To cut cost in the face of dwindling economy and stiff competition, financial institutions hire contract staff who earn peanuts. But this has jacked up fraud in the banking industry, reports TONY CHUKWUNYEM
Until January 31, Chinyere Amadi was a contract worker with one of Nigeria’s tier one banks.
Nowadays, she sits at home, taking care of her 11-month-old baby and thinking of what job to apply for or what business to do to support her husband who, according to her, is finding it increasingly difficult relying on his meagre monthly salary to take care of his young family.
“Given my husband’s situation, I sometimes feel that, perhaps, I should not have resigned from the bank. But I had reached a point where I could no longer continue working as ‘a contract staff ’ in that organisation.
“Despite the fact that my husband is finding it difficult to support us with his poor salary, he fully backed my decision to quit,” she said.
Chinyere attributed her departure from the bank to the fact that not only was her monthly salary of N64,000 hardly sufficient to relieve the burden on her husband, her job as a contract worker was so tasking that it had begun to negatively impact her ability to look after her baby.
Indeed, she said that she spent three weeks in the hospital last December as her baby was admitted for an ailment which had become quite serious because her work schedule made it impossible for her to detect the problem before it got complicated.
Slavery She said: “The job required that I leave home as early as 5.30a.m., to return sometimes as late as after 10p.m. We were also expected to be at work on Saturdays so there was very little time for us, especially nursing mothers, to spend with our families.”
The young mother, who graduated with a Second Class Upper degree in Economics from the Nnamdi Azikiwe University, Awka, in 2010, disclosed that although she knew about the challenges of being a bank contract worker in this country, she had reluctantly taken up the appointment in 2014 when no other offer was forthcoming.
She said: “I did not initially want the job as it was common knowledge that despite having almost the same qualifications, contract staff earn far less than their colleagues who are employed on a permanent basis. But I had little choice because at that time, the most common opening for young graduates in the banking industry was being employed as a contract worker.
“However, it did not take me long to discover that the job was a form of slavery. We (contract staff) hardly have any breathing space; you cannot take or receive calls on your mobile phones while you are at work and getting permission to attend to urgent personal matters is a big problem.”
Amadi added that those who had permanent employment usually look down on the contract staff. “Apart from the tough work schedule, the insults and abuse that we frequently suffer in the hands of bosses who just wanted to show that they don’t have the same employment status with us can be so annoying that many people chose the option of quitting instead of being provoked into doing something rash.
“You can imagine that while the permanent staff who clearly don’t work as hard as contract workers earn about N150,000, we were paid N64,000.
Besides, while permanent staff are entitled to annual leave and leave allowance, its usually very difficult for contract staff to be granted leave and even then, they receive no allowance whatsoever,” she added.
Amadi emphasised that although she was yet to find another job and was having a tough time raising funds to start a business, she really did not regret resigning from the bank. 32,359 bank contract staff
However, it would seem that the likes of Amadi who have the courage to resign are quite few as data released by the National Bureau of Statistics (NBS) in February shows that as at December 31, 2017, no fewer than 32,359 staff in the banking industry were employed on contract basis, accounting for 35.8 per cent of total bank staff, which stood at 90,453.
The NBS in its Selected Banking Sector Data for the fourth quarter of 2017 reveals that the number of contract staff in banks had consistently grown to 32,359 in the last quarter of last year.
Specifically, the report shows that banks had gradually increased their number of contract staff from 20,237 in the first quarter to 21,837 in the second quarter and 27,032 in the third quarter before increasing it by 19.71 per cent in the fourth quarter.
The report further shows that the number of executive staff of banks dropped from 197 in the third quarter to 188 by the end of last year, while the number of senior executives had dropped by 3,852 from 20,420 to 16,568 as at December 2017. Also, in the last three months of 2017, the number of executive and senior staff of banks declined by 4.57 per cent and 18.86 per cent respectively.
Cost cutting Analysts point out that banks began to increasingly employ contract staff and reducing hir-ing of executive and senior staff as part of aggressive cost cutting measures introduced in the wake of the crisis which hit the industry in the last decade.
The crises, which led the Central Bank of Nigeria (CBN) to take over several lenders that were close to going under, resulted in massive job cuts in the industry with the departing staff being replaced with younger contract staff, who were ready to receive salaries that were less than half of what permanent employees were getting.
How it works New Telegraph findings show that banks adopted the strategy of outsourcing the hiring of contract staff to firms which usually have some form of close relationship with the lenders. For instance, the firms could be owned directly or indirectly by a relative/associate of a top shareholders or executive director of the bank.
Although the hired contract staff are seconded to the banks, these firms undertake all the processes required in the hiring of the contract staff, including advertising vacancies, conducting tests/interviews and issuing employment letters.
Also, in the event that the bank complains about the worker’s conduct, the person will not be sacked, but will be simply sent back to his or her employer. Industry sources said that while lenders pay outsourcing firms huge amounts for hiring contract staff, these companies pay the workers small salaries despite the challenging tasks they perform in the banks.
Rising fraud Interestingly, regulators have attributed the rising rate of fraud and forgery cases in the banking industry to the increasing number of contract staff employed by banks.
For instance, in the last few years, the Managing Director and Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, has been repeatedly warning banks against the use of outsourced staff, pointing out that in 2015, over 75 per cent of fraud cases in the banking sector was traced to outsourced bank staff.
Last year, he revealed that bank examination reports indicated that the high incidence of fraud and forgeries in the banking system was linked to outsourced or contract staff.
The NDIC boss also stated that in as much as regulators appreciated the necessity for banks to cut costs, it was incumbent on all stakeholders to fashion out capacity building and other strategies to motivate all employees to contribute positively rather than engaging in criminal acts that impact adversely on the entire banking system.
Ibrahim told finance and business journalists in Ilorin in October 2015 that 64 per cent of fraudulent activities in the banking industry in 2014 were traced to temporary staff of banks.
Similarly, two years ago, the CBN Director, Banking and Payments System Department, Mr. Dipo Fatokun, disclosed that the apex bank had advised lenders to desist from giving sensitive banking roles to contract staff as they might not have a stake in the financial institution.
He said: “A temporary staff may not have a stake in the bank so to say. So, it is encouraged that if they have staff that are not permanent, they should not give them responsibilities or roles that will expose them to critical functions of a bank.
“If you are giving somebody an authority to approve transactions of high magnitude and he does not have a stake in your bank, then you are already exposing yourself. So, this has been going on and I believe many banks understand the need to rely on their key staff for major duties. That is one of the reasons the fraud attempts have been rising, but the value lost declining.”
However, findings by New Telegraph indicate that despite these warnings, banks not only continue to hire contract staff, but have started assigning these employees to sensitive roles that were previously reserved for full time or permanent staff.
An industry source attributed the development to the increasing need for banks to cut costs in the face of a tough economy and rising competition. The source said: “Before now, contract staff were not assigned to Automated Teller Machine (ATM) watch duties.
You will also hardly find them being told to perform customer service duties. But all that has changed. Also, in the past, most banks usually set a maximum value of between N200,000 and N500,000 as the limit for risky transactions that a contract staff can undertake, but these days, this limit has been raised to N1 million.”
According to fraud statistics contained in the latest Nigerian Electronic Fraud Report, which was prepared by the Banking and Systems Payment Department of CBN, the banking industry recorded 31,736 fraud cases involving N16.5 billion between January 2014 and December 2016.
The study shows that the frauds were perpetrated through various payment channels such as Across the Counter, ATMs, cheques and electronic-commerce platforms. Others are Internet banking, mobile banking, Point-of-Sale and web transactions.
The report states that in the last three years, there had been more attempts in the number of fraud cases, adding that the development could be linked to the tough economy. Commenting on the issue of banks’ hiring of contract staff, a management consultant, Mr. Dafe Edeki, blamed the situation on the country’s sluggish economy, which, according to him, continues to drive cost minimisation by companies. He said: “The banks are not exploiting the contract staff; it’s strictly business.
Any organisation that wants to stay competitive would take advantage of the demand and supply gap in the labour market by offering small salaries because there are millions of people who are ready to do that job for half the pay. Anyone who is not comfortable with the terms of employment should not sign the employment letter.”
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