Hidden workforce: How Nigerian banks exploit contract workers

On this piece, HENRY FALAIYE highlights the exploitative circumstances confronted by contract workers in Nigerian banks who endure low wages, job insecurity, and exclusion from important advantages akin to medical health insurance and pensions.

Behind Nigeria’s thriving banking sector lies a harsh actuality: contract workers, the business’s spine, are overworked and underpaid and face systemic inequalities that tarnish the sector’s success.

In lots of Nigerian banks, contract workers make up a good portion of the workforce, but their contributions typically go unnoticed and underappreciated.

Contract staffing is now a cornerstone of operations for a lot of Nigerian banks.

Based on a 2023 report by the Chartered Institute of Bankers of Nigeria, roughly 65 per cent of the workforce within the banking sector includes contract workers. These employees deal with vital customer-facing roles, from cashiers and tellers to gross sales brokers, but stay outdoors the purview of honest labour practices loved by everlasting workers.

The rise of outsourcing in Nigerian banks may be traced to cost-cutting methods. By using employees by means of third-party businesses, banks keep away from paying full salaries, pensions, and advantages.

Additionally, a 2022 examine by the Nigeria Employers’ Consultative Affiliation revealed that banks save as much as 40 per cent on labour prices by outsourcing roles historically held by everlasting workers.

Nonetheless, these people, employed by means of third-party businesses, are the spine of many monetary establishments.

In the meantime, they carry out vital duties, but they’re subjected to exploitative working circumstances, poor pay, and a scarcity of job safety. Whereas Nigerian banks proceed to report spectacular earnings, the plight of contract workers exposes a troubling paradox of company greed and employee exploitation.

Will probably be recalled that the banking sector in Nigeria underwent important reforms following the 2004 consolidation train led by the Central Bank of Nigeria.

In the meantime, the restructuring launched stricter capital necessities and enhanced regulatory oversight, pushing banks to undertake cost-cutting methods. One outstanding strategy was outsourcing labour to third-party businesses, enabling banks to sidestep the duties and advantages sometimes afforded to full-time workers, leaving contract workers with fewer protections and perks.

Presently, contract workers are estimated to represent over 60 per cent of the workforce in lots of Nigerian banks. Whereas this association presents employers flexibility, it imposes important hardships on the employees who occupy these positions.

Unequal pay for equal work

Probably the most evident injustices confronted by contract workers is the disparity in pay. Regardless of performing the identical duties as everlasting workers, contract workers typically earn a fraction of the wage.

Talking with The PidomNigeria, a banker, Mr. Tobi, who has labored as a contract workers member for the previous 4 years in one of many widespread banks in Lagos, regardless of being a college graduate, lamented the tough realities of his job.

Tobi stated, “Regardless of dealing with the identical duties as full-time workers—managing accounts, assembly demanding targets, and aiding clients—my month-to-month wage barely covers fundamental bills.

“I earn simply N80,000, whereas my colleagues doing the identical work take dwelling over N200,000,” he stated bitterly, his voice tinged with frustration.

Tobi decried trapped in a cycle of inequality, excluded from advantages like pensions or medical health insurance, but anticipated to ship the identical degree of efficiency.

“It’s disheartening to present your all and nonetheless really feel undervalued,” he admits, struggling to reconcile his aspirations with the tough therapy he endures each day.

This wage hole is much more disheartening contemplating the rising price of residing in Nigeria, pushed by inflation and skyrocketing costs of important items, transportation, and electrical energy tariffs as a consequence of inflation.

In the meantime, contract workers face strict efficiency targets with little help, risking termination with out discover or compensation in the event that they fall quick, leaving them financially insecure.

Office discrimination and marginalisation

Contract workers are often subjected to discriminatory therapy within the office. They’re excluded from coaching programmes, team-building workouts, and different alternatives that might improve their abilities and profession prospects. This marginalisation not solely limits their skilled progress but additionally reinforces the notion that they’re second-class workers.

In an interview with The PidomNigeria, the Deputy Normal Secretary of the Nigerian Union of Banks, Insurance coverage, and Finance Establishment Workers, Shola Aboderin, stated the union and different unions have been making efforts through the years to safe higher working circumstances and a profession path for contract workers.

He stated, “Regardless of preliminary success with the signing of a sectoral guideline by former Labour Minister Chris Ngige, the implementation of those agreements has confronted important challenges.

“The sectoral guideline, geared toward enhancing circumstances for outsourced employees in banks, insurance coverage, and monetary establishments, stipulated that each two to 3 years, the union may evaluation employees’ circumstances of service. It additionally required that disciplinary actions involving outsourced workers would wish union involvement.”

Nonetheless, Aboderin expressed frustration that these tips haven’t been successfully applied. “Up until now, we’re nonetheless battling with the implementation,” he stated.

Aboderin additional criticised the federal government’s lack of response to the union’s efforts. He revealed that NUBIFIE, together with the Affiliation of Senior Workers of Banks, Insurance coverage, and Monetary Establishments, had written to the current Minister of Labour, requesting a gathering to debate the enforcement of those tips. Regardless of the letter being despatched in Might, no response has been acquired.

“The minister of labour didn’t give me an opportunity to ask each the Affiliation of Senior Workers of Banks, Insurance coverage, and Monetary Establishments and NUBIFIE for a gathering,” Aboderin lamented.

He defined that outsourced employees now make up about 80 per cent of the workforce in Nigerian banks. Regardless of their important numbers and the truth that many are extremely certified, together with these with grasp’s levels, they’re paid far lower than their everlasting counterparts for performing the identical job.

“If you’re doing the identical job in the identical place, you might be imagined to earn the identical quantity, not minding whether or not you’re a contract workers member or core workers,” Aboderin emphasised, highlighting the wage disparity.

Along with wage inequalities, he talked about that outsourced employees have been typically denied fundamental advantages, together with medical health insurance, pensions, and housing allowances. Whereas some outsourced corporations have signed agreements with the Ministry of Labour to offer medical protection, Aboderin revealed that many employees nonetheless don’t obtain satisfactory healthcare.

“The vast majority of them will not be having fun with medical. Ask the vast majority of these units of employees. It’s only medicine they can provide them,” he defined.

Aboderin defined that contract workers may be dismissed at any time with out discover or severance pay, leaving them weak.

“If they’re requested to go, what they’ll go dwelling with, like redundancy, many banks is not going to even seek the advice of the union for negotiation,” he stated.

He added that this lack of job safety provides to the nervousness and stress confronted by these employees, affecting their general well-being.

Aboderin additionally famous the extreme monetary hardships confronted by outsourced workers. Many spend a good portion of their wage on transportation prices, leaving little for different necessities.

Excessive price of residing and low wages have led to dire residing circumstances for a lot of employees, with some even taking out loans at excessive rates of interest to outlive.

Aboderin careworn that the union is dedicated to preventing for the rights of outsourced employees.

He warned that if the federal government and monetary establishments don’t handle these points quickly, NUBIFIE could also be compelled to declare a nationwide strike.

“By January, the union will declare its stance in regards to the outsourced employees,” he acknowledged, emphasising that they won’t proceed to tolerate the exploitation of employees within the sector.

He added that the union’s struggle for equal pay and honest working circumstances continues, with a possible strike looming if their calls for will not be met.

The exploitation of contract workers in Nigeria exposes gaps in labour legal guidelines and weak enforcement. Most contracts are short-term and renewable, leaving employees weak to termination with out discover or severance pay. This insecurity, coupled with unattainable targets, creates fixed nervousness and worry of dismissal.

A 2021 survey by the Banking Sector Staff Union revealed that 70 per cent of contract workers in Nigerian banks reported working greater than 10 hours each day to fulfill strict targets, typically with out time beyond regulation pay.

The stress to fulfill gross sales quotas has additionally led to unethical practices, with some workers compelled to market questionable monetary merchandise to unsuspecting clients.

“We have been advised to promote loans and meet month-to-month targets or danger termination,” says Mr. Tunde, a former marketer with an outsourced company. “Typically, I needed to bend the reality to persuade shoppers, understanding it may backfire.”

The exploitation of contract workers has broader implications for the banking sector. Low morale amongst these employees typically leads to poor customer support, errors in transactions, and even incidents of fraud.

In 2022, the Central Bank of Nigeria flagged an increase in fraud circumstances linked to disgruntled contract workers, citing their lack of job safety and monetary stability as contributing components.

A 2022 report by SBM Intelligence highlighted that the common contract employee in Nigerian banks earns under the nationwide minimal wage when contemplating deductions made by outsourcing companies. Many contract workers don’t have any entry to housing allowances, transport stipends, or medical health insurance advantages that everlasting workers take with no consideration.

“I spent two years as a teller, incomes N60,000 month-to-month after deductions,” says Bukky, a former contract workers member at a high Nigerian financial institution.

“Regardless of dealing with hundreds of thousands on daily basis, I struggled to afford requirements. But, my everlasting colleagues earned thrice or extra my wage for doing the identical job.”

Psychological and bodily pressure

In the meantime, the stress and insecurity of contract work take a toll on employees’ psychological well being. Many report signs of burnout, despair, and power nervousness.

A 2023 examine by the Nigerian Institute of Social and Financial Analysis discovered that 68 per cent of contract financial institution employees skilled work-related stress, with many attributing it to unrealistic expectations and poor working circumstances.

Additionally, the Nationwide President of the Affiliation of Senior Workers of Banks, Insurance coverage, and Monetary Establishments, Olusoji Oluwole, stated, “There are tips stipulated that contract workers could possibly be built-in as everlasting workers after a interval, sometimes 2-3 years, supplied they accomplished tertiary schooling and handed the required qualifying exams.

“Many organisations have adopted this observe, although not all banks or establishments could also be following it. Some contract workers, nevertheless, should face job insecurity and exploitation, typically performing the identical duties as full-time workers however with fewer advantages and decrease wages. The plight of those employees, particularly within the casual sector, is a rising concern.”

He additional talked about that NUBIFE, a significant union representing core workers within the banking sector, highlights that greater than 80 per cent of employees in some monetary establishments are outsourced workers, typically performing the identical duties as everlasting workers however receiving insufficient pay and advantages. Many of those employees wrestle to afford fundamental residing bills, with some counting on poor housing circumstances and restricted entry to medical care.

“Regardless of the existence of the 2022 tips, unions argued that not sufficient has been carried out to guard contract workers, and they’re calling on the federal government to take concrete motion.

If no substantial measures are launched by January, a strike is deliberate.

Nonetheless, the ASSBIFI boss acknowledged that the difficulty is just not restricted to the banking sector; it impacts a variety of industries, together with hospitals and accounting companies, the place contract and outsourced employees face related challenges.

Whereas the main focus is commonly on the banking sector as a consequence of its perceived monetary capability, it’s important to deal with the broader subject of casual sector employees throughout industries.

“One of the best answer might contain increasing union illustration to cowl casual employees, both by means of present unions or by forming new our bodies. This strategy may guarantee extra complete protections and enhance the general working circumstances for these weak employees,” Olusoji added.

Authorized and regulatory gaps

Nigeria’s labour legal guidelines present a framework for honest employment, however enforcement stays weak.

The Labour Act mandates equal pay for equal work, but contract workers in banks are persistently underpaid. Outsourcing businesses typically exploit loopholes, working with minimal oversight and accountability.

The unions, particularly the Nigeria Labour Congress, have repeatedly referred to as for reforms to deal with these points.

In 2022, NLC submitted a petition to the Nationwide Meeting, demanding stricter laws for outsourcing practices within the banking sector.

Nonetheless, progress has been gradual, with banks persevering with to prioritise earnings over employee welfare.

Voices of advocacy and reform

The Worldwide Labour Organisation has additionally emphasised the necessity for Nigeria to align its labour practices with international requirements.

 A 2023 ILO report urged the Nigerian authorities to introduce insurance policies that promote first rate work for all, together with contract workers.

Aboderin acknowledged, “As Nigerian banks proceed to report record-breaking earnings, the exploitation of contract workers stays a stark inconsistency. These employees, who’re important to the day-to-day operations of the banking sector, deserve respect, equitable pay, and job safety.

“For sustainable progress, banks should prioritise the welfare of all workers, everlasting or contract. Solely by addressing these disparities can Nigeria’s banking sector really embody equity and excellence, slightly than undervaluing its overworked contract workers.”