RETRENCHMENT IN NIGERIA AND ITS SOCIO-ECONOMIC EFFECTS

Abstract

The introduction of the Structural Adjustment Program in Nigeria in 1986 saw the beginning of economic woes in Nigeria. This program brought a lot of retrenchments to employees. The situation was exacerbated by some of the government’s policies which pushed away investors to relocate or made it difficult for the existing investors to break even. In addition, the global economic meltdown witnessed in 2008/2009 coupled with political, social and economic instability also led to the retrenchment of many people. Such a scenario has forced many companies to retrench workers in a bid to keep their operational costs down.The article examined the socio-economic consequences of retrenchment on the affected individuals, their families and the nation. Since retrenchment more often than not takes place suddenly, retrenched workers are ill equipped to face the unforeseen challenges that befall them after the incidence. Their plight is worsened by the fact that a sizeable proportion of them are relatively “too old” to find suitable job placement, learn or begin new ventures. Consequently, many of them become incapacitated, idle, unproductive, and sometimes stressed, frustrated and may eventually die prematurely. This paper reviews extant literature on the socio-economic effects and their implications on the nation, besides the individuals directly affected and makes far reaching suggestions for positive outcomes. Findings from the extant literature revealed that most organisations do not just retrench their human capital, but due to low level of business activities, job obsolesces, major operational changes in job contents or work procedures, corporate politics or mergers and acquisition, technical progress that requires displacement of human capital and incessant high cost of power generation to operate at profit. The paper concludes that retrenchment has detrimental and multiplier effects on both the families and the society at large. The paper recommends the adoption of valuable strategies like pre-retirement training for all category of staff; Inclusion of pre-retirement education (Capacity building) during induction for new staff in preparation for retirement date in future both in government and private sector to enable them to prepare in advance on how to abate the effects of retrenchment. It also suggests strict regulation and improvement in the management of Pension Funds by the regulatory Authority and the PFA. Bulk payment rather than meagre monthly stipend of the accrued pension savings to the retrenched to enable each retrenched to start up small business of his/her choice for sustainability. Government could also give assistance to organizations in difficulty due to harsh business environment.