By Oyewole O. Sarumi PhD and Olusola O. Aliu PhD
Introduction: A System That Works Against Its Own Workers
Nigeria is a country of extraordinary contradictions, and nowhere are those contradictions more sharply illustrated than in the world of work. On one hand, we are told of a banking sector that generated a combined N984.47 billion in fee and commission income in the first quarter of 2026 alone. We read of banks that posted record profits, paid record dividends, and underwent a monumental N4.65 trillion recapitalisation exercise.
On the other hand, a 2023 report by the Chartered Institute of Bankers of Nigeria revealed a figure so striking that it demands a national conversation: contract staff make up 65 percent of the banking sector’s workforce. This means that the industry which best represents Nigeria’s economic aspirations — the most regulated, most profitable, most visible formal sector in the land — sustains itself primarily on the backs of workers who, in the estimation of their employers, are not worth the full cost and commitment of permanent employment.
This is not merely a labour market anomaly. It is a structural malaise that cuts across Nigeria’s entire formal economy. In the oil and gas sector, contract employees reportedly earn 50 to 70 percent less than their full-time counterparts, even when performing equally demanding or operationally riskier tasks. In telecommunications, Chinese and Indian-partnered manufacturing firms, and even government-adjacent enterprises, contract staffing has become so deeply normalised that entire organisations are built on a two-tier architecture: a small, protected permanent core and a large, precarious outsourced majority. This article is a forensic, analytical, and prescriptive engagement with that reality.
It is written for those with the authority to change it — policymakers, labour leaders, civil society organisations, board directors, and the broader senior leadership community — and it will not flinch from the evidence.
The central argument is this: Nigeria has constructed a system of pseudo-employment. Millions of working Nigerians are counted as employed in official statistics, but they are employed without security, without progression, without healthcare, without pension, and without dignity. When these workers age out of their usefulness to corporate Nigeria, they are discarded — quietly, without ceremony, and without a retirement income of any kind. The nation is not merely building a labour crisis. It is engineering a geriatric poverty catastrophe. The time to confront it is now.
I. The Architecture of Precarity: Understanding the 65 Percent
The 65 percent figure published by the Chartered Institute of Bankers of Nigeria is startling enough on its face. But its full weight can only be appreciated when one understands what the lives of those workers actually look like. A contract staff member at a typical Nigerian bank — let us call her by the generic name that thousands of real workers share — is likely a university graduate, recruited through an outsourcing agency such as Philips Outsourcing Services, Workforce Group, or any of several similar firms. She is deployed to a bank branch as a teller, customer service officer, loan recovery agent, or marketing executive. She wears the bank’s uniform, carries the bank’s business card, operates the bank’s software, meets the bank’s deposit and loan targets, and is answerable to the bank’s branch manager. She is, to every customer and casual observer, a bank employee.
She is not. She is, legally, an employee of the outsourcing firm. Her salary — typically between N60,000 and N120,000 per month in 2025 naira, compared to the N300,000 to N700,000 earned by permanent staff in equivalent roles — is paid by the outsourcing vendor after that vendor has collected its margin from the bank. She has no pension. She has no meaningful health maintenance organisation coverage. She has no housing fund contribution beyond the notional minimums that enforcement frequently fails to secure. She has no clear career ladder, no annual appraisal that leads to promotion within the bank, and no share in the bank’s profit-sharing arrangements. Her contract is renewed — or not renewed — every six to twelve months, meaning that she lives perpetually in what our forensic analysis has termed ‘renewal anxiety’: the grinding psychological stress of not knowing whether the next cycle will bring continuation or dismissal.
This is not an accident of the market. It is a deliberate design choice, structured with considerable sophistication. The forensic anatomy of the exploitation mechanism works as follows. Banks set up or maintain relationships with outsourcing firms, paying those firms a blended rate for labour services. The outsourcing firm retains a margin — typically 15 to 25 percent — and pays the remainder to workers. The bank eliminates pension liability, health insurance liability, severance liability, and trade union negotiation obligations for those workers in one stroke. From a cost-to-income ratio perspective — which CBN prudential guidelines monitor closely — the labour cost of the 65 percent does not appear on the bank’s payroll line. It appears instead under operating expenses, buried within ‘other costs’, making the bank appear leaner and more efficient to analysts and regulators than it actually is. This is not merely an employment injustice. It is regulatory arbitrage of a sophisticated variety, and it is widespread.
The parallel story in oil and gas is no less troubling. The US Solidarity Center and various academic researchers have documented how Nigeria’s hydrocarbon sector shifted decisively from permanent employment to outsourced and casual staffing over the past two decades. International oil companies operating in Nigeria, and their local counterparts, have offloaded entire operational layers to labour contractors, creating a situation in which workers handling hazardous materials, operating in dangerous environments, and carrying out safety-critical tasks have no job security, no guaranteed healthcare, and no pensions.
The implicit social contract — that industrial risk carried by a worker should be accompanied by commensurate rewards and protections — has been effectively dissolved.
In telecommunications, where China and India have been major investors and technology partners in Nigeria’s infrastructure rollout, the outsourcing model has been replicated at scale. Field engineers, network technicians, customer care agents, and retail staff are overwhelmingly contract workers. FMCG manufacturing firms — many established with Chinese or Indian capital alongside Nigerian partners — run production lines staffed primarily by casual and contract workers. And with breathtaking irony, government agencies and parastatals — entities that, as employers of last resort in the public interest, should model the highest standards of employment — have themselves become significant users of contract staffing arrangements, circumventing civil service employment protections through the now-familiar outsourcing mechanism.
II. The Economic Consequences: How Pseudo-Employment Undermines Growth
The economic damage inflicted by this system extends far beyond the individual workers it harms. It reaches into the macroeconomic structure of the country in ways that compound Nigeria’s existing developmental challenges and undermine the very growth story that the banking sector’s headline numbers seek to project.
Consider first the question of domestic demand. Nigeria’s economic recovery — as evidenced by the improving PMI and rising bank fee income of Q1 2026 — depends significantly on household consumption. When a workforce of millions is held in perpetual wage suppression, the consumption multiplier that economists associate with formal employment is severely diminished. A bank teller earning N80,000 per month on a contract basis in Lagos, after transport, rent, and food, has essentially nothing left to invest, save, or spend on discretionary goods. Multiply this by hundreds of thousands of workers across the formal economy, and one begins to understand why GDP growth figures that look encouraging at the macro level produce so little felt improvement at the household level. The economy grows; the people do not prosper. The outsourcing model is one of the structural explanations for this paradox.
The second economic consequence is the artificial inflation of bank profitability. As our forensic analysis has established, banks are reporting strong earnings that are, in part, constructed on labour cost suppression. The combined profit after tax of Guaranty Trust Holding Company, Zenith Bank, United Bank for Africa, and Access Holdings was approximately N3.4 trillion in 2024. These institutions simultaneously paid record dividends to shareholders. If those same institutions employed their workforces on full permanent terms — with pension contributions, health insurance, competitive salaries, and severance provisions — their reported profitability would be measurably lower. The shareholder value currently being celebrated is, in a structural sense, partially funded by the welfare deprivation of the workers who create it. This is not sustainable, and it is not equitable.
Third, the outsourcing economy creates a talent drain dynamic that ultimately damages the industries that practise it most enthusiastically. As BusinessDay Nigeria reported in 2025, contract staff earning N80,000 a month while handling N50 million in daily cash transactions face a moral hazard that no employer should court. The incidence of fraud involving contract bank staff — motivated not by malice but by economic desperation — is well documented.
Equally damaging is the loss of institutional knowledge. The best contract workers — those with the initiative, intelligence, and capability to drive genuine productivity — inevitably leave. Some secure permanent employment elsewhere. Many join Nigeria’s well-documented ‘Japa’ migration wave, contributing their skills to economies in the United Kingdom, Canada, the United States, and the Gulf states rather than to the institutions that trained them. Short-term wage savings generate long-term institutional impoverishment.
Fourth, and perhaps most consequentially for the long term, is the pension crisis that this system is systematically engineering. As of the third quarter of 2025, only 215,914 informal and contract workers had enrolled in PenCom’s Personal Pension Plan — against an estimated 92.1 million informal sector workers who remain entirely uncovered. PENCOM itself has acknowledged that 90 percent of workers in the informal economy have no pension benefits of any kind. The World Bank’s 2021 estimate that 80.4 percent of Nigeria’s labour force operates in the informal sector — a category that increasingly includes the ‘formally employed’ contract worker who lacks all substantive protections — points toward a demographic catastrophe. As Nigeria’s population ages, as its life expectancy gradually improves, and as the cohort of workers who spent their careers as perpetually renewable contractors reaches old age, the nation will confront millions of elderly citizens with no retirement savings, no pension, and no state social protection system capable of substituting for either. Without a structured pension system for these workers, Nigeria faces — as analysts at Business Post and RisCura have warned — a severe old-age crisis characterised by mass poverty, social unrest, and mounting pressure on already inadequate healthcare and social services.
III. The Governance Failure: Rent-Seeking and Regulatory Arbitrage
A forensic examination of the outsourcing economy in Nigeria’s banking and corporate sectors cannot avoid the governance dimension, because the architecture of this system raises questions that go beyond employment policy and into the territory of conflict of interest and corporate capture. The key forensic questions must be asked plainly: Who owns the outsourcing firms that supply labour to Nigeria’s banks? Are the procurement processes through which outsourcing contracts are awarded transparent, competitive, and auditable? Are there related-party transactions — executives or directors of client companies holding interests in the labour supply firms they engage?
These questions matter because the economics of labour outsourcing create powerful incentives for rent-seeking. A bank that pays an outsourcing firm N1 billion annually for 1,000 workers, of which the firm retains N200 million and distributes N800 million to workers, has created a significant revenue stream for the outsourcing entity. If that outsourcing entity is connected — directly or through proxies — to senior managers or board members of the client bank, then the labour cost ‘savings’ are not being passed to shareholders or to customers through lower charges: they are being captured by insiders through a parallel income stream. This is, in classical terms, rent extraction, and it represents a governance failure of the first order. The Central Bank of Nigeria’s corporate governance framework for banks — which requires disclosure of related-party transactions and mandates board oversight of significant supplier relationships — provides the regulatory authority to investigate these arrangements. Whether that authority is being used with sufficient vigour is a question that the National Assembly’s Joint Committee on Banking and Labour should pursue through public hearings.
The broader governance failure, however, is systemic rather than individual. Nigeria’s Labour Act, in Section 7(1), requires that employers provide workers with written terms of employment that include wages, hours, and benefits. ILO Convention 181 on Private Employment Agencies sets out standards for the protection of workers placed through such agencies. The CBN has issued Financial Sector Guidelines on Labour Administration in Contract Staffing. The Federal Government has, on multiple recorded occasions, directed banks specifically to convert contract staff to full employment status. None of these directives have produced systemic compliance. Enforcement mechanisms are weak, penalties are insufficient to deter profit-maximising institutions, and the regulatory arbitrage opportunity that outsourcing creates is simply too valuable for corporate boards to voluntarily abandon without compulsion.
The National Industrial Court of Nigeria has repeatedly adjudicated disputes involving contract workers and has, in a number of landmark judgements, taken positions that differ from the classification of outsourced workers as employees exclusively of the intermediary contractor. These judicial pronouncements have progressively established that the substance of the employment relationship — the direction, control, integration, and dependence of the worker — matters more than the formal contractual label. But litigation is a remedy for individual workers who can afford it, not a systemic solution to a structural problem. What is needed is not more court cases but more legislative clarity, more aggressive regulatory enforcement, and — critically — more political will.
IV. What the World Has Learned: Global Comparative Frameworks
Nigeria does not need to reinvent the wheel on this question. Jurisdictions across every region of the world have wrestled with the challenge of regulating outsourced and temporary labour, and the accumulated body of law, policy, and institutional learning offers a rich menu of approaches that can be adapted to the Nigerian context.
The European Union: Equal Treatment As A Non-negotiable Baseline
The European Union has approached the regulation of temporary and agency work through a progressive framework of directives that establish equal treatment as the foundational principle. The Temporary Agency Work Directive of 2008 — Directive 2008/104/EC — establishes in Article 5 that temporary agency workers must receive, for the duration of their assignment at the user company, basic employment and working conditions equal to those they would have received had they been employed directly by the user company in the same position. This includes pay, working time, rest periods, and paid leave.
Derogations are permitted only under specific collective bargaining arrangements, and member states are required to review any restrictions on agency work that cannot be justified on grounds of worker protection.
The EU went further in October 2024, formally adopting the Platform Work Directive — Directive (EU) 2024/2831 — which came into force on December 1, 2024, and must be transposed into national law by member states by December 2026. This directive addresses the 21st-century iteration of the outsourcing problem: the gig economy. It introduces a presumption of employment for digitally managed workers — meaning that the burden of proof shifts to platforms and employers to demonstrate that a worker is genuinely self-employed, rather than requiring workers to prove their employment relationship. It also introduces algorithmic transparency requirements, ensuring that automated decision-making tools used to manage workers are subject to oversight and challenge. France and Spain have already begun implementing national legislation to give these protections domestic effect. The European Trade Union Confederation has noted that digital platforms have historically based their business model on creating ‘a race to the bottom on rights’, and the EU’s legislative response represents a deliberate, politically mobilised effort to reverse that dynamic.
South Africa: The Three-month Deeming Provision
South Africa’s approach to regulating temporary employment services provides arguably the most directly relevant regional precedent for Nigeria. Section 198A of South Africa’s Labour Relations Act, as amended in January 2015, establishes a ‘deeming provision’: once a worker placed by a temporary employment service has supplied services to the same client for longer than three months, and earns below the prescribed threshold, the client is deemed to be the employer of that worker for all purposes of the LRA. This means that after three months, the client company assumes the legal obligations of an employer — including protections against unfair dismissal, access to CCMA dispute resolution, and equal treatment provisions. The law further provides that workers placed under such arrangements must not be treated less favourably than comparable permanent employees of the client.
The South African experience has not been without challenges — employers have attempted to exploit loopholes by rotating contract staff before the three-month trigger activates, and courts have been required to adjudicate complex questions about dual employment relationships. But the legislative architecture is clear: long-term outsourcing to perform permanent roles creates an implied employment relationship, and the law insists that workers in that relationship receive meaningful protection. The principle that ‘a worker performing permanent work in a permanent way has a legitimate expectation of permanent employment’ has been progressively affirmed by South African jurisprudence and provides a model for Nigerian legislative reform.
Germany And Co-determination: Structural Worker Voice
Germany’s approach to labour market flexibility operates within a framework of strong co-determination — the legal requirement that workers be represented on company supervisory boards and consulted on significant workforce decisions. Germany’s Temporary Agency Work Act (Arbeitnehmerüberlassungsgesetz) sets explicit limits on the duration of temporary placements — currently eighteen months — beyond which a worker must be offered permanent employment. Temporary agency workers are also entitled to the same working conditions as direct employees after nine months of continuous deployment, with only limited exceptions for those covered by collective agreements providing equivalent protection. The German trade union system, through Tarifverträge (collective agreements), has further negotiated sector-specific protections that raise the floor for temporary workers across industries.
The German model rests on a fundamental premise that Nigerian policymakers would do well to internalise: labour market flexibility and worker security are not inherently in conflict. A labour market that enables employers to adjust workforce size through temporary contracts during genuine downturns while protecting workers from permanent casualisation is one that combines economic adaptability with social stability. The abuse identified in Nigeria is not flexibility — it is the permanent substitution of precarious labour for permanent employment, even in roles that are structural, ongoing, and integral to core business operations.
Asia: India, Singapore, And China’s Emerging Protections
The Asian experience with contract labour regulation is diverse and evolving. In India, the Contract Labour (Regulation and Abolition) Act of 1970 governs the engagement of contract workers, requiring principal employers to ensure that contractors pay wages no less than the prescribed minimum and maintain statutory social security coverage. India’s Code on Social Security, enacted in 2020 and progressively implemented, extends social security provisions — including provident fund, employees’ state insurance, and gratuity — to gig and platform workers, a landmark extension that remains partially implemented but represents a serious legislative commitment. China’s regulators have ordered online platforms to ensure that workers earn above the minimum wage and maintain insurance coverage.
Singapore has moved to extend workplace injury insurance and pension coverage to ride-hailing and food delivery workers, becoming one of the first Asian nations to provide legal protections specifically tailored to gig economy participants.
The pattern across Asia is one of progressive extension: as countries have recognised that the informal-formal boundary is being manipulated by corporate actors, they have responded with targeted legislation to re-establish substantive protection for workers who, regardless of their formal classification, are economically dependent on a single client. This is precisely the dynamic that Nigeria must address.
The Middle East: The Kafala Cautionary Tale
The Middle East offers Nigeria a cautionary tale rather than a model to emulate. The kafala (sponsorship) system, widely used in Gulf Cooperation Council states to manage migrant labour, ties a worker’s legal status to their employer, creating a relationship of structural dependency that has been extensively documented to facilitate exploitation. Workers under kafala who change employers without permission may face legal jeopardy, and the asymmetry of power between employer-sponsor and worker-dependent has generated what the International Labour Organization and human rights organisations have characterised as a framework susceptible to forced labour.
Recent reforms in Qatar — accelerated by the scrutiny accompanying the 2022 FIFA World Cup — and incremental changes in the UAE and Saudi Arabia have begun to liberalise kafala restrictions, but the fundamental warning for Nigeria is clear: when legal frameworks vest too much power in the employer relationship without countervailing worker protections, exploitation follows as predictably as night follows day. Nigeria’s contract staffing system is not kafala, but the power asymmetry it creates — workers who cannot afford to lose renewal, facing employers who face no meaningful regulatory cost for non-renewal — produces comparable dynamics of suppression and silence.
Africa: Kenya, Rwanda, And Ghana’s Emerging Frameworks
Within the African continent, Kenya’s Employment Act provides that a worker employed on a series of successive fixed-term contracts for two years or more is presumed to have a contract of permanent employment, placing the burden of rebuttal on the employer. Rwanda’s Labour Code requires that temporary contract workers performing the same tasks as permanent employees receive equivalent remuneration, and the Rwanda Development Board has worked to enforce minimum social security contributions for all workers regardless of contractual classification. Ghana’s Labour Act similarly contains provisions designed to prevent the abuse of temporary employment as a device for avoiding permanent employment obligations. These frameworks are imperfect and enforcement remains challenging across the continent, but they demonstrate that the legislative tools exist and that neighbouring African economies are at varying stages of deploying them.
V. The Coming Pension Catastrophe: A Time-Bomb We Must Defuse
The pension dimension of Nigeria’s contract labour crisis deserves a dedicated examination, because it represents not merely a current injustice but a future catastrophe that is accruing compound interest with every month that structural reform is delayed. As of September 2025, PenCom reported that only 215,914 informal and contract workers had enrolled in its Personal Pension Plan — out of an estimated 92.1 million informal-sector workers. That is an enrollment rate of approximately 0.23 percent. The Contributory Pension Scheme, which covers formally employed permanent workers, remains the primary vehicle for retirement security in Nigeria, and it is precisely the workers excluded from that scheme — the contract workers, the outsourced tellers, the casual field engineers — who will arrive at old age with nothing.
PenCom has acknowledged this crisis directly, noting that bringing informal and contract workers into pension coverage is critical to address ‘the risk of old age poverty.’ The World Bank has estimated that if current patterns persist, the combination of demographic growth, increasing life expectancy, and pension exclusion will produce a situation in which most Nigerians spend their old age in abject poverty. The implications are not merely humanitarian. They are fiscal, political, and social. An ageing population with no retirement income creates demand for state social assistance that Nigeria’s current fiscal architecture cannot support. It creates healthcare costs that overwhelm an already strained public health system. It creates social discontent that, in a country of Nigeria’s scale and complexity, carries real risks of the kind of instability that makes productive investment impossible.
The irony is that many of the workers most at risk of this fate spent their working lives inside Nigeria’s most profitable institutions. A bank teller who works for fifteen years as a contract employee — earning forty percent of what her permanent counterpart earns, contributing nothing to a pension because her employer is not legally required to facilitate it, building no retirement savings because her net pay after Lagos living costs leaves nothing to save — will retire to poverty after spending her most productive years enriching shareholders who received dividends she was never invited to share. This is not an economic system. It is an exploitation compact, dressed in corporate vocabulary and legitimised by regulatory silence.
VI. A Framework for Reform: Recommendations for Nigeria’s Leadership
The evidence assembled in this article demands a response that is commensurate with the scale of the problem. The following framework — structured around legislative reform, regulatory action, corporate governance, labour organisation, and fiscal policy — offers a comprehensive roadmap for Nigeria’s policymakers, corporate leaders, and civil society actors.
Legislative Reform: Closing The Legal Loopholes
The National Assembly must enact an amendment to the Labour Act that establishes a ‘Core Role Test’ with legal effect. Any worker performing functions that are operational, continuous, customer-facing, and essential to the business of the principal employer — such as teller services, loan origination, network maintenance, or production line operation — should, after twelve continuous months with the same principal employer, be automatically entitled to review for conversion to direct employment with full benefits. The amendment should further establish that the burden of demonstrating non-core status rests on the employer, not the worker. This rebalances the asymmetry of evidence and creates a genuine incentive for employers to conduct honest assessments of what is genuinely temporary and what is structurally permanent work.
A complementary provision should establish an explicit outsourcing ratio ceiling for systemically important industries. For banking, a maximum outsourcing ratio of 30 percent for core functions — with ‘core’ defined by the proposed Core Role Test — would provide a clear regulatory target while allowing genuine flexibility for truly non-core services. The CBN already has authority within its prudential framework to impose such requirements; what is needed is the political commitment to exercise that authority.
Regulatory Action: CBN, PENCOM, FIRS, And The Ministry Of Labour
The Central Bank of Nigeria should issue a directive requiring all licensed banks to disclose, in their Pillar 3 and annual report disclosures, the full human capital cost — including both direct payroll and total vendor payments for outsourced labour services. This one transparency measure would illuminate the true cost structure of Nigerian banking and enable investors, analysts, and regulators to form accurate views of labour-adjusted profitability. It would also create reputational accountability that currently does not exist.
PENCOM should refuse to renew the operating licences of outsourcing firms that cannot demonstrate active Retirement Savings Account registration and contribution for 100 percent of their deployed workers. The Federal Inland Revenue Service should similarly deny tax deductibility for labour vendor invoices where the vendor cannot produce evidence of pension remittance and tax compliance for its deployed workforce. These two regulatory measures, operating in concert, would make non-compliant outsourcing significantly more expensive than compliant outsourcing, and gradually more expensive than direct employment.
That is the appropriate direction of incentives in a well-functioning regulatory economy.
The Ministry of Labour and Employment should establish a dedicated Labour Outsourcing Compliance Unit with the powers to conduct unannounced inspections of outsourcing firms and their client companies, levy meaningful administrative penalties for non-compliance with existing Labour Act provisions, and publish an annual National Employment Quality Index that ranks major employers — including banks, oil companies, telecoms, and manufacturers — by their ratio of permanent to contract staff, wage gap between employment categories, pension compliance rates, and conversion rates from contract to permanent status. Public disclosure is a powerful accountability mechanism, and a well-designed index of this kind would enable customers, investors, and civil society to reward compliant employers and penalise exploitative ones through market behaviour.
Corporate Governance: What Boards Must Do
Nigeria’s bank boards bear direct accountability for the labour practices conducted in their institutions’ names. The Companies and Allied Matters Act vests in directors a fiduciary obligation to the company — but when interpreted in light of Nigeria’s constitutional values and the United Nations Guiding Principles on Business and Human Rights, that fiduciary obligation cannot be limited to shareholders alone. It must encompass the social licence that makes banking viable.
Boards should immediately commission an independent audit of all outsourcing arrangements to identify related-party transactions, conflicts of interest, and ownership connections between outsourcing vendors and bank insiders. Where such connections exist, they should be disclosed in annual reports and the arrangements restructured to eliminate rent-seeking dynamics. Board HR and Remuneration Committees should adopt a Workforce Quality Index as a KPI for executive performance — explicitly linking executive compensation to improvements in the ratio of permanent staff, pension compliance, wage equity, and contract-to-permanent conversion rates. The Stanbic IBTC case study embedded in our forensic analysis is instructive: after shareholder activism, that institution reduced its contract ratio from 58 percent to 41 percent in eighteen months, with measurable improvements in fraud reduction and customer satisfaction. Quality employment, properly measured, pays for itself.
Labour Organisation: Empowering The 65 Percent
The Nigeria Union of Banks, Insurance and Financial Institution Employees (NUBIFIE) and the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) must, as a matter of urgency, extend full union membership to contract and outsourced workers. ILO Convention 87 on Freedom of Association and Convention 98 on the Right to Organise and Collective Bargaining both protect the right of all workers — regardless of contractual classification — to organise and bargain collectively. The artificial exclusion of contract workers from collective bargaining is one of the mechanisms through which their wages and conditions are suppressed, and addressing it through genuine union inclusion would begin to restore the wage floors that have been eroded by decades of outsourcing normalisation.
The CIBN should further establish a certification-to-conversion pipeline: contract workers who achieve specific CIBN professional certifications should be automatically prioritised for direct employment conversion, transforming the current dead-end of contract banking work into a credentialed ladder toward security and career progression. This serves the banking sector’s interest in a better-trained workforce while creating a concrete, measurable pathway for the workers who currently have none.
Fiscal Policy: Using The Public Purse As Leverage
The Federal Government disburses trillions of naira annually to commercial banks through government account operations, bond purchases, and various financial services arrangements. This creates significant public leverage. The Ministry of Finance and the Accountant General’s Office should establish a preferential banking policy: government accounts should be preferentially held with, and government bond transactions preferentially conducted through, institutions that meet defined employment quality thresholds. A bank that employs 65 percent of its workforce on contract terms should not enjoy the same unrestricted access to government financial relationships as one that has made measurable progress toward quality employment. This is not punitive regulation; it is the responsible use of public purchasing power to shape corporate behaviour in the public interest. Governments in the European Union, the United Kingdom, and the United States have long deployed public procurement preferences as social policy instruments. Nigeria should do the same.
Conclusion: A Social Contract That Must Be Restored
We began this article with a paradox: the most profitable sector in Nigeria’s formal economy sustains itself primarily through the labour of workers who are excluded from its prosperity. We end with a moral and political imperative: this cannot continue. It cannot continue because it is producing a demographic time-bomb in the form of millions of workers ageing into pensionless destitution. It cannot continue because it is suppressing the domestic demand that Nigeria’s economic recovery requires. It cannot continue because it is a governance failure that corrodes public trust in institutions whose function is, fundamentally, the stewardship of public money and confidence. And it cannot continue because it is simply wrong — a violation of the elementary principle that those who create value should share in its rewards.
The international evidence is unambiguous: jurisdictions that have moved decisively to regulate outsourced and temporary labour — through the EU’s equal treatment directives, South Africa’s deeming provisions, Germany’s co-determination framework, and the progressive extensions of social security coverage being attempted in Kenya, India, and Singapore — have not suffered the economic collapse that employers traditionally threaten whenever labour protections are proposed. What they have gained is more stable workforces, lower turnover costs, reduced fraud risks, greater social cohesion, and a more robust consumer demand base. Nigeria can have these benefits too. But only if its leaders — in the National Assembly, in the CBN, in PENCOM, in the Ministry of Labour, on the boards of banks and corporations, and in the trade union movement — choose to act.
The workers who are currently being cycled through six-month renewal contracts, who carry bank targets and bank risks without bank protections, who will retire with nothing after decades of service to institutions recording trillion-naira profits — those workers do not have the luxury of waiting for a convenient political moment. Their youth is passing. Their pension window is closing. Their old age is approaching. The obligation of leadership is to act before the catastrophe that is clearly foreseeable becomes the catastrophe that is irreversibly suffered.
Nigeria ranked sixth globally in the 2026 Global Outsourcing Talent Index, signalling the world’s recognition of our extraordinary human capital. The profound question that ranking poses is whether Nigeria will use that talent to build a knowledge economy in which workers share in the prosperity their skills create, or whether it will continue to export talent abroad because the terms of employment at home offer neither dignity nor security. The answer to that question will define not merely our labour market, but our social contract, our democracy, and ultimately our destiny as a nation.
About the Authors
Prof. Sarumi, a digital transformation architect and leadership strategist with over 40 years of cross-sector experience across Nigeria and the African continent, writes from Lagos.Prof. Aliu is an entrepreneurship development economist, workforce development strategist, and co-researcher specialising in international and African labour markets, governance, and institutional reform. He collaborates with Prof. Sarumi on applied research addressing Nigeria’s most pressing developmental challenges.
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