Adewale-Smatt Oyerinde, the Director General of the Nigerian Employers Consultative Association (NECA), has voiced concerns over the potential for workforce reductions due to the nation’s escalating economic difficulties. The ongoing depreciation of the naira has adversely impacted the operations of various organizations, leading to the closure of several companies that attribute their withdrawal from the Nigerian market to these economic hardships.
In the face of a deteriorating economy, employers are exploring alternative strategies for sustenance, leaving employees anxious as the declining value of the naira diminishes the worth of their earnings. Speaking to Saturday PUNCH, Oyerinde highlighted the dire situation, indicating that in response to the severe devaluation of the naira, employers might consider layoffs as a means to stay afloat.
He pointed out that the devaluation significantly reduces the operational capital of businesses, affecting their production levels. Oyerinde elaborated, “When businesses find themselves forced to operate below capacity and produce less because their operational funds are being depleted by the rapid devaluation of the naira, they are left with no choice but to evaluate all possible survival strategies, which may include reducing their workforce.”
The reliance of many Nigerian businesses on imported raw materials and machinery compounds the issue, as the depreciation of the naira leads to reduced capital for these businesses, thereby affecting their output levels.