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HomeNewsAfrica9,740 bankers, oil workers lose jobs

9,740 bankers, oil workers lose jobs

Palpable fear has gripped workers across the country as more companies continue to lay off large number of their staff, a direct consequence of the prevailing tough economic situation in the country.

Investigations show that more workers are likely to be sacked in the coming days as the harsh conditions in the country show no signs of abating.

A source in one of the major oil companies told one of our correspondents that the situation is so scary that some oil workers have resorted to engaging in prayer sessions somewhere in the Ikeja area of Lagos so as not to be affected by the gale of sack sweeping across various sectors of the economy.

The media industry is also not immune from the pervasive austere times as many of the media organisations are finding it difficult meeting their monthly salary obligations to employees.

While some have resorted to cutting salaries, others delay payment, sometime well into the next month, while yet others do not pay at all. This worsening economic situation in the country, coupled with regulatory headwinds has clearly taken its toll on the financial sector which is the worst hit as over 3,000 bank workers have lost their jobs since the beginning of the year, findings by Saturday Telegraph have revealed.

Diamond, Ecobank sack

1,400 staff Indeed, only in the last one week alone, Diamond Bank and Ecobank Nigeria laid off over 400 and 1,040 staff respectively. Ecobank had, in fact, sacked about 50 of its senior managers in February this year, citing the need to cut cost and improve efficiency.

Earlier in the year, First City Monument Bank (FCMB) sacked over 400 while First Bank of Nigeria Limited was reported to have concluded plans to sack 1, 000 staff. There have also been unconfirmed reports that other banks have retrenched employees albeit on a smaller scale.

Financial analysts had predicted that as part of efforts to cope with impact of the economic downturn and regulatory headwinds, many banks would adopt cost-cutting measures which will include major job cuts and the shutting down of non-profitable branches.

Daily Telegraph, a sister title of Saturday Telegraph, had exclusively reported the widespread panic in the nation’s banking sector over a looming axe of retrenchment due to harsh business atmosphere, a few months back.

In his economic forecasts for the year published in January, the Managing Director of Financial Derivatives Company (FDC) Limited, Mr. Bismarck Rewane, predicted that the tough economy would force banks to commence massive staff retrenchment in Q2 2016.

The harsh economy has seen many lenders posting below par performance for both their full year December end 2015 and first quarter 2016 results. The parent company of Ecobank Nigeria Limited, Ecobank Transnational Incorporated (ETI), was among the group of lenders including Diamond Bank, which issued profit warnings to the effect that their profits for 2015 will be lower than the previous year.

In its statement to the Nigerian Stock Exchange (NSE), ETI attributed its expected reduced 2015 profits to a number of factors, which it said include the macroeconomic challenges faced by most African economies, such as lower crude oil prices, depreciating currencies and monetary and fiscal bottlenecks.

Analysts also point out that the full implementation of the Federal Government’s Treasury Single Account (TSA) policy, which commenced in October last year, is a key reason for the current wave of job losses in banking industry.

The policy mandates all Ministries, Departments and Agencies (MDAs) to remit revenue into a single account, thereby denying banks a cheap source of funds. 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.

A banking industry source said that since the implementation of the policy, many bank employees had found it difficult meeting their monthly targets and had thus been asked to resign.

An official of a new generation bank, who did not want to be named, said: “Banks were already facing hard times due to the impact of the slump in oil prices and regulatory headwinds. However, things have become more difficult since the full implementation of the TSA started.

Many banks are struggling to survive. Right now, their marketers have to hustle for other means of bringing in deposits from individuals and private organisations.”

Piqued by the rise in job losses in the country the Organised Private Sector (OPS) has urged the Federal Government to fix the country’s economy and save the industrial sector from further slide.

The OPS, which is the umbrella body of the private sector operators in the country, comprises Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Lagos Chamber of Commerce and Industry (LCCI), Manufacturers Association of Nigeria (MAN) and Nigerian Economic Consultative Association (NECA). The OPS said it was worrisome that the rise in job cuts in the country’s industrial sector is fuelling increase in the nation’s unemployment rate.

SMEs records 57% job loses

Speaking with the Saturday Telegraph on the rising job losses, the Chairman, Lagos Chamber of Commerce and Industry (LCCI), Small and Medium scale Enterprise Group (SMEG), Jon Kachikwu, said the private sector and SMEs had recorded about 57 per cent in job cuts as companies continue to lay off workers from their jobs due to the harsh economic situation.

He said the country’s SMEs sector is facing the harshest economic challenges in modern era under President Muhammadu Buhari’s administration due to the continued neglect of the sector, thus engendering uncertainty in businesses and dwindling public confidence in the country’s economy by investors.

Kachikwu explained that at the LCCI SMEG meeting in Lagos on Wednesday, the country’s economic index showed that SMEs sector operators already recorded 57 per cent in job cuts as they could not guarantee jobs safety as cost of running businesses continue to rise amid declining industrial capacity utilisation.

“At our group’s meeting on Wednesday in Lagos, we discovered that our members have reduced about 57 per cent in their workforce so as to remain in business. So, this 57 per cent in job cuts will further heighten unemployment rate in the country in the long run,” he said.

For President, Abuja Chamber of Commerce and Industry (ACCI), Tony Ejinkeonye, the private sector body agreed with the recent release by the National Bureau of Statistics (NBS) on the nation’s economy of possibility of an imminent economic recession in the country.

According to him, the current situation has remained worrisome to the OPS as it has been at the receiving end of the harsh economic climate. He said it was alarming that the country’s industrial sector did not contribute to the nation’s Gross Domestic Growth in the first quarter as released by NBS, noting that the volatility in the Nigerian economy is evidence that economic recession is looming. He said:

“The volatility of the Nigeria economy cannot be overemphasised given that the epileptic power supply, difficulty in accessing foreign exchange (FX) for importation of raw materials and equipment for manufacturers, infrastructure deficiency among others, have affected businesses drastically.

This is evident in the negative growth the Nation’s GDP recorded in the Q1 of 2016. If proper investigation should be carried out the industrial sector would have lost close to N200 billion in the last one year as some businesses that could not continue with operation laid-off their workers which contributed to increase in unemployment rate to about 46 per cent which is not healthy for the country’s economic growth.”

LCCI blames FG

On his part, the Director- General, LCCI, Muda Yusuf, blamed the government’s economic woes for the rise in job cuts in the country, especially in the industrial sector.

Yusuf stated that uncertainty around economic policies, adverse external environment, security challenges in some parts of the country affecting production and distribution of agricultural produce, low electricity supply, fuel shortages, and the foreign exchange crisis, persisted in the first quarter of 2016.

He said the apex bank had taken strict economic measures to manage the country’s economy following the sharp drop in the prices of crude oil in the international market, but the country’s economic outlook remains bleak.

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Yusuf said stabilising the country’s foreign exchange market remains a key driver to move the country out of its perennial problems and CBN must rise up to the occasion as millions of Nigerians, Nigerian business community, foreign investors and international financial agencies are watching the with keen interest the country’s situation.

He said: “Foreign exchange market is still characterised by considerable uncertainty which drives speculative activities and impacts negatively on investors’ confidence.

The apex bank needs to urgently articulate a comprehensive framework for the autonomous market (which is now the major forex market). The scope of the market needs to be clearly defined.”

LCCI’s Director, Research and Advocacy, Dr. Vincent Nwani, blamed the CBN foreign exchange policy, especially, the ban placed on 41 items prohibition for the continued job cuts in the system.

Nwani said: “We feel very strongly that the CBN has the right to regulate and make sure that the naira is stable. But the challenge we have is that those of us in business love taking risks.

What we hate is uncertainty and we don’t deal with uncertainty in business. “In risk, you can calculate your profit and loss and take a position but in uncertainty you cannot do anything. Given that situation you cannot land, you cannot take-off, it means you cannot take any decision and that is what CBN policy has done overtime.

“The major problem we have now in the manufacturing sector is having access to foreign exchange. Even the goods or raw materials that are not listed on the 41 items our members cannot even source for dollar to fund the legitimate ones.

Before I left the office, about three letters came from LC through Diamond Bank I won’t mention the name of the branch approved by CBN, but after two or three days, Diamond Bank has to reverse the transaction saying, ‘sorry CBN said that there was no dollar’.

“This is for items that are not part of the 41 prohibited items. This company has listed to sack about 62 per cent of its staff effect from April this year. I can tell you that about 80,000 jobs are at risk in manufacturing sector and this may persist.”

4,000 oil workers sacked

Over 4, 000 Nigerians in the oil and gas industry lost their jobs in the last 18 months. A survey by Saturday Telegraph showed that while about 75 per cent of these oil workers were former staff in the operations of the International Oil Companies, the indigenous firms sacked about 1000 staff, which is the remaining 25 per cent.

In total, this number of sacked workers is a 16.4 per cent of the total number of staff on sack list by just two oil giants, Shell and Chevron, in their global operations.

Oil giant, Shell, had on May 23, declared plans to sack additional 5,000 staff, raising the number of staff to be laid-off in Nigeria and other countries of operations by the company and another oil major, Chevron, to 23, 500. These have heightened panic and generated confusion among some staff of the companies who are now considering industrial action.

Shell’s vice president for the United Kingdom (UK) and Ireland, Paul Goodfellow, who announced the plan to lay off 5,000 more staff before the end of 2016, said that 2,200 more jobs would be cut in the first phase of the new disengagement, as the world’s second biggest oil companies continue to adjust to the slump in oil prices.

This takes the tally of sacking by Shell to 15,000 between 2015 and 2016, as the oil firm continues to adjust to the slump in prices. Chevron, on its own, will round up the number of sacked workers to 8,500 before December while other companies such as ExxonMobil, Total have also sacked about 4,000 workers secretly in their global operations.

Mobil Producing Nigeria (MPN), Unlimited, operator of the Nigerian National Petroleum Corporation MPN/NNPC Joint Venture in Akwa Ibom laidoff about 150 contract staff and 40 drivers from its employ, while Total fired 100 in its Nigerian operations.

“These are tough times for our industry,” Goodfellow said in a statement.“We have to take further difficult decisions to ensure Shell remains competitive through the current, prolonged downturn.” At least 5,000 jobs will be cut this year, Shell said in an emailed statement. These reductions are in response to oil prices staying “lower for longer,” and as a result of the acquisition of BG Group Plc. earlier this year, said Goodfellow. Shell and BG employed about 94,600 people at the end of 2015.

The industry is cutting deeper despite oil’s 80 per cent recovery since last January. Prices remain about half the level of two years ago and companies’ earnings have been pummelled, debt has increased and credit ratings have been cut. To help protect their balance sheets, companies have deferred or cancelled billions of dollars of projects, renegotiated contracts with suppliers and eliminated thousands of jobs.

Shell had, before Goodfellow’s announcement, revealed its plans to sack 10,000 staff and slash direct contractor positions in the company’s unedited full year 2015 results earlier obtained by New Telegraph. The oil giant also got the approval by shareholders at a January 27 meeting in The Hague, Netherlands, of a cost cutting strategy by $3 billion in 2016.

Chevron would, in the process that began in 2015, complete the sacking of 8,500 staff in its services globally by the end of 2016. The United States oil company revealed that it would lay off 7,000 staff before 2016 ends in addition to the 1,500 it announced early in 2015, according to a 2015 last quarter report published by the New York Times.

Stating that it expected its costs to fall again in 2016, by a further $3 billion, Shell, which slashed $4 billion investments in 2015, said that its drive to improve competitive performance was delivering at the bottom line.

“That is on top of 10,000 already cut! Meanwhile CEO gets £1.4 million salary, £3.5 million bonus and £441,000 pension! #Strike needed,” an employee of Shell/ BG, Richard Godon, said in a tweet.

Another staff, Anthony S. John, added: “A plague spreading across businesses hitting the lower paid: cut positions, lower wages and bonuses, increase world load and hours.” Shell’s adjusted net income fell 58 per cent to $1.6 billion in the first quarter following the collapse in prices.

NUBIFIE decries wave of retrenchment

When contacted, the President of the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), Mr. Danjuma Musa, told Saturday Telegraph that the wave of retrenchment in the banking sector was giving the union real cause for concern.

He disclosed that NUBIFIE had met with officials of the Federal Ministry of Labour and Employment and was seeking a general meeting of all stakeholders in the financial sector to discuss the issue.

He said: “The job losses are really giving us cause for concern and we are doing something about it. Just yesterday, (Thursday) we were at the ministry to submit some documents.

We are requesting for a general meeting in the financial sector to discuss it.” According to him, while NUBIFIE acknowledged the fact that the economy is in a bad shape, there was need for modalities to be put in place to ensure that its members are quickly paid their benefits and entitlements. Efforts to get the reaction of the President of the Association of Senior Staff of Banks, Insurance and Financial Institutions Employees (ASSBIFIE), Mr. Sunday Salako, were not successful.

However, in a chat with Saturday Telegraph in January, the ASSBIFIE president had advised banks against sacking workers as part of measures to cope with the tough economy.

He had said then that: “We don’t want to play up the issue yet so as not to give any bank management the idea that staff retrenchment is a way out of their current difficulties.

They should not think of cutting jobs now because the staff contributed to banks’ growth when things were good. Besides, the tough times are only temporary. It is not something that would last.”

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