Data from the National Bureau of Statistics shows Nigerian
banks are relying more on contract staff to boost operations.
The recently published data on Sectorial Breakdown of
Credit, ePayment Channels and Staff Strength (Q2 2018) shows the banking sector
employed a total of 43,955 contract staff as employees. This compares to about
21,837 a year earlier and a 101% increase YOY.
Some key metrics
Total banking sector employees as at 2018 Q2, 101, 861
compared to 89, 608 in the previous quarter. Total banking sector employees
were about 77,096 in the first quarter of 2017 and 75, 607 in the second
quarter of 2017.
Total employees in the banking sector have now risen by
13.67% quarter on quarter and 34.72% year on year.
Contract staff as a percentage of total employees has risen
from 26% at the start of 2017 to about 43.2% in 2018. Contract staffs are now
on track to surpass the 50% mark in the next few months.
Before now junior staff’s made up a larger percentage of
banking staff. However, in the second quarter of 2018, contract staff jumped
from 32,013 in Q1 of 2018 to 43,955 in Q2 of 2018, indicating that banks
employed a whopping 11,942 contract staff in the second quarter alone.
Junior staff remains at just over 40k.
Why is this
important?
As banks struggle to reign in on high cost to income ratios,
the increasing reliance on contract staff is expected to help reduce overheads
especially as it relates to personnel cost.
The data confirms banks are now relying more on contract
staff to handle routine operational activities while it leaves core banking
activities such as trading, treasury, loan making to permanent employees.
Banks that have a higher percentage of contract staff to
total staff will likely save more on overheads and can pass these cost savings
to shareholders. However, this depends on whether some of the so-called cost
savings are being shifted towards executive and senior staff compensation.
In terms of employment opportunities for Nigerian Youth,
this suggests the days of getting a bank job straight out of school is
diminishing. Except for specialized Graduate Management Trainee programs, most
fresh graduates will likely be employed as contract staff.
We also understand a number of newer outsourcing companies
are also springing up to provide contract services for the banking industry.
Most utility companies in the telecoms and power sector already rely on
contract staff for their operations.
Any downsides
For the banking sector, incessant cases of fraud are being
linked to contract staff.
In a recent fraud which occurred in tier 2 commercial bank,
a staff of the bank informs Nairametrics that some of the contract staff are
exposed to core operations of the banks such as cash and cheque handling and
also have access to delicate customer information that makes the bank
vulnerable to fraudulent activities.
Because of their limited contractual obligations, contract staff
easily absconds with little or no recourse to guarantors.
