Oil price crash: Mass sacking looms in private, public sectors

 Oil price crash: Mass sacking looms in private, public sectors

As crude oil price continues its descent, and the economy falters, strong indications have emerged that workers in both private and public sectors are faced with mass retrenchment.

Stakeholders in both sectors, who spoke to SUNDAY PUNCH on Friday, painted a gloomy picture of the economy and the prospects of workers in the new year. They based their projections on recent happenings in the Nigerian and global economies.

Oil prices have been in steep decline since June 2014 as a result of slow demand growth and the United States’ oil boom, which has increased supply. The global oil benchmark, Brent, against which Nigerian oil is priced, on Tuesday, tumbled below $58 per barrel, hitting its lowest levels since May 2009.

PUNCH had exclusively reported on Tuesday that at least 70,000 civil servants in 30 ministries, departments and agencies of the Federal Government had yet to receive up to three months salaries.

While the Federal Government is believed to owe workers of the Ministry of Labour and Productivity salary arrears ranging from one to three months, 11 state governments could not pay December salary to workers. Three of the states – Benue, Plateau and Osun – have been reported to owe workers three months’ salary arrears.

In separate interviews with SUNDAY PUNCH, stakeholders expressed fears that companies and public institutions were planning to address the downturn in the economy with cost-cutting measures and downsizing.

On Friday, the Petroleum and Natural Gas Senior Staff Association of Nigeria gave indications to this effect when it raised the alarm that companies, especially petroleum companies, had plans to retrench staff.

According to the association, non-core employees of oil firms in the country may be asked to quit their jobs, if the fall in oil prices persists till April or May.

The Media Officer, PENGASSAN, Mr. Babatunde Oke, told SUNDAY PUNCH that employers had grown weary of the slump.

“The effect might be severe if it continues till May because some employers are already complaining that they may need to shed weight, if it persists till then. Of course, it will affect contract staff, if the slump persists,” Oke added.

Similarly, the Deputy President (South), National Association of Small Medium Enterprises, Mr. Orimadegun Agboade, stated that retrenchment had already begun in some sectors.

He said, “We closed for the year earlier than usual. Ordinarily, we take a break close to Christmas. But with the way things are right now, many companies closed two weeks before the normal closing date.

“Based on recent events, federal, state and local governments still owe salaries of up to three months. It is an indication that things are not right at all. In fact, many of us are afraid of what will happen.”

Agboade stated that the current foreign exchange rate is the harbinger of the gale of retrenchments that would sweep workers out of the manufacturing sector.

“For instance, I am a manufacturer of medicine; I received a notice from my bank two weeks ago that the Federal Government had placed an embargo on all letters of credit. The implication of this is that immediately we run out of the raw materials we have now, the hope of getting more will be slim, or it won’t come on time.

“In the pharmaceutical industry, where I belong, close to 98 per cent of our raw materials are imported. A lot of companies are already cutting salaries,” Agboade added.

The NASME Deputy President further said the scale of retrenchment could be as high as 25 per cent. He warned that if things were not sorted out quickly, it could reach 50 per cent.

Similarly, the Chairman, National Association of Small Scale Industrialists, Lagos State chapter, Mr. Segun Kuti-George, said the fact that the foreign exchange rate was not in equilibrium with the naira was a sign that mass retrenchment might be closer than expected.

“We have more naira chasing fewer dollars now. Also, the monetary policy is moving from 12 per cent to 13 per cent higher interest rate. We now have a higher rate of exchange, which inherently means inflation.

“It means that prices of imported and locally-made goods will go up, which would mean lower demand and, therefore, lesser profits for companies. This may then lead to layoffs,” he explained.

The Director-General, Lagos Chamber of Commerce and Industry, Muda Yusuf, predicted that the year would be challenging for businesses, as the cost of production would increase, while purchasing power would decline.

He explained that businesses would have to look at all possible options for survival, including cost reduction in other areas. The process of reducing costs, according to him, may result in cutting the number of employees.

At the presentation of the 2015 budget to the National Assembly, the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, had announced more austerity measures. She had explained that the measures were aimed at cushioning the economic impact of the drop in oil prices.

She added that the measures would be implemented from the beginning of the second quarter of 2015 to boost the ratio of non-oil revenues to oil revenues. The Federal Government’s 2015 budget estimates of about N4.3trillion was planned with a $65 oil price benchmark.

Workers vow to resist retrenchment

Meanwhile, workers have threatened a showdown in the event of mass sacking. Officials of the organised labour who spoke to SUNDAY PUNCH warned the federal and states governments against laying off workers.

The Association of Senior Civil Servants of Nigeria told SUNDAY PUNCH that it had mobilised members nationwide to resist any planned retrenchment of workers by the Federal Government.

The Secretary-General of ASCSN, Mr. Alade Lawal, in an interview with one of our correspondents on Friday in Abuja, said workers should not be made to bear the burden of the country’s distressed economy.

Lawal said, “As for the issue of resorting to retrenchment as a result of the drop in the price of crude oil in the international market, labour will surely resist it.

“We have already sensitised and mobilised our members on the matter. We workers did not create the problem and we will surely not allow the ruling elite to use us as tools to be dumped because of the temporary setback in the pricing of oil.

“When the going was good, we were left unattended to. Now that the chicken has come home to roost, they, and not innocent workers, should bear the brunt.

“We are fully prepared and on red alert, waiting for signals from the two labour centres in the event of any attempt to retrench workers as part of recently introduced austerity measures.”

Also speaking, the President-General of Trade Union Congress of Nigeria, who is also the President of ASCSN, Mr. Bobboi Kaigama, said the TUC would ensure that any attempt to retrench worker was resisted.

He said, “TUC would resist any attempt to retrench workers; all the definitions of resistance put together would be done, including protests and strikes.

“Let’s fight corruption, let’s fight oil theft, let’s improve our Internally Generated Revenue, let’s be prudent in our expenditure, develop our infrastructure and tourism potential; those are the things that would give us money, not sacking workers.

“We shall resist any attempt to retrench workers. They can’t try retrenchment because we shall resist it out rightly.”

On his part, the General Secretary, NLC, Dr. Peter Ozo-Eson, warned that the NLC would meet to take an “appropriate decision”, should any state government decide to sack workers.

He said, “Our position, as already stated, is that there are adjustments that government can make by cutting the cost of governance.

“We have already warned that they shouldn’t allow workers to be victims of the downturn in the oil price.

“We believe that the down-turn should not be used to sack workers, they should cut excess waste and the cost of governance. We have a situation where a governor has a retinue of excess aides and entourages; all these can be cut. These are areas where we feel adjustments should be made.”

Across Nigeria, state chapters of the organised labour unions also warned that retrenchment would be resisted.

In separate interviews with our correspondent in Ilorin, the Chairman, Nigerian Labour Congress, Kwara State chapter, Mr. Farouk Akanbi, and his Trade Union Congress counterpart, Mr. Olumoh Kolawole, stated that workers in the state would resist any attempt by the state government to downsize.

Akanbi said, “We do not believe that it will be a good thing for any government to retrench workers. We are going to resist any retrenchment of workers because we know that the cost of governance in Nigeria is where we have problem. It is not in terms of the payment of the workers’ salaries.

“We will ensure that workers will down tool, which is one of the weapons we have if negotiations fail.”

Speaking in the same vein, Kolawole said, “Part of governance is that government will look after the welfare of the workers. I do not see any reason for retrenchment. I believe that there are many ways we can assist government to jerk up revenues. The IGR can be increased. We know where the loopholes are and we can advise government appropriately.”

The Chairman, NLC in Edo State, Mr. Emmanuel Ademokun, said in the event of any retrenchment, “We will give a 24-hour strike notice. It (retrenchment) won’t happen.”

State governments allay fears

Against the backdrop of widespread fears of mass retrenchment and threats of showdown by workers, state governments have said they would look for ways to generate more income. In Bayelsa State, Governor Seriake Dickson, who complained recently that his administration could no longer sustain the N500m monthly wage bill of 200 political aides, said he would “downsize or rightsize” political appointments.

The state’s Commissioner for Information, Mr. Markson Fefegha, told SUNDAY PUNCH that the government’s finance team was working to arrive at a sustainable wage bill.

Fefegha said the government did not have any plan to retrench workers. Rather, he said, the government might “downsize the political class”, if the dwindling resources continued.

Similarly, the Abia State Government said it was not considering retrenchment of workers. It, however, admitted that the state was facing economic hardship.

The state has a workforce of about 21,000, in addition to its 11,000 primary and secondary school teachers, according to information from the state’s leadership of the NLC.

Abia, before the economic downturn, received a monthly allocation of between N3bn and N4bn, with a monthly wage bill of about N2.5 billion.

The state Commissioner for Information and Culture, Mr. Anthony Agbazuere, told one of our correspondents in Umuahia that though the state government was feeling the impact of the drop in oil price, the sacking of workers was out of contemplation.

He, however, said government was making efforts to plug all financial leakages and shore up its internally generated revenue.

The state Commissioner for Finance, Dr. Philip Ntoo, also said the drop in the federal allocation had adversely affected the state’s revenue, as 90 per cent of its income depended on federation allocation.

He said the state’s economy was still stable following Governor Theodore Orji’s directive that all frivolous expenses be suspended immediately as part of measures to cushion the effect of the drop in allocation.

Report from Punch