 2011 after the establishment of the Asset Management of Corporation of Nigeria (AMCON) in 2010 following the banking sector crisis in 2009. Aside banks, most of the oil companies operating in the country have also come under serious financial challenges due to the economic crunch, which has continued to impact on their operations and profitability. Some of them, according to investigations, are now slashing staff salaries, in some cases by 50 per cent, while others have reduced their investments in the country. One of the firms, a Lagos-based indigenous oil and gas company, announced that the 50 per cent salary slash would be for six months in the first instance. “We are obviously not happy with the development but we are discussing with the management but we do not know if they will reconsider their stand,” our source said.
The telecommunication sector is also not finding things easy as they are not left out from the gale of sacking sweeping across companies throughout the federation. MTN Nigeria, believed to be the giant in this sector, is said to have laid off some of its contract staff, particularly those that worked at the call centres. According to insider sources, many of the contract staff received their disengagement letters since the last quarter of this year. Most affected are those who worked in their branches. They were said to have had their salaries reduced from N120,000 to N40,000 a month. Recalled that MTN Group shares once slumped after the National Assembly raised allegations, in which the legislators accused the company of illegally moving almost $14 billion out of its largest market.
This, according to information from the company, was aimed at remaining buoyant in meeting its obligations. Also affected by the economic crunch is the automobile industry. Sources close to Coscharis Group said the auto giant has had to reduce its workforce by 208. Already, some of the affected employees had been paid off, in what a source in the company described as a move aimed at pruning down the staff strength to a manageable number.
The source added that those sacked were not limited to the automobile arm of the company but that it cut across virtually all its subsidiaries. “It was part of a general restructuring aimed at putting the firm on a sound financial footing,” our source added. Though, the story could not be confirmed, it is believed that factors such as redundancy, old age and poor health were considered in the exercise, just as some others were redeployed for improved performance.
Airlines have had to equally suspend operations on the heels of the ongoing economic recession sweeping through and crippling various sectors of the economy and bringing down supposedly viable and vibrant organisations in the nation. Aero Contractors was in the group.
As at the time it did the unthinkable, about 1000 of its workforce were thrown into the labour market that is already saturated by graduates and other job seekers. The airline had, before then, downsized its staff strength by 50 per cent. Although it came back to continue operations, Aero Contractors has been struggling since then.
There are indications that more airlines may close shop in the coming year, due to the biting economic recession, poor business plans, humongous debts and lack of adequate support from banks. The airline trade deficit, a source close to the airline revealed, stood at N20 billion. Also, the suspension was a consequence of series of challenges it faced in the past, a development which has negatively affected its operations, even after coming back.
The implication of the suspension of scheduled services operations, according to the company’s Chief Operating Officer, Fola Akinkuotu, extended to all staff directly and indirectly involved in providing services as they effectively proceeded on indefinite leave of absence during the period of non-services.
Barely 24 hours of Aero Contractors’ suspension of operations, another domestic carrier, First Nation Airlines, suspended its operations. Although, it was said that the airline did that to enable it to carry out the required maintenance of its aircraft, sources close to the airline, however pointed to the biting economic recession. Many saw the development as a bad omen in the industry, but, authorities of National Civil Aviation Authority, (NCAA) were forced to refute the claims that the airlines in Nigeria were winding up. Other multi-nationals are still groaning as recession grips national economy.
Saturday Telegraph gathered that the food, beverage and tobacco sector of the Nigeria economy is on the verge of shutting down and that over a million jobs would be lost due to the inability of the companies to source foreign exchange to import raw materials for their operations. Already, leading companies in the sector, such as Nigerian Flour Mills, Nigerian Breweries, Guinness Plc, Nigerian Bottling Company, 7-UP Bottling Company Plc, Friesland Campina, Wamco Plc, among others, have written to labour for discussions on retrenchment of workers.
In the last three months, no fewer than 1,500 workers had been sacked in the sector as employers seek ways of coping with foreign exchange crisis. President of Food, Beverage and Tobacco Senior Staff Association (FOBTOB), Quadri Olaleye, had called on government to intervene to save the industry.
It was learnt that over three million jobs had already been lost since the beginning of the economic recession. Olaleye was quoted to have said that employers in the sector had devised every opportunity to sack workers, noting that between 2012 and the first half of 2015, over 3,000 workers were sacked in the guise of re-engineering, restructuring, right sizing, downsizing, redundancy and re-organisation.
He said: “The current situation has reached a pathetic level, because it seems all the employers in our sector are in competition with one other on who can lay off the most workers. Every company is now calling for a downsizing of the workforce, and this time under the guise of lack of foreign exchange due to the Federal Government’s recent policy on foreign exchange.” Also, thousands of workers employed by hotels and tourism firms across the country may have also lost their jobs following the worsening foreign exchange crisis caused by the economic downturn in the nation.
With hundreds of thousands of workers in the hotel and tourism business, the hospitality sector is one of the highest employers of labour in Nigeria. But with the situation in the country, most of these jobs now hang in the balance. The scarcity of dollars has impacted negatively on the industry as foreigners continue to shy away from doing businesses in the country. Also, the exchange rate of the dollar to the naira is not favourable to importers anymore, considering the margin between the two currencies.
The body is calling on government to begin to tap solid minerals deposits to earn more revenue. It is anticipated that government can earn additional $20 billion yearly from mining, which will help to improve the nation’s dwindling external reserves. The hoteliers also want government to relax some of its monetary policies on foreign exchange management. Economic experts have pointed out that the full implementation of the Federal Government’s TSA policy as a key reason for the current wave of job losses and economic mess weighing down the nation.
The policy mandates all Ministries, Departments and Agencies (MDAs) to remit revenue into a single account, thereby denying banks a cheap source of funds to transact business with customers. According to available figures, the policy led to MDAs pulling out N1.2 trillion, about $60 billion from commercial banks to the CBN. Also, over 20,000 accounts were said to have been closed as the process was speedily executed. An economic expert, Anayo Nwosu, blamed President Muhammadu Buhari for the pains Nigerians are passing through at the moment. He listed certain actions of the president that added to the speedy recession of the economy. He identified the implementation of the TSA as one significant cause of the recession. Painfully, some banks had to stop funding projects halfway hence making completion impossible and resulting in bad loans.
The media, especially the print category, has also been badly hit lately as the current economic crisis has forced some newspaper houses to cut staff strength in their newsrooms across the country. Sources close to some media giants confirmed that hundreds of journalists had been shown the way out, citing rising cost of operation amidst a general economic downturn.
Nigeria’s economy slipped into recession after contracting for two consecutive quarters due to months of low crude prices. Many businesses have had to close shop or downsized as the economic situation continues. One of the media houses based in Lagos said to be among the largest employers in the industry, reportedly cut between 30 to 40 jobs not too long ago.
A management source, who confirmed the development, said that some of the staff were dismissed following a staff performance appraisal. However, many that are still struggling to survive have had to resort to slashing salaries or owing for an upward of about three months. “It’s true that they were dismissed, but not entirely because of the economic situation,” the official said, adding, “We look at staff productivity like every year and those who didn’t meet up were many this year.” Staff members in Abuja, Lagos and elsewhere were affected by the exercise, which another source said was the broadest for the company since inception. The cut was deeper in others, where about 70 per cent were either converted to freelance or permission to leave for a period of time.
A reporter, who was among those converted to freelance, said the development marked the toughest time in his career. “There are many of my colleagues in other papers who have nothing to be hopeful for,” the reporter said. “So don’t assume I am being timid when I said mine is better than most.”
An editor in one of the affected papers said the changes had taken “a terrible effect on production.” “I am an editor, but the sacking made it difficult for me to make specific and timely demands from reporters. I can’t ask them to go to places and do stories within the deadline,” he added. The strategies to beat off the raging economic recession in the country is not a preserve of companies alone as individuals are also inventing different tactics to survive. This is most noticeable in schools. Before now, many parents would easily not be willing to enrol their children in public schools because of what they see as the dwindling fortunes of government schools.
They would tell a story of how the degeneration had defeated the purpose for which they were established and how many became eyesores. The loss in the public schools became, as it were, gains for private schools that sprang up under different names and standards. But, with the economic meltdown in the country, parents who could no longer cope with the high cost of these institutions are withdrawing their children back to the once rejected government schools.
The harsh economic realities of today, occasioned by the biting recession, seemed to have reconfigured the educational equation across the nation. To beat this challenge, parents are withdrawing their kids from private secondary, primary and nursery schools. They complained that they could no longer cope due to the fact that their take home pays can no longer take them home.
A support staff member of one of the new generation banks with head office along Ajose Adeogun Street, Victoria Island, Anthony Boi, had three of his children at the prestigious Mayflower Private School, Ikenne, Ogun State. The pupils brought back home a letter from the school management as they were coming home for the long holidays.
The content was an upward review of both school and accommodation fees. “We were paying a little above N79, 000, which they now increased to approximately N118, 000 per pupil. For someone like me that have three of my kids in the school, it becomes difficult to cope.
So, I have no option than to move them to the public section, even though that was not what I wanted because of the quality. But, that is what my salary can carry as my wife has been out of job for quite a while now,” Boi said. Boi’s, however, is not an isolated case.
A middle aged woman, who identified herself simply as Chinasa, also told Saturday Telegraph that her husband had to relocate her and the children to their native Imo State when they could no longer survive with his meager income in Lagos State. Many other families have also taken their children back to their grandparents in the villages as a way of cutting back on their expenses. Bola, a JSS 2 student of Barachel Model College, Ifako off Oyemekun Street, Lagos, was also stopped from taking her schools bus to and from school. The school owners were charging each pupil N30, 000 per term for the bus services.
This, many parents said, were becoming a burden they could no longer cope with. “We had to resort to one way school run for her; dropping her off at school only in the morning on our way to work to save cost. She now only returns home with the school bus. With this we are able to save half of the money that would have been paid for such services.
That N15,000 is what we pay for her younger brother who is in Nursery 4 in another school,” said Bola’s mother, who identified herself only as Moyo. Just like Moyo, Ashikwe Chimanugor, a human resource consultant, also told Saturday Telegraph that he had stop his child from being fed at break period in his school to save cost.
Before now, his child’s school charges N15,000 per child and Chimanugor has three of his children in the school, and had been paying N45,000 for their feeding alone. He said: “We had to re-strategies to save money for their other needs. After we had taking stock of our spending on a monthly basis we came to the realisation that we may not be able to continue with such.
We also realised that we could spend far less to feed them adequately even better than what their school could provide them.” The story is virtually the same at most other private schools across the country. But, the owners of these schools are not relenting, as many of them have come up with some incentives to retain their pupils.
For instance, in Normal College, Ifako, Agege, Lagos, parents were promised a five per cent cut in the fees should they pay up before the resumption date. A senior teacher in the school, who does not want to be mentioned, told our correspondent that the strategy worked because many parents, according to him, rushed to pay because they needed to benefit from such lure.
“Quite a sizable number of parents benefited from this. You know that things are hard and many people would want anything that could cushion the effect of this recession. “It’s a motivation the owners of the college are contemplating sustaining in this hard time. We did our survey and discovered that our contemporaries lost many of their pupils to public schools. So, if we did not take such action, we would have suffered this same fate,” the teacher said.
News13 hours ago
PHOTOS: Former defence chief, Alex Badeh, shot dead
News23 hours ago
JUST IN: EFCC arraigns NBA President, Usoro, over alleged N1.4bn fraud
Metro and Crime9 hours ago
Kidnappers give abducted civil servants’ families 24 hours to pay ransom
News9 hours ago
Obasanjo, ex-African Presidents, Jega meet over e-voting, others
Politics9 hours ago
Lagos 2019: APC kingmakers who’ll shape the polls
News19 hours ago
Despite strike, president Buhari to present 2019 budget tomorrow
Politics9 hours ago
Issues as Buhari presents 2019 budget
Politics9 hours ago
Buhari should be concerned about his place in history – Sani