Economic Recession: Banks, Insurance Firms Slash Workers’ Salaries

​Hit by the current economic recession in the country, most money deposit banks and insurance firms have slashed their workers’ salaries by between 20 and 50 per cent.

Investigations revealed that Diamond Bank Plc, Heritage Bank Plc, Zenith Bank Plc, First Bank Plc and Wema Bank Plc have reduced their workers’ salaries as of August 31, 2016. This has also been confirmed by management sources and workers in the affected banks.

While Diamond Bank was said to have slashed salaries by 30 per cent, Heritage by 30 per cent, First Bank and Wema Bank workers’ salaries were slashed by 20 per cent each.

It was learnt that the banks tied the decision to cut salaries to workers’ ability to meet deposit targets, which have become unrealistically high in recent time. Hence, workers who failed to meet their targets had their salaries slashed.

Investigations also revealed that some insurance companies have extended the targets of premium generation to their employees.

Before, the marketing departments of the underwriting firms and insurance agents were responsible for generating premium for the companies.

Due to the economic crisis in the country, many insurance firms increased the targets for their marketing departments’ workers with threats of not paying them salaries if they failed to meet it (targets). As such, insurance workers who failed to meet their premium targets, according to industry sources, also had their salaries slashed.

An insurance employee, who spoke to one of our correspondents, said, “Before, it was only the marketers that they used to give targets to. Now, some of us also have targets ranging between N40, 000 and N100, 000 monthly and our promotion and salaries are tied to our performance.”

A Zenith Bank worker, who simply identified herself as Nkem, confirmed the slash in salaries.

Nkem said she resumed work after her annual vacation only to discover that she didn’t get the same salary that she had always received.

Similarly, another Zenith Bank employee, who spoke on condition of anonymity, told one of our correspondents that there was eight per cent cut in their salaries, beginning from August.

The source said the reason given by the bank was that the workers had not been paying the correct tax, hence, the bank had to start the deduction to regularise the tax payable.

On the fear that some workers could be sacked, the source said such fear had always been there, but the current one was beyond description.

He said, “The problem now is that there has not been any promotion since last year, which seems strange.”

An employee of First Bank, who spoke on condition of anonymity, said he had been sleeping and waking up in worry in the past two weeks due to fear of being sacked.

The banker, who just got married in Lagos, said workers had received an email from the bank’s Managing Director about a “new development soon.”

He said, “We have been receiving hints of more lay-offs due to the economic recession in the country, which has deeply affected the banking sector. Some employees lost their jobs two months ago. We also learned that another set of people will be laid off between September and October.”

Investigation learnt that Ecobank has yet to slash its workers’ salaries, but there is apprehension among the bank’s employees that their pay might be slashed any moment from now.

One of the bank’s senior members of staff, who preferred to be addressed as Handsome Guy, said it had become a tradition among Nigeria’s banks to be imitating one another’s policies, especially those affecting workers’ welfare.

A worker with First Bank Plc, who simply identified himself as Jimson, confirmed to one of our correspondents on Thursday that most bank workers now go to work with the fear that they could be sacked anytime.

“There is perpetual fear in all banks. Every category of workers in the banks is affected by the economic crisis,” he said.

He, however, noted that some bank workers had been resigning and travelling abroad, especially the United States and Canada, to avoid being sacked.

Jimson said, “One of my colleagues just resigned last month because of the fear of losing his job and travelled to the U.S to seek greener pastures. But those who are not interested in leaving Nigeria have devised many means to survive the harsh economy should their letters of sacking come anytime. They are setting up small scale businesses.

“The most common ones are laundry services and restaurants which require capital outlay of N500, 000.

“The academically-sound ones among them have been moving to private universities to take appointments there. The problem is on the high side now.  There is perpetual fear among bank workers that they can be fired at anytime.”

The National Union of Banks, Insurance and Financial Institutions’ Employees confirmed the development in the banks. 

NUBIFIE Secretary General, Mohammad Sheick, said the issue had become a serious concern to the union.

Sheick said, “There is apprehension in the banking sector. Recently, there was mass sacking by banks and the Federal Government directed that those who were sacked during that period should be recalled.

“We have had about two meetings with the Federal Ministry of Labour on the issue and we are hopefully looking at the possibility of the ministry calling us to another meeting so that we can have an understanding on how to respond to the emerging issues like economic recession and other factors that are affecting the operations of banks.

“Even before the economic recession, the banks have always responded to any policy of the government negatively. The first thing that came to the mind of the banks’ management, which the union has always disagreed with, is to lay off workers.

“They (banks) have to think outside the box and objectively. If they want to cut cost or reduce certain expenditure because of certain government’s policy, then the reality is that they should know where they should direct their attention.

“I can volunteer to say that the thing that eats deep into banks profit and loss is nothing other than the kind of lifestyle of the management staff of the banks. For example, the monthly salary of one executive director is more than the salaries of 100 workers. This is apart from other privileges and perks attached to him as an executive director.”

The Head, Corporate Communications, First Bank, Mr. Babatunde Lasaki, denied that the lender cut its employees’ salaries.

In a response to an emailed question, he said, “This is totally incorrect and unfounded.  First Bank staff salaries, allowances and bonuses are being fully paid as and when due.”

The spokesperson of Zenith Bank, Mr. Akin Olaniyan, could not be reached on the telephone. Text message and email questions sent to him were not responded to.

The spokesperson, Diamond Bank, Mike Omeife, denied that the bank had cut the salaries of some of its workers.

The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas,  said everybody is a marketer in the insurance firms because they need the premium to operate all the departments.

“It will not be out of order for the companies to give employees targets except the target is unrealistic,” he said. 

However, economists said the high deposit targets and the attendant fear by bank and insurance workers could be a strategy by the two industries to survive the current economic reality in the country.

A renowned Economist and Managing Director, Cocosheen Nigeria Limited, Ikeja, Lagos State, Mr. Henry Boyo, agreed that such a measure could be a strategy by banks to remain in business.

He said, “Every sector in the country is affected by the economic crisis, not only the banks. For instance, if a company asks you to pick between being sacked and your salary being reduced, I think most people would prefer the latter option. This could be what is happening.”

Another Lagos-based economist, Dr. Babatunde Abrahams, predicts the mass sacking of workers in banks and insurance firms going by the latest development.

He said, “If anyone has been watching economic trends for a while in the country, you will discover that the sacking of workers is inevitable. Banks trade with customers’ deposits, but I can tell you that very few people have money in banks in this harsh economic period.”

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