Nigerian banks experienced the largest drop in contract staff employment since 2015. This is according to the latest banking sector report of the National Bureau of Statistics (NBS).
The report reveals that in the 3 months ending September 2019, the number of contract staff across Nigerian banks reduced by 3,083, dropping from 46,263 in June 2019 to 43,180 by the end of September 2019.
Bank staff: As of the end of September 2019, staff across Nigerian banks dropped to 101,435 from 104,364 in June.
- The breakdown of the data shows that executive staff rose to 186 (less than 1%), junior staff rose to 40,396 (40%) while senior staff dropped to 17,671 (17%) and contract staff also dropped to 43,180 (43%).
- Senior and contract staff declined, while the executive and junior staff rose slightly between Q2 and Q3 2019.
- Junior and contract staff now make up a combined 83% of banking sector employees.
Contract staff down by 6.6% in 3 months
Despite the drop in contract staff hiring, the data also indicates Nigerian banks continue to rely heavily on them for their operations, preferring full staff for core relationship management, treasury, and middle to senior management operations.
- From a mere 20,576 in 2016, contract staff numbers have more than doubled, both as a percentage of total staff and in absolute terms.
- However, contract staff witnessed a big decline for the first time a surprise drop considering its recent spike.
- The 3,083 is the largest decline in about 4 years.
- Despite the drop, contract staff remains the largest staff category, accounting for 43% of total banking employees.
Why the big drop in contract staff? : Financial expert and CEO, AfriSwiss Capital Assets Management Limited, Kalu Aja, stated the following:
If you divide 3,100 by 24 banks, it is about 129 per bank. 130 staff lost to say Zenith or UBA is less than 1 per branch. In perspective, not a lot but the key is to watch the trend. The real red line is if you see banks letting middle and top management go.
Contract staff by definition are “short term” to fill gaps in staffing. The drop in contract staff may not be as a result of technology, as technology does not reduce some roles for contract staff.
However, the Chief Economist for Businessday, Nonso Obikili, is of the opinion that technology may have triggered the fall. He gave further analysis.
“I think it is a technology play as banks migrate to more technology-driven platforms that require less casual labour. It may also be good to look at the full-time tech hires as that may be offsetting the reduction in casual contract staff.
Meanwhile, this is not a red flag to the economy as the financial sector employment is a very small share of total employment.”
Also weighing in, financial expert and founder of Nairametrics, Ugodre Obi-Chukwu, explained it in detail.
“I think it’s too early to determine if it is technology or not that triggered the fall. However, banks have continued to review their operations in line with their cost to income ratio targets. This could require the closure of branches or alignment of operations. The big merger between Diamond Bank and Access Bank could also have been a major factor.
“I don’t think it’s a red flag for the economy. Even though the banking sector is one of the largest employers of labour in the country, their employment numbers are often cyclical as I expect them to hire again by early 2020.”
Job creation: Despite the improved technology adopted by banks for their core operations, banks are expected to continue their reliance on contract staff strength for their banking operations.
- Whilst banks have been criticized in some quarters for their use of contract staff, it remains a major source of employment for over 500,000 graduates churned out by Nigerian universities annually.
- Contract staffs are often paid between N80,000 and N200,000 monthly depending on their function within the bank. Payment also ranges across commercial banks.
- Interestingly, last Wednesday, a lawmaker in the House of Representatives Amobi Akintola moved a motion at the plenary session calling on banks to convert their contract staff to permanent staff.
Adopting the motion, the lawmakers called on commercial banks “to convert their casual staff who are handling core operations to permanent staff without further delay.”
In all, whether the banks would consider the request of the lawmakers, depends on the objectives of the financial institutions.