One Year After COVID-19 Lockdown: a Chronicle of Job Losses and Salary Cuts
March 27 marks exactly one year the COVID-19 lockdown started. The restriction and policies created by the lockdown set a series of events that even the best of seers couldn’t have predicted at the beginning of 2020.
One of the biggest woes of the pandemic was the loss of jobs, especially in the tech sector. Approximately, about 1000 tech jobs were reportedly lost their job due to the Lockdown in Nigeria alone.
This was largely owing to the fact that so a lot of companies, both well-established and start-ups struggled for survival amidst reducing revenue and economic slowdown and a recession.
Anthony*, a Graphics designer at an engineering company in Abuja told Technext that he got a notice after the Lockdown was extended. He explained that when he finally got the call that not only he but two other colleagues met the same fate.
Like Anthony, many others felt the harsh strokes of the lockdown, below is a breakdown of some of the reported layoffs, and salary cuts that affected the Nigerian tech ecosystem.
The microfinance bank, Renmoney are one of the first to shift their business model and layoff staffs when the lockdown started.
In an email, the company’s CEO, Kieran Donnelly, explained that the mass layoffs are a result of “a strategic change in how we conduct our business”.
He revealed that it was adopting a more digital approach and will no longer operate a “direct sales channel”. This led to direct sales agents which represent almost half its staff being sacked.
Like Renmoney, many tech startups across Africa have had to make the difficult decisions to keep costs low as a means to survive.
IROKOtv, a Video on demand (VOD) platform announced that it was cutting the salaries of 49 employees and furloughing another 83 employees in May after a drop in revenue due to the Pandemic.
A few months later, it sacked 150 of its staffs and closed its Nigerian office. According to the company’s CEO, Jason Njoku the move was necessitated following the stem of losses caused by the economic woes in the region.
“Between the COVID-19 fallout, rapidly devaluing the currency and hostile regulatory environment, it’s time to pause the burn. It’s time to hunker down and see what the next 18 months bring,”Jason Njoku, CEO iROKOTV
in May, Tech Talent Outsourcing Company, Andela laid off 135 of its personnel across four locations on the continent including Nigeria. This represents about 10% of its workforce.
According to the company’s CEO, Jeremy Johnson majority of Andela’s customer base was infected by the COVID-19 induced recession. And as such the company is anticipating a decline in new customers, hence the drastic decision made.
“While our customer base has held up better than most, the majority have still been impacted by the economic downturn. We expect to see churn spike this year as well as a decline in new customers due to the economic uncertainty. Expectations for slow growth necessitate cost-cutting measures to ensure that we make it to the other side.”Jeremy Johnson, CEO, Andela.
TechAdvance, a payment application development company also revealed on Twitter that it downsized during the lockdown. However, there were no exact numbers.
According to the company’s founder and Chief Innovation Officer, Edmund Olotu, the decision to let go of some members of staff was difficult but was done based on compelling data.
“Worse still, letting go of them in the middle of a crisis because the data said it was that or a dead company. Doing that and still trusting that those left behind will continue to be motivated to sail the company through this storm.”Edmund Olotu, founder and Chief Innovation Officer at Techadvance
Similarly, a social media report claimed that payments company, Paga, notified all employees of a 50% slash in salaries. However, there are no verified report of the claims
Big Cabal Media
Another company that decided on a pay cut during the lockdown is Big Cabal Media. The media company announced a salary cut for all employees in the middle of the lockdown.
According to the company’s CEO, Tomiwa Aladekomo, it was not an easy decision in what is a difficult time for businesses. He added that decisions like this can be “life and death for a business that gets them wrong.”
In the fintech space, Opera,s OPay, reportedly fired over 70% of its staff. This according to sources could include high ranking staffs.
At the time there was also reports that it was selling off its bikes from its ORide vertical
If this true, OPay would have sacked about 140 staffs following the 200-500 employee range seen on LinkedIn.
The company has, however, revealed that new vertical in the e-commerce sector called OMall. It has also introduced O-Express a logistics arm for OMall, just as Jumia Logistics is to Jumia’s e-commerce activities.
Early May, Global ride-hailing company, Uber laid off 3,700 employees and permanently closed about 180 driver centres across the world after the stay home caused by the pandemic significantly dwindled ride-hailing businesses.
At the time the CEO, Dara Khosrowshahi explained that ride-hailing was significantly down and the company was currently maintaining a freeze on hiring.
“With the reality of our rides trips volumes being down significantly, our need for CommOps as well as in-person support is down substantially and with our hiring freeze, there simply isn’t enough work for recruiters.”Dara Khosrowshahi, the chief executive officer of Uber
A breakdown of former employees using the Uber Alumni list shows that about 94 employees were probably sacked in the EMEA region which includes Nigeria.
Similarly, Airbnb, an online marketplace for lodging, vacation fired roughly 1,900 people in May. This represents about 25% of its workforce.
According to the company’s CEO, Brian Chesky, Airbnb 2020 revenue will be half of what the company brought in during 2019. This is because stay-home orders led to mass cancellations of bookings in its operating countries including Nigeria.
A breakdown of former employees using the Airbnb talent directory shows just 1 employee was probably affected in Africa.
The decisions by many companies to cut salary, furlough or layoff staff during the lockdown isn’t surprising. A report revealed that as much as 74% of startups have had to let go of full-time employees, with 26% of them having to let go of 60% or more of full-time staff.
This in part contributed to the 28.2% unemployed tech professionals reported by the National Bureau of Statistics.
However, one year after most company’s have begun to recover and new employment opportunities are showing us as companies are working toward gaining full strength and momentum.
This is illustrated by the recent influx of funding into the Nigerian tech industry.
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