With banks cutting down their respective operating cost, they have now resort to employing contract staff at the expense of permanent staff. This development is, however, a time-bomb that could threaten the entire banking system, if not addressed now. BUKOLA IDOWU writes.
Across all sectors of Nigerian economy, the word ‘casualisation’ is no longer alien; it is now the king of the labour market.
The fact that over 40 million Nigerians are unemployed with about four million people losing their jobs yearly has made casualisation of workers come to stay, especially, in the formal sector of the economy.
The practice of engaging casual workers popularly known as ‘contract staff’ in Nigeria for permanent positions have been referred to as casualisation and this practice abounds mainly in the manufacturing, banking and oil and gas industries. It remains a practical option as well as a socio-economic necessity to cut costs and remain competitive in an environment of increasing competition, cost minimisation and flexibility.
To this end, the Nigerian banking industry in recent times have seen a rising trend in cases of insider related fraud as the volume of fraud in the sector continue to rise. This some have linked to the rising number of contract staff in the banking sector.
With the economy witnessing a downturn in economic activities, banks have had to look at ways to cut back on their spending as their profits dropped. This had seen them take on more contract workers such that they will spend less on salaries, among other severance package.
Why Banks Employ Contract Staff
Basically, a contract staff is one that works for an entity with an agreement to perform a specific task or job but is not on the staff roll of the company. In a normal setting, contractors earn more money than employees do.
That is because contractors have the leverage to charge more and can take home a lot more of their pay than employees are able to. However, in most cases, contract employees work through a contract of employment with an umbrella company.
For a contract staff working in a bank, the bank does not pay such employee directly.
The drive to cut down costs had led to the rising spate of employing the services of contract staff particularly since the ending of 2017, when the country was beginning to recover from the recession it entered into in 2016.
The economic recession hit most banks on several fronts, ranging from a record high bad loan (non-performing loans) of N1.02 trillion to a decline in income from importing financing. All these tied together led to the decline of banks’ income to 54.3 percent in the first half of 2016 from 63.8 percent in December 2015, according to the Central Bank of Nigeria (CBN). In view of the dwindling revenue and the impact of loan loss on their institutions, banks resorted to operation cost cutting measures, one of which was staff retrenchment.
wwThe first two quarters of 2017, NBS reports on banks indicate that a total number of 3,089 banks’ staff lost their jobs. Between Q1 and Q2, 13 top bank executives lost their jobs; 657 senior level staff and 2419 junior level staff, who suffered the most jobs casualty. At this time, job loss cut across all the cadre of employees in the banking sector, except contract staff.
Banking sector data released by the National Bureau of Statistics (NBS) showed that the percentage of contract staff in banks have risen year on year between 2017 and 2018 by 39.8 per cent as against a 15.7 per cent increase recorded for the entire staff in the sector.
The data showed that the percentage of contract staff had soared in from 35.7 per cent in the first quarter of 2018 to 43.2 per cent in the second quarter. As the number of staff in the sector rose, the number of contract worker grew alongside.
By the second quarter of 2018, the number of contract staff in banking halls had increased by 101.2 per cent, as NBS data showed that the number of contract staff in banking halls rose to 43,955 compared to 21,837 contract staff in the employ of banks in the country as at June 2017.
Latest data, dated December 2018, from the NBS showed that contract staff in banking halls is presently 43.2 per cent of total banking staff figure with 45,238 of the 104,669 bank staff being contract workers.
Figures showed that the number of contract bank workers increased from 32,359 at the end of December 2017 and 44,484 as at the end of the third quarter of 2018, to 45,238 by December 2018 reflecting a 39.8 and 1.69 per cents increase year-on-year and quarter-on-quarter respectively.
Comparing this with a 0.55 reduction in the number of junior staff in between December 2017 (41,338) and December 2018 (41,111), there was a 9.36 per cent increase in the number of senior staff from 16,568 in 2017 to 18,119 in 2018 and 6.9 per cent rise in the number of executive staff from 197 in 2017 to 201 in 2018.
This reflects that the contract staff are taking up the jobs of junior workers who work mainly as marketers, tellers, amongst others, in the banking hall.
LEADERSHIP findings reveal that employing contract staff is common mainly amongst the top tier banks some of who may have just two full staff in a branch. Some of the contract staff who spoke with LEADERSHIP lamented the outrageous targets given to them to sustain their contract.
Contract Staff Lament
Mr. Odu Irewamiri said contract staff in banks are really poorly treated. “I even have a friend who works for a new generation bank who told me that he is really finding it tough as a contract staff but has no choice due to the lack of jobs in Nigeria. He complains of the very little salary he collects which is about #70,000 and works from morning till around 9pm,” he stressed.
Funke Alabi has been working in a bank as a contract employee for the past four years and she is now getting apprehensive about what the future holds for her. She does not know if her contract with the bank will be renewed or not and even if the contract is renewed, her salary will not be better than what it is now in any case.
Alabi has struggled endlessly to ensure that her employer converts her employment to a permanent one but her aspiration seems to be a mirage. To make matters worse, the bank often threatens its entire contract staff with termination of appointment at any given opportunity.
Alabi and her colleagues are quite eager to secure good jobs with better conditions elsewhere but since such jobs are not within their reach, they are compelled to make do with their current occupation, although the working conditions are unpalatable.
This is a semblance of the story of most contract workers across sectors of the nation’s economy. They virtually all have palatable stories to tell, but who are them to complain openly when they are yet to secure a new job.
Warning Against Employment Of Contract Staff
Moreover, customers who spoke with LEADERSHIP expressed fears that the rising cases of diverse fraud that are perpetrated in the industry could be as a result of the contract staff that are being employed. Many noted that the meager salary that are being paid to the contract staff is not enough to keep their eyes away from customers’ funds.
Recently, a contract staff in one of the new generation banks in Lagos had attempted to steal a boxful of dollar notes after the bank had closed for the day. To avert these kinds of scenario, CBN had warned commercial banks to desist from giving sensitive banking roles to contract staff, as they may not have a stake in the banks.
Former CBN Director, Banking and Payments System Department, ‘Dipo Fatokun noted that the apex bank has severally, encouraged banks to ensure that their staff are those with something at stake.
“A temporary staff may not have a stake in the bank so to say. So, it is encouraged that if they have staff that are not permanent, they should not give them responsibilities or roles that will expose them to critical functions of a bank,” he said.
To him, “If you are giving somebody an authority to approve transactions of high magnitude, and he does not have a stake in your bank, then you are already exposing yourself. So, this been going on and I believe many banks understand the need to rely on their key staff for major duties. That is one of the reasons, the fraud attempts have been rising, but the value lost is declining.”
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