The House of Representatives recently adopted a motion for “urgent intervention to prevent mass layoffs” in Nigeria.
Backdrop: The House is worried about the impact of COVID-19 on the economy, especially the prospect of mass layoffs in the private sector. According to the House’s resolution, the members of the labour, productivity and COVID-19 committees would embark on a consultation with corporate bodies.
- Sponsor of the motion, Henry Nwawuba argued that mass job losses were imminent should the government not provide, “income support, tax credits or tax deferrals, short term work schemes, wage subsidies and tax moratoriums on loan payments on those organizations.”
- There is nothing novel about the latest coronavirus motion from the House. Speaker Gbajabiamila’s emergency economic stimulus bill, which caters to some of these job protections (and two months free electricity for Nigerians), was passed by the House two months, but it is yet to come to fruition. The Senate has been adjourned and the President is yet to receive the bill for his assent.
- The major objective of the House should be to secure Senate’s concurrence and push the bill to the President’s desk.
What they are missing: The conversation appears to be limited to cushioning the impact for corporate organisations alone. The current economic stimulus proposals do not take into consideration the country’s informal sector which accounts for over 60% of the economy (pdf) and more than 80 per cent of the workforce.
- Less than 9% of companies in Nigeria pay taxes (pdf), so the tax-linked incentives would not move the needle with regards to stimulating the economy.
- We don’t have a true picture of current unemployment situation in the country due to lack of fresh data from the National Bureau of Statistics. NASS could have commissioned a quick study into the potential job losses across the country tied to COVID-19. The International Air Transport Association projects the loss of 22,000 jobs within Nigeria’s aviation sector.
Watch out for big corporate players, industry associations and government crony entrepreneurs across all the sectors, who will be looking to extract huge bailouts from governments.
- Big salary cuts that will further reduce government revenue. With the Central Bank of Nigeria managing to prevent banking sector job losses through an order, we have witnessed drastic pay cuts as an alternative measure. A case in point: Access Bank, which employs about 30,000 staff, announced salary cuts of up to 40%.
Bottomline: The House of Reps and Senate have to pay attention to the details. Pursuing economic policies without thorough appreciation of data and the factors at play, means that this will end up in tears for the people who need government’s support the most. And for the economy.