There are indications that private sector employers may have opted for job cuts to survive the effects of the coronavirus pandemic, TOBA AGBOOLA reports
The National Bureau of Statistics (NBS) reported that Nigeria’s unemployment rate rose to 23.6 per cent and underemployment worsened to 16.6 per cent last year. Unemployment may also worsen due to the effects of the coronavirus (COVID-19) pandemic.
Experts have indicated that the pandemic has started impacting the private sector negatively as many firms are struggling to survive.
The pandemic is affecting businesses in advanced economies, such as the United States and the United Kingdom. For instance, the US Department of Labour recently announced that employers cut over 700,000 jobs in March.
The NBS data indicated that over 20 million Nigerians were unemployed by last year. Experts fear looming job cuts as a result of COVID-19 would 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 to check the spread of COVID-19 are likely to affect the prospects of many businesses.
“Goods are acquiring demurrage at the ports and many importers will simply abandon the goods – and many will go bankrupt,” Fasua said.
On looming job losses, Fasua noted that the bankruptcy that is rolling abroad would soon land in Nigeria.
The International Monetary Fund (IMF) has predicted that the global economy will fall by 12 per cent due to the impact of COVID-19.
Already, businesses are feeling the brunt of the pandemic even as the 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 restless 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 members to proceed on compulsory leave without pay pending when the situation improves.
Speaking with The Nation, an employee of a top hotel in Lagos, Tola Oni, said they were asked to go home without details of what to come next.
He said they were told that they would only receive half of their April salary, and what comes after that would be determined by the prevailing situation in the country.
He noted that operations at the hotel had been grounded with over 95 per cent of the rooms vacant, adding that the future of many of the company’s staff members remained uncertain.
Meanwhile, analysts have argued that banks and other financial institutions would almost need to manage the earnings impact from the COVID-19 pandemic which has forced a near shutdown of economic activities.
They said banks would need to rethink their balance sheet challenges while managing loan stresses.
They noted that the banks would need to find ways to trim their costs quickly by resetting their revenue outlook and 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 pandemic.
“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. Any bank that is going to lay-off people now, they are going to face the repercussion very soon. I am not expecting any bank in Nigeria to lay-off staff. However, there will be effects on the profitability of the banks and there are going to be effects on people that took loans because they cannot go into production,” Olasanoye said.
A recent report by Verraki Partners (formerly Accenture), a business solutions company for Africa, also stated that Nigeria may go into recession if the pandemic persists and with the potential loss of N2.27 trillion worth of trade and significant job losses across sectors.
The report titled: “COVID-19 and Nigerian businesses: From survival to thriving in a changing world,” stated that the social, economic and financial challenges of the COVID-19 will lead to a global recession in the year and potential lost output of $2.7 trillion.
According to the firm, employee productivity is expected to drop, especially for firms that were not designed for and have not made remote working a part of their processes.
While the global challenge persist, Verraki Partners stated that business leaders should expect different recovery speeds for different sectors and locations, adding that leaders must also be flexible to spot and pursue the opportunities presented by this crisis, including reserving 90 minutes, 10 per cent of 15 hour daily, daily for work focused on preparing the organisation for the future.
Furthermore, the report further explained that while nations are struggling to weather the storm, there has been collapse in national development indices of Nigeria.
Specifically, it noted that four of Nigeria’s top trading partners and import sources — China, USA, Spain and the Netherlands which accounted for an estimated 45 per cent of its imports — have implemented lockdown strategies to contain the spread of COVID-19.
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