The gale of sack that has swept through the banking industry has swollen the army of out-of-job Nigerians. Altogether, no fewer than 5,000 bank workers have been shown the door. The trend runs contrary to the long-held belief that banking jobs are among the safest in the country. The sacking of bank workers which came on the heels of the National Bureau of Statistics’ (NBS) report that 528,148 persons lost their jobs in the first quarter of the year, apart from the 15.2million youths who remain unemployed, underscores the precariousness of the economy. The banking industry serves as a barometer for measuring the wellness of an economy. If it shows signs of distress, it goes without saying that the economy is in a dire strait.
The development in the banking industry is a consequence of a number of factors. Before taking the route of disengaging their employees, many of the banks had given profit warnings, alerting their shareholders to the inevitability of their turning in poor results at the end of the 2015 financial year as well as the first quarter of the current year. The banks premised their submission on the state of the economy, among other factors. They claimed that non-performing loans, economic headwinds as well as a cocktail of hostile fiscal and monetary policies had led them down the poor profitability road. It is, therefore, not surprising that the banks opted to offload some of their workers to rescue the institutions from going under.
Although the Minister of Labour and Productivity, Dr Chris Ngige, last Friday, on behalf of the Federal Government, directed the banks and other financial service providers to discontinue the disengagement of their staff pending the outcome of the conciliatory meetings in the industry, we view this as a mere political statement that would not have the desired effect. The banks that have already made up their minds to let go of some staff will still go ahead with the plan and there is hardly anything the government can do about it. We are of the opinion that rather than giving directives that would be ignored, the Federal Government should address the situation that resulted in lower profitability for the lenders.
Since his assumption of office, President Muhammadu Buhari has left no one in doubt about his determination to protect the poor and the disadvantaged in the country. This has informed most of his economic decisions. The vacillation that caused the delay in deregulating the downstream of the petroleum sector for so long until the government was pushed to the wall was as a result of the president’s avowed desire to protect the poor. He had said during an interview that the poor would be badly affected by any increase in the price of petrol. Similarly, the tardiness that has been witnessed with respect to the liberalization of the foreign exchange market is a consequence of the president’s determination to shield the poor from the ill wind of inflation that the policy will blow their way. The combination of the two resulted in the contraction of the economy, which has put the country at the brink of a recession because many companies have had to scale down their operations or close down completely sequel to their inability to source forex to procure raw materials needed for their manufacturing activities. The contraction of the economy has had an adverse effect on the banking industry because banks do well when the economy thrives.
While we wholly support the president’s desire to protect the poor from the hostile consequences of some economic decisions, we are constrained to submit that having a contracted economy in a bid to protect the poor will be counterproductive for everyone. It amounts to holding the economy to ransom and is not in tandem with modern economic management. The cash transfer programmes already in the 2016 budget is a better way of safeguarding the interest of the poor. Neither the interest of the poor nor that of the rest would be served if the economy goes into recession.
What the government needs to do now is to have another look at its policies and come up with those which will not only encourage foreign investors, who fled the country as a result of the plethora of unfavourable policies,
to return with their investments but will also enable local manufacturing companies that have either shut down completely or slowed down their operations to return full stream. It is when the economy is buoyant and vibrant that employers will not only keep those in their employ but will also be willing to take on new ones. Retrenchment does not cease in response to emotional government directives, it stops when there are favourable government policies. The way out of job losses in the banking industry as well as other sectors of the economy is to institute policies that will stimulate productivity and growth.