Job losses loom as Covid-19 spreads

As the coronavirus pandemic continues to spread its tentacles across the world, it has become obvious that unprecedented loss of jobs is in the horizon; BENJAMIN UMUTEME writes.

The pandemic

Oguche Andrew has been at home now for the past three weeks as a result of the federal government’s directive to Nigerians to contain the spread of the novel coronavirus. Andrew, a senior manager in a consultancy firm, expresses fears that when work finally resumes, there may be downsizing of staffers as a result of the impacts of the lockdown on businesses.

“Even though it’s too early to talk about job loss, it is staring us in the face especially with the adjustment of the budget and the crash of global prices of oil,” he told Blueprint Weekend.

Andrew is not alone in this as many globally and in Nigeria brace up for loss of job resulting from shutdown of business all over the world. 

In November 2019, the first case of Covid-19 infection was reported in Wuhan, China and by December, it had spread rapidly in the province leaving in its wake 3,169 deaths and 67,891 confirmed cases. 

According to reports, delayed and controversial response by the authorities failed to contain the outbreak in the early stage, and by February 8, over 724 died from the coronavirus infection-associated pneumonia and 34,878 were confirmed to be infected. In Hubei alone, there were 24,953 cases of infections and 699 related deaths.

And it did follow almost a similar pattern in Europe and North America with the authorities unwilling to promptly take measures to curb the spread of the virus until it started its ravaging effects with recorded confirmed cases of infection from Covid-19 nearing the one million mark. 

As at April 22, 2020, more than 2.58 million cases of Covid-19 have been reported in 185 countries and territories, resulting in more than 178,000 deaths. More than 696,000 people have recovered.  

The pandemic has caused severe global socioeconomic disruption, including one of the largest global recessions in history. It has led to the postponement or outright cancellation of sporting, religious, political and cultural events, widespread supply shortages exacerbated by panic buying. 

Global economic impacts 

As the virus continues to claim lives, it is obvious that global production would grind to a halt across the world, especially as various countries restricted movement to curb the spread of the ‘silent enemy.’

This subsequently led to a slowdown in global manufacturing and with it a crash in global stock market as countries that depended on imports from Asia, Europe and China saw their real sector unable to engage in serious production.

From, aviation to manufacturing, shipping, entertainment and sport, fashion, no sector has been left without a bloodied eye as it has been one postponement after another leading to the loss of billions of dollars in revenue. Even footballers in Europe have had to take pay cuts to help their clubs weather through the Covid-19 storm with some non-playing staff being laid-off.

The global aviation industry umbrella body, International Air Transport Association (IATA), has out losses globally at $314 billion in 2020 from an initial $113 billion resulting from passengers’ revenue slump globally. It added that it will be putting at risk 25 million jobs that are dependent on aviation globally.

In the continent, “African airlines had lost $4.4bn in revenue as of March 11, 2020. Ticket refunds have increased by 75 per cent in 2020 compared to the same period in 2019 (February 01 – March 11),” IATA said.

The association said further that South Africa would also lose six million passengers, $1.2bn in base revenues and risk over 102,000 jobs.

According to IATA, other African countries expected to record huge losses are Kenya ($320m), Ethiopia ($202m) and Rwanda ($52m).

IATA said the expected job losses for Kenya would be 36,800; Ethiopia, 98, 400; and Rwanda, 3,000. Even in the oil industry, the story is not different, it is forecasted that an estimated 51,000 jobs were lost in the oil industry in March, a nine per cent reduction that will surely grow much more severe in the weeks ahead. “We’re looking at anywhere between five and seven years of job growth wiped out in a month,” Philip Jordan, VP at BW Research Partnership, a research consultancy, told Bloomberg. “What makes it sort of scary is this really is just the beginning. April is not looking good for oil and gas,” he said further. 

For Guy Ryder, the head of the International Labour Organisation (ILO), Covid-19 could see a global loss of about 195 million jobs. ILO, in its latest analysis, shows that the impact of the pandemic far exceeds that of the 2008-2009 financial crises. According to the organisation, workers and businesses face catastrophe without urgent, coordinated measures by governments.

“The rapidly intensifying economic effects of Covid-19 on the world of work are proving to be far worse than the 2008-9 financial crisis, with cutbacks equivalent to nearly 200 million full-time workers expected in the next three months alone,” the UN labour agency said.

The warning comes almost three weeks after the ILO predicted that 25 million jobs were threatened by the new coronavirus. According to the agency, the latest dire assessment reflects the full or partial lockdown measures affecting almost 2.7 billion workers – four in five of the world’s work force.

Ryder noted that at the start of the year – before Covid-19 spread worldwide – global unemployment already stood at around 190 million. He also said with the additional shock of the virus, it was “obvious” that the world of work is suffering an “absolutely extraordinary fall” because of the effects of the pandemic and the measures taken to deal with it.

“Workers in four sectors that have experienced the most “drastic” effects of the disease and falling production are: food and accommodation (144 million workers), retail and wholesale (482 million); business services and administration (157 million); and manufacturing (463 million).

“Together, they add up to 37.5 per cent of global employment and this is where the “sharp end” of the impact of the pandemic is being felt now.”

NBS report 

The National Bureau of Statistics (NBS) in its Labour Force Statistics – volume 1: Unemployment and Underemployment report for third quarter of 2018 revealed that the number of unemployed Nigerians rose by 3.3 million to 20.9 million.

But with Nigeria’s worsening economic situation, analysts say the figure may have doubled.

The NBS stated that year-on-year (YoY), the rate of unemployment rose by 3.3 million or 19 per cent to 20.9 million in Q3’18 from 17.6 million in Q3’17, while on a quarterly basis, it rose by three per cent from 20.3 million in Q2’18. The report further showed that unemployed and under-employed female population far outpaced that of the men folk.

Expectedly, the rate of job losses in the rural areas also far outpaced that of the urban centres with the rate of unemployment in the rural centres increasing by 7.5 per cent, while there was a 2.2 per cent decrease in unemployment in the urban centres, respectively.

The report stated: “The unemployment rate accordingly increased from 18.8 per cent in Q3’17 to 23.1 percent in Q3’18. The total number of people classified as unemployed, which means they did nothing at all or worked too few hours (under 20 hours a week) to be classified as employed increased from 17.6 million in Q4 2017 to 20.9 million in Q3 2018.

“Of the 20.9 million persons classified as unemployed as at Q3’18, 11.1 million did some form of work but for too few hours a week (under 20 hours) to be officially classified as employed, while 9.7 million did absolutely nothing.

“Of the 9.7 million unemployed that did absolutely nothing as at Q3 2018, 90.1 per cent of them or 8.77 million were reported to be unemployed and doing nothing because they were first time job-seekers and have never worked before.

“On the other hand, 0.9 per cent of the 9.7 million that were unemployed and doing nothing at all reported they were unemployed and did nothing at all because they were previously employed but lost their jobs at some point in the past which is why they were unemployed.

“Total combined unemployment and underemployment rates increased from 40.0 percent in Q3 2017 to 43.3 percent in Q3, 2018.”

According to the bureau, “Unemployment rate in Nigeria has been on the increase since the economic crisis in 2014. The unemployment rate based on NBS’s revised methodology is calculated to be 23.1 per cent in the third quarter of 2018. Underemployment, however, has been gradually declining over the past four quarters, with then rate in Q3 was reported as 20.1 per cent.

The Nigerian experience

Here, in Nigeria, the Airline Operators of Nigeria (AON) has been lamenting the impact of the Covid-19 lockdown on the industry.

According to AON, the lockdown has left the Nigeria aviation industry with an exposure of about 251,000 direct job losses including the various parastatal, ground handling and support service providers, etc, as the failure of airlines will obviously bring down the support structure as well.

AON further noted that the “disruption to air travel due to the continued spread of coronavirus will cost Nigeria’s aviation industry over N160.58 billion (using Bureau de Change rate of N370 to $1) ($434 million) in revenue and 22, 200 jobs.”

This, according to the operators, is in addition to the loss of approximately 2.2 million passengers.

There is palpable fear among hospitality industry operators in Nigeria as the lockdown continues across the world. For Alfred Okonoboh, who works with a popular hotel in Abuja, the management of the hotel has concluded plans to downsize due to low patronage resulting from the coronavirus pandemic and the attendant lockdowns. 

He told this reporter that he would not blame the management because since the lockdown began patronage has been very low.

“Even though I feel bad that some of us are about to be out of work, the truth is that for over a month now business has been bad. So, how do we get paid if there are no clients, it’s bad for everybody,” he said.

For Andrew, the situation will be further compounded by the fact that some contracts that have already been signed will be cancelled as nobody is sure of anything this year. With the federal government cutting down its 2020 budget by N1.5 trillion, he said the situation would be better imagined than experienced.

“The implication of this downward review is that some companies will have to free up their wage bill due to loss in revenue and mostly staff rationing is the way to go for them.” 

Multiplier effects

For public affairs analyst Barrister Charles Edo, micro, small and medium enterprises (MSMEs) are the worse hit at the moment. He told Blueprint Weekend that with businesses unable to operate down due to the lockdown coupled with the lack of access to market their goods and services, massive job loss looks on the horizon.

“The multiplier effect is that, it will lead to massive job losses which will lead to high crime rate as we are already experiencing in Lagos state. Many MSMEs will fold up as a result of the lockdown which has overstretched and diminish their working capital thereby making it impossible to continue in business.”

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