Nigeria: Unemployed Pilots - The Inevitable Glut

Capt. Daniel Omale

— April 19, 2014

For the past three years, this column has remained constant in forecasting the potential unemployment plague that would be facing the aviation sector in Nigeria. But as usual, no one in government, not even the ministry of labor and productivity appears bothered about the scourge, and the possible repercussion that comes with youth idleness that usually leads to restiveness.

It is estimated that over 60% of Nigeria’s workforce is unemployed. The definition of a workforce is: total number of a country’s population employed in the armed forces and civilian jobs, plus those unemployed people who are actually seeking paying work. Sadly, the majority of Nigeria’s population seeking paying work is below the age of 40.

Job creation is a fundamental responsibility of the government in power, and, the government must visibly be worried if more than 70 million able/ active people in the country, who are qualified for gainful employment, are without income. It’s needless to reemphasize the looming danger as a result of the state of hopelessness and despondency.

In every psychological and sociological study of crime rate in most societies, the fundamental reason for rising crime wave lies with the economic disposition of the community in question.

The rate of unemployment among newly trained Nigerian pilots has been on the rise for the past three years, although the latent failure began with the demise of Nigeria Airways, the single, largest employer of airline pilots in Nigeria’s history.

Why the issue of unemployment amongst Nigeria’s pilots is almost incurable are as the result of the following problems:

First, there  are fewer airlines in Nigeria today than before, although the number of trained commercial pilots has tripled; second, the five currently active airlines in Nigeria are heavily indebted to the Asset Management Company (AMCON) of Nigeria; three, the majority of the corporate jets operating in Nigeria are financed from abroad, with stringent financing terms, which include keeping the aircraft’s registration in the country of the lending institution and, for European banks, the aircraft must be registered in Europe. Few Nigerian pilots have European commercial pilot’s certificate.

Another major issue is that no Nigerian bank can lend to a potential airline investor below interest rate of 25%, which is a glaring doom even before the business starts.

The number of commercial pilots without jobs in Nigeria as of today stands at about 300. The Nigerian College of Aviation Technology, Zaria, has nearly 100 student pilots that will graduate and join the unemployment scheme in less than 12 months from now. The International flying school in Ilorin, Kwara state, has about 30 students or more, while those sponsored abroad by the Kano and Niger Delta states exceed 150 students.

Airline business is generally expensive with very low profit margin. The illusion that airline business is worth  investing in, has led a number of investors into bankruptcy.

Professional commercial pilots are trained to acquire a linear skill which limits their versatility in other economic sectors; therefore, they suffer from structural unemployment.

Structural unemployment, one of the main unemployment types, is the mismatch between job openings and job seekers in an economy. For example, local job seekers may be generally skilled, but lack the specific skills required for available job openings. This type of unemployment can also result if sufficiently skilled workers are seeking employment, but available jobs are in another part of the country or the world. Any disparity between the abilities of available workers and the requirements for open positions can be considered structural unemployment.

The dynamics of the labor market tend to give rise to this type of unemployment. Shifting market conditions, such as changing technology, continuously alter the demand for labor. Training can become a major issue as workers try to predict the future job market. Training for specialized skills requires a significant amount of time and resources. The resulting lag between the actual demand for labor and the current skill set of available workers is one major cause of structural unemployment.

Last week, the minister of finance enthusiastically announced to Nigerians that our country’s Gross Domestic Product (GDP) has become the highest in Africa. But the question on everyone’s mind, including one of the unemployed pilots who was in my office was: what does this mean to us? Well, my definition of GDP got him even more confused: the value of a country’s overall output of goods and services (typically during one fiscal year) at market prices, excluding net income from abroad.

Gross Domestic Product (GDP) can be estimated in three ways which, in theory, should yield identical figures. They are (1) Expenditure basis: how much money was spent, (2) Output basis: how many goods and services were sold, and (3) Income basis: how much income (profit) was earned.

The core reason why Nigerians are unhappy or not enthusiastic with the finance minister’s announcement is that life is becoming harder everyday for the majority of Nigerians, not the unemployed pilots alone. But it is even harder if your parents spend N10m to train you with the hope that one day, you will be able to take care of yourself and, that is far from happening. Improvement in our GDP without corresponding improvement in livelihood is mere economic jargon.

This is the case of the unemployed commercial pilots in Nigeria: their parents have spent millions of Naira to train them either abroad or in Nigeria, but jobs are not forthcoming.

Arik air, the largest airline in Nigeria, has in theory, employed 80 of the idle pilots, but it will take approximately five years for the airline to actively engage all of them, because, Arik can only send three pilots for simulator training every three months. Therefore, in one year, only twelve out of the 80 newly recruited pilots will effectively be absorbed in the company to earn income. So, this translates to one pilot per month.

There is no government legislation that can force private aircraft owners to employ any of the unemployed, but government can support the airlines in this country through subsidized operational costs to boost revenue, and invariably more aircraft for airline operators.

The more aircraft we have in this country, the better the chances of those out of job to gain employment.

Government policies should gear towards encouraging those who are interested in acquiring aircraft for the purpose of operating in our national airspace. A contrary policy will continue to hurt the economy with more unemployment news in the polity; obviously, an ambiguity exists: supply is more than demand.

Source:   http://leadership.ng