In this piece, HENRY FALAIYE highlights the exploitative conditions faced by contract staff in Nigerian banks who endure low wages, job insecurity, and exclusion from essential benefits such as health insurance and pensions.
Behind Nigeria’s thriving banking sector lies a harsh reality: contract staff, the industry’s backbone, are overworked and underpaid and face systemic inequalities that tarnish the sector’s success.
In many Nigerian banks, contract staff make up a significant portion of the workforce, yet their contributions often go unnoticed and underappreciated.
Contract staffing is now a cornerstone of operations for many Nigerian banks.
According to a 2023 report by the Chartered Institute of Bankers of Nigeria, approximately 65 per cent of the workforce in the banking sector comprises contract staff. These workers handle critical customer-facing roles, from cashiers and tellers to sales agents, yet remain outside the purview of fair labour practices enjoyed by permanent employees.
The rise of outsourcing in Nigerian banks can be traced to cost-cutting strategies. By employing workers through third-party agencies, banks avoid paying full salaries, pensions, and benefits.
Also, a 2022 study by the Nigeria Employers’ Consultative Association revealed that banks save up to 40 per cent on labour costs by outsourcing roles traditionally held by permanent staff.
However, these individuals, employed through third-party agencies, are the backbone of many financial institutions.
Meanwhile, they perform critical tasks, yet they are subjected to exploitative working conditions, poor pay, and a lack of job security. While Nigerian banks continue to report impressive profits, the plight of contract staff exposes a troubling paradox of corporate greed and worker exploitation.
It will be recalled that the banking sector in Nigeria underwent significant reforms following the 2004 consolidation exercise led by the Central Bank of Nigeria.
Meanwhile, the restructuring introduced stricter capital requirements and enhanced regulatory oversight, pushing banks to adopt cost-cutting strategies. One prominent approach was outsourcing labour to third-party agencies, enabling banks to sidestep the responsibilities and benefits typically afforded to full-time employees, leaving contract staff with fewer protections and perks.
Currently, contract staff are estimated to constitute over 60 per cent of the workforce in many Nigerian banks. While this arrangement offers employers flexibility, it imposes significant hardships on the workers who occupy these positions.
Unequal pay for equal work
One of the most glaring injustices faced by contract staff is the disparity in pay. Despite performing the same duties as permanent employees, contract staff often earn a fraction of the salary.
Speaking with The PUNCH, a banker, Mr. Tobi, who has worked as a contract staff member for the past four years in one of the popular banks in Lagos, despite being a university graduate, lamented the harsh realities of his job.
Tobi said, “Despite handling the same responsibilities as full-time employees—managing accounts, meeting demanding targets, and assisting customers—my monthly salary barely covers basic expenses.
“I earn just N80,000, while my colleagues doing the same work take home over N200,000,” he said bitterly, his voice tinged with frustration.
Tobi decried trapped in a cycle of inequality, excluded from benefits like pensions or health insurance, yet expected to deliver the same level of performance.
“It is disheartening to give your all and still feel undervalued,” he admits, struggling to reconcile his aspirations with the harsh treatment he endures daily.
This wage gap is even more disheartening considering the rising cost of living in Nigeria, driven by inflation and skyrocketing prices of essential goods, transportation, and electricity tariffs due to inflation.
Meanwhile, contract staff face strict performance targets with little support, risking termination without notice or compensation if they fall short, leaving them financially insecure.
Workplace discrimination and marginalisation
Contract staff are frequently subjected to discriminatory treatment in the workplace. They are excluded from training programmes, team-building exercises, and other opportunities that could enhance their skills and career prospects. This marginalisation not only limits their professional growth but also reinforces the perception that they are second-class employees.
In an interview with The PUNCH, the Deputy General Secretary of the Nigerian Union of Banks, Insurance, and Finance Institution Employees, Shola Aboderin, said the union and other unions have been making efforts over the years to secure better working conditions and a career path for contract staff.
He said, “Despite initial success with the signing of a sectoral guideline by former Labour Minister Chris Ngige, the implementation of these agreements has faced significant challenges.
“The sectoral guideline, aimed at improving conditions for outsourced workers in banks, insurance, and financial institutions, stipulated that every two to three years, the union could review workers’ conditions of service. It also required that disciplinary actions involving outsourced staff would need union involvement.”
However, Aboderin expressed frustration that these guidelines have not been effectively implemented. “Up till now, we are still battling with the implementation,” he said.
Aboderin further criticised the government’s lack of response to the union’s efforts. He revealed that NUBIFIE, along with the Association of Senior Staff of Banks, Insurance, and Financial Institutions, had written to the present Minister of Labour, requesting a meeting to discuss the enforcement of these guidelines. Despite the letter being sent in May, no response has been received.
“The minister of labour didn’t give me a chance to invite both the Association of Senior Staff of Banks, Insurance, and Financial Institutions and NUBIFIE for a meeting,” Aboderin lamented.
He explained that outsourced workers now make up about 80 per cent of the workforce in Nigerian banks. Despite their significant numbers and the fact that many are highly qualified, including those with master’s degrees, they are paid far less than their permanent counterparts for performing the same job.
“If you are doing the same job in the same place, you are supposed to earn the same amount, not minding whether you are a contract staff member or core staff,” Aboderin emphasised, highlighting the wage disparity.
In addition to wage inequalities, he mentioned that outsourced workers were often denied basic benefits, including health insurance, pensions, and housing allowances. While some outsourced companies have signed agreements with the Ministry of Labour to provide medical coverage, Aboderin revealed that many workers still do not receive adequate healthcare.
“The majority of them are not enjoying medical. Ask the majority of these sets of workers. It is only drugs they can give them,” he explained.
Aboderin explained that contract staff can be dismissed at any time without notice or severance pay, leaving them vulnerable.
“If they are asked to go, what they are going to go home with, like redundancy, many banks will not even consult the union for negotiation,” he said.
He added that this lack of job security adds to the anxiety and stress faced by these workers, affecting their overall well-being.
Aboderin also noted the severe financial hardships faced by outsourced staff. Many spend a significant portion of their salary on transportation costs, leaving little for other essentials.
High cost of living and low wages have led to dire living conditions for many workers, with some even taking out loans at high interest rates to survive.
Aboderin stressed that the union is committed to fighting for the rights of outsourced workers.
He warned that if the government and financial institutions do not address these issues soon, NUBIFIE may be forced to declare a nationwide strike.
“By January, the union will declare its stance concerning the outsourced workers,” he stated, emphasising that they will not continue to tolerate the exploitation of workers in the sector.
He added that the union’s fight for equal pay and fair working conditions continues, with a potential strike looming if their demands are not met.
The exploitation of contract staff in Nigeria exposes gaps in labour laws and weak enforcement. Most contracts are short-term and renewable, leaving workers vulnerable to termination without notice or severance pay. This insecurity, coupled with unattainable targets, creates constant anxiety and fear of dismissal.
A 2021 survey by the Banking Sector Workers Union revealed that 70 per cent of contract staff in Nigerian banks reported working more than 10 hours daily to meet strict targets, often without overtime pay.
The pressure to meet sales quotas has also led to unethical practices, with some staff forced to market questionable financial products to unsuspecting customers.
“We were told to sell loans and meet monthly targets or risk termination,” says Mr. Tunde, a former marketer with an outsourced agency. “Sometimes, I had to bend the truth to convince clients, knowing it could backfire.”
The exploitation of contract staff has broader implications for the banking sector. Low morale among these workers often results in poor customer service, errors in transactions, and even incidents of fraud.
In 2022, the Central Bank of Nigeria flagged a rise in fraud cases linked to disgruntled contract staff, citing their lack of job security and financial stability as contributing factors.
A 2022 report by SBM Intelligence highlighted that the average contract worker in Nigerian banks earns below the national minimum wage when considering deductions made by outsourcing firms. Many contract staff have no access to housing allowances, transport stipends, or health insurance benefits that permanent employees take for granted.
“I spent two years as a teller, earning N60,000 monthly after deductions,” says Bukky, a former contract staff member at a top Nigerian bank.
“Despite handling millions every day, I struggled to afford necessities. Yet, my permanent colleagues earned three times or more my salary for doing the same job.”
Psychological and physical strain
Meanwhile, the stress and insecurity of contract work take a toll on workers’ mental health. Many report symptoms of burnout, depression, and chronic anxiety.
A 2023 study by the Nigerian Institute of Social and Economic Research found that 68 per cent of contract bank workers experienced work-related stress, with many attributing it to unrealistic expectations and poor working conditions.
Also, the National President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions, Olusoji Oluwole, said, “There are guidelines stipulated that contract staff could be integrated as permanent employees after a period, typically 2-3 years, provided they completed tertiary education and passed the necessary qualifying exams.
“Many organisations have adopted this practice, though not all banks or institutions may be following it. Some contract staff, however, may still face job insecurity and exploitation, often performing the same tasks as full-time employees but with fewer benefits and lower wages. The plight of these workers, especially in the informal sector, is a growing concern.”
He further mentioned that NUBIFE, a major union representing core staff in the banking sector, highlights that more than 80 per cent of workers in some financial institutions are outsourced staff, often performing the same duties as permanent employees but receiving inadequate pay and benefits. Many of these workers struggle to afford basic living expenses, with some relying on poor housing conditions and limited access to medical care.
“Despite the existence of the 2022 guidelines, unions argued that not enough has been done to protect contract staff, and they are calling on the government to take concrete action.
If no substantial measures are introduced by January, a strike is planned.
However, the ASSBIFI boss stated that the issue is not limited to the banking sector; it affects a range of industries, including hospitals and accounting firms, where contract and outsourced workers face similar challenges.
While the focus is often on the banking sector due to its perceived financial capacity, it is essential to address the broader issue of informal sector workers across industries.
“The best solution may involve expanding union representation to cover informal workers, either through existing unions or by forming new bodies. This approach could ensure more comprehensive protections and improve the overall working conditions for these vulnerable workers,” Olusoji added.
Legal and regulatory gaps
Nigeria’s labour laws provide a framework for fair employment, but enforcement remains weak.
The Labour Act mandates equal pay for equal work, yet contract staff in banks are consistently underpaid. Outsourcing agencies often exploit loopholes, operating with minimal oversight and accountability.
The unions, especially the Nigeria Labour Congress, have repeatedly called for reforms to address these issues.
In 2022, NLC submitted a petition to the National Assembly, demanding stricter regulations for outsourcing practices in the banking sector.
However, progress has been slow, with banks continuing to prioritise profits over worker welfare.
Voices of advocacy and reform
The International Labour Organisation has also emphasised the need for Nigeria to align its labour practices with global standards.
A 2023 ILO report urged the Nigerian government to introduce policies that promote decent work for all, including contract staff.
Aboderin stated, “As Nigerian banks continue to report record-breaking profits, the exploitation of contract staff remains a stark inconsistency. These workers, who are vital to the day-to-day operations of the banking sector, deserve respect, equitable pay, and job security.
“For sustainable growth, banks must prioritise the welfare of all employees, permanent or contract. Only by addressing these disparities can Nigeria’s banking sector truly embody fairness and excellence, rather than undervaluing its overworked contract staff.”