High unemployment signposts deeper economic woes

FELIX OLOYEDE

A rising unemployment rate estimated at 19 per cent up from 13.3 per cent at the end of the second quarter of the year is raising concerns amongst policy makers and analysts alike that the federal government’s efforts at reviving the national economy is hitting a brick wall.

A number of economists have argued that if the government does not take urgent step to address the staggering rise in the number of people out of work, social security problems would become an increasingly gruesome challenge it would have to address in months ahead. Last week, Dangote Cement, a company under the Dangote Group, the largest employer of labour in the private sector, sacked 48 members of staff due to the ongoing economic meltdown.

Business Hallmark gathered that 36 expatriates and 12 Nigerians were shown the exit door, which as the company was having challenge paying their salaries; a reflection of the impact of the sliding naira exchange rate to the American dollar.

The Chairman of Dangote Group, Alhaji Aliko Dangote, who is Africa’s richest man, had at different times assured Nigerians that his companies would not lay off workers, but the worsening economic situation has compelled the cement baron to review his earlier promise.

Mr Emma Nwosu, former Managing Director, ACB International told Business Hallmark that the failure of the government to reflate the economy was responsible for the current high unemployment rate in the country.

“If the economy is flourishing, there would be job opportunities. People would have money to invest and create more employment. The present rate of unemployment is dangerous” he opined.

Equally last week, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) gave the Federal Government a three week ultimatum to halt massive job loss in the petroleum industry due to the mass retrenchment by international companies or its members would down tools.

According to the president of NUPENG, Mr.Igwe Achese, about 3,000 workers have lost their jobs in the petroleum industry, because of international oil companies who have fled the country as a result of the downturn.

“It is painful to say as I address you, Chevron has wound up in the East and their offices closed. A total of 1,500 workers were sacked without their entitlements paid and nobody is saying anything. As we speak, many companies have left and many others are winding up.’’

“ExxonMobil, Pan Ocean, Sapiem Ground Petroleum, and Hercules Offshore Nigeria Limited are shuffling through the exit. About 3,000 workers have already been sacked by the various oil companies.’’

“The Federal Government should act fast to avert further loss of jobs. There is too much redundancy in the oil industry, which needs urgent action from government to salvage the situation,” Achese stated during NUPENG’s Central Working Committee of the union meeting in Effurun, Delta State.

Dr Frank Jacob, President, Manufacturers Association of Nigeria (MAN), recently disclosed that over 22 members of the association have stopped operations and over 50,000 workers have lost their jobs in the process.

In the banking industry alone, not less than 5,000 workers have lost their jobs this year as banks cut cost to remain afloat in the face of tumbling gross earnings, occasioned by slow domestic economic activity.

In the last ten months, over 200 workers had their employments terminated in Diamond Bank; First Bank of Nigeria eased out about 1,000 staff, while Ecobank laid  off 1,040 of its workers.

Early in the year, Zenith Bank retrenched 1,200 workers; Skye Bank, 175; and Fidelity Bank, 500 workers.

Banks in the country have battled rising impairment charges resulting from soaring Non-Performing Loans (NPLs) as the dip in the economy has made it difficult for bank customers to fulfil loan obligations.

Worried by the spate of retrenchment of workers in the industry, the Central Bank of Nigeria (CBN) had to step in, urging banks in the country to stop impending layoffss.

The National Bureau of Statistics (NBS) data on unemployment shows that as at second quarter of the year, the country’s labour force rose by 1.78 per cent to 79.9 million from 78.5 million in Q1 2016, 351,350 people in full-time employment lost their jobs during the period.

“This means 1.39 million persons from the economically active population entered the labour force that is individuals that were able, willing and actively looking for work. This magnitude of this increase between Q1 and Q2 2016 is smaller when compared to Q4 2015 and Q1 2016, which was an increase of 1.59m in the Labour force population,” NBS unemployment/underemployment report Q2 2016 stated.

However, according to the report, the number of Nigerians within the economically active or working age population who are doing no job has been on a steady decline from Q2 2015 29.6 million to 26.8 million in Q2 2016.

The report indicates that while the number of Nigerians who are doing no job was on the decline, those who are unemployed (those working but doing menial jobs not commensurate with their qualifications or those not engaged in fulltime work and merely working for few hours) increased by 392,390 in Q2 2016, a 2.61 per cent rise from Q1 2016.

This brings the country’s unemployment rate to 19.1 per cent, representing 15.4 million of Nigeria’s 183 million total population.

Meanwhile, in the third quarter of the year, more organisations have laid off their workers as many of them have been having more difficulties accessing foreign exchange to import their raw materials.

More so, incessant devaluation of the naira has also shot up their importation bills, which has made some manufacturers to wind up business.

The report explained, “During the reference period, the number of unemployed in the labour force, increased by 1,158,700 persons, resulting in an increase in the national unemployment rate to 13.3% in Q2 2016 from 12.1 in Q1 2016, 10.4% in Q4 2015 from 9.9% in Q3 2015 and from 8.2% in Q2 2015. In view of this, there were a total of 26.06 million persons in the Nigerian labour force in Q2 2016, that were either unemployed or underemployed compared to to 24.5 million in Q1 2016 and 22.6 million in Q4 2015.”

NBS report also showed that almost 19,000 people working in the public sector were thrown out of job between October 2015 and March 2016.

The general belief amongst economists is that if the federal government does not propel higher levels of public and private sector spending in the final quarter of this year and first quarter of next year, 2017, the lingering economic recession could tip into a full blown depression.