Covid-19 and the increasing job losses
EVEN before the Covid-19 pandemic, Nigeria’s unemployment statistics was quite scary. Unemployment has been a potent threat to the country’s existence for years. Over the years, Nigerians have been massively impoverished as politicians toyed with its future and as population growth outpaced GDP growth rate. Now, with the economy substantially in shut-down mode over the pandemic, the situation has become scarier. The Excess Crude Account, Nigeria’s fall back option, has dwindled to an all-time low at just $72 million. Naturally, remittances from the diaspora which typically account for 6 per cent of the country’s GDP took a plunge in February, recording a 50 per cent drop. Businesses are daily shutting down and thousands of workers are being laid off. From the banking sector to the aviation sector and the media industry, it has been one tale of woe after another, especially in the last three months. Many banks cut jobs or cut down salaries even as losses to bad loans reportedly shot up by 99 per cent in February. Fitch Ratings downgraded the three highest rated banks in the country to Long-Term Issuer Default Rating (IDR) ‘B’ and Viability Rating (VR) ‘b’. That is not surprising because even prior to the pandemic, its outlook for the Nigerian banking sector was negative.
The situation is the same in other sectors. For instance, in the aviation sector, over 10,000 staff are said to have been laid off since business nosedived in March. The operating airlines have reportedly reduced staff strength by 80 per cent, with massive pay cuts for the 20 per cent workforce retained. According to reports, local and international flight restriction has cost the local travel sector massive job and financial losses in excess of N180 billion. And going by the International Air Transport Association’s (IATA) estimates, the Covid-19 crisis put 124,000 Nigerian jobs at risk, and some N324 billion of its GDP in jeopardy.
Across the country, workers ‘lucky’ enough to be retained even in previously low-paying jobs are adjusting to the realities of massive pay cuts. Currently, nearly one in every three Nigerians of working age is unemployed, and unemployment is predicted to reach 33 percent by the end of the year. As noted by an entrepreneurship and small business expert, Dr. Timi Olubiyi, the country’s unemployment rate will continue to increase unless government supports businesses with remedial fiscal incentives to mitigate the impact of the viral disease on their operations. Olubiyi, a member of the Chartered Institute for Securities and Investment (CISI), noted that over 60 per cent of the country’s total population are youths, many of them vulnerable and out of gainful employment.
Sadly, in spite of official pronouncements, there is nothing at the moment which suggests that governments across the country have viable strategies to tame the situation. And worse still, with a steadily increasing number of cases and with governors in some parts of the country actively undermining efforts to rein in the Covid-19 pandemic, harder times looms large on the horizon. In our view, the increasing job losses are concerning because of the grave implications for the economy and the functioning of the society. This is because to the extent that people are not gainfully engaged, to that extent is the society vulnerable in terms of security and other threats. Regrettably, there does not seem to be appropriate apprehension of the gravity of the situation at all levels of government in the country. As we have noted time and again, those in government are still carrying on as if everything is fine, without realising that everybody is in danger when the majority do not have gainful employment.
The government should approach the question of the increasing job losses as an emergency and put in place radical and innovative new structures to get the economy back to productivity. That way, new opportunities of employment would spring up to address the job losses. But that cannot happen any time soon with lax enforcement of Covid-19 regulations.
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