Demola, a young economics graduate, spends his days behind a desk in a Lagos banking hall, attending to customers with the professionalism expected of a full-time employee. Dressed in a crisp shirt and tie, he blends seamlessly into the corporate environment. But beneath this polished image lies a harsh reality, Demola is a contract staff member, earning significantly less than his full-time colleagues despite doing the same work.
“I work from 8am to 6pm, sometimes even later, yet my salary barely covers my transportation and feeding,” he lamented. “The worst part? The company pays double of my salary for my role, but the outsourcing firm takes the bulk of it.”
Demola’s story is not an isolated case. Across Nigeria’s banking, telecommunications, oil and gas, and even government sectors, contract staffing has become the norm. The outsourcing model, intended to improve efficiency and reduce operational costs, has instead fueled an exploitative system where middlemen profit while workers barely survive.
Recently, street sweepers under the Lagos Waste Management Authority (LAWMA) raised their voices against poor remuneration. A worker in a viral video revealed that despite a government-approved minimum wage of N85,000 for state employees, sweepers were initially paid N30,000, with a slight increase to N40,000 in February.
In response, LAWMA defended the payments, stating that private firms, not the government, are responsible for paying the workers. The agency further claimed that the N40,000 salary for sweepers and N50,000 for supervisors was fair compensation for their four-hour daily shifts.
“Street sweepers are engaged through private companies under structured contracts, with their responsibilities and entitlements clearly defined,” LAWMA said in a statement.
But for many of these workers, the reality is different. With rising inflation and soaring living costs, the wages remain inadequate, forcing them into financial hardship.
A 2023 report by the Chartered Institute of Bankers of Nigeria (CIBN) revealed that contract staff make up 65% of the banking sector’s workforce. In the oil and gas sector, contract employees reportedly earn 50%–70% less than their full-time counterparts, even when performing equally demanding or riskier tasks.
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Esther, a contract employee at a major beverage company, shared her frustration:
“We handle customer complaints, resolve technical issues, and even market products. But while direct staff get medical benefits, paid leave, and bonuses, we get nothing. If you fall sick and miss work, your pay is slashed. I have worked here for three years with no promotion, yet they keep hiring fresh contract staff.”
Nigeria’s Labour Act mandates fair wages and decent working conditions, but enforcement remains weak. Labour unions have repeatedly called for an end to exploitative outsourcing, yet companies continue to exploit legal loopholes to maintain the status quo.
Also, the federal government has repeatedly ordered banks to convert contract staff to full-time employees, but compliance has been largely ignored. A similar directive in the oil and gas sector has also failed to bring meaningful change.
According to a human resource consultant who pleaded for anonymity, companies prefer to outsource for various reasons, including ease of operation, time and resource management, operational efficiency, and cost-effectiveness. “Outsourcing takes away the burden of personnel management,” he explained.
However, he noted that despite existing labour laws, the extent of their enforcement remains debatable. “Labour laws apply to all workers and employees, whether contract or full-time. But in reality, their application remains a mirage.”
On the issue of wage disparity, he pointed to multiple factors influencing the pay gap. “The justification for the wide pay gap could be seen from different angles—the terms of agreement between the client and the outsourcing firm, the agreement between the outsourcing firm and the employee, the cost of an employee’s lifecycle, and finally, the profit margin per employee to the outsourcing firm.”
Beyond wages, outsourcing firms also bear significant risks, which companies prefer to avoid. “Managing a contract staff comes with risks such as cash suppression, indemnity, false declaration, and falsification of data and records. These risks are borne by the outsourcing firm alone, including challenges like high turnover rates and performance management,” the HR consultant explained.
Labour experts argue that the government must enforce stricter regulations to ensure fair pay and benefits for contract workers. Without proper oversight, outsourcing firms will continue to exploit workers by taking a disproportionate share of their earnings.
Many believe that allowing contract staff to unionise could help them negotiate better wages and working conditions. However, outsourcing firms and employers often discourage union activities, fearing that organised labour could drive up costs and reduce their control over the workforce.
Transparency in outsourcing contracts is another critical area for reform. Companies should be required to disclose how much they pay outsourcing firms per worker. If more workers knew the actual value of their labour, they could push for fairer wages and conditions.
For now, contract workers remain trapped in a system that undervalues their labour. Until Nigeria confronts the loopholes in its outsourcing industry, thousands of skilled professionals will continue to endure financial struggles while the middlemen reap the rewards. The question remains: How long will this injustice persist?
