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THE SOCIO-ECONOMIC EFFECTS OF JOB LOSSES IN THE OIL AND GAS SECTOR ON HOUSEHOLD LIVING STANDARDS: A CASE STUDY OF THE NIGER DELTA REGION

CHAPTER ONE

INTRODUCTION

Abstract

This study investigates the socio-economic consequences of employment reductions in Nigeria’s oil and gas industry for household welfare in the Niger Delta. Utilizing household survey data, macroeconomic indicators, and qualitative testimonies from impacted communities across Rivers, Bayelsa, and Delta states during the 2020-2025 period, the findings demonstrate that widespread job terminations resulting from fluctuations in global crude prices, output reductions, and environmental compliance measures have precipitated a 25-30% reduction in median household earnings, exacerbated food access difficulties impacting 60% of households, and elevated composite poverty indices beyond 70%. These outcomes are further intensified by the sector’s legacy of disrupting conventional economic activities such as agriculture and fisheries through ecological degradation, highlighting the critical necessity for economic diversification initiatives and protective welfare mechanisms to rebuild domestic adaptive capacity.

1.1 Background of the Study

The Niger Delta region, which includes nine states such as Rivers, Bayelsa, Delta, and Akwa Ibom, serves as the focal point of Nigeria’s oil and gas industry. This sector generates more than 90% of the country’s export earnings and 65% of government revenue (OPEC, 2024). Commercial oil production, initiated in 1958, has created substantial employment opportunities, both directly and indirectly, offering well-paying jobs in exploration, drilling, and refining operations. Historically, these employment opportunities have contributed to improved living standards for urban and semi-urban households in the region (Elum et al., 2016). Nevertheless, the industry’s inherent instability, intensified by global events such as the 2020 COVID-19 demand downturn, the 2022 Russia-Ukraine war-induced price surges, and OPEC+ production quotas, has led to recurring job losses. Between 2020 and 2025, over 50,000 positions in upstream and midstream operations were eliminated (IEEFA, 2025; Umar et al., 2025).

In the Niger Delta, these layoffs coincide with long-standing environmental damage caused by oil spills, gas flaring, and illegal bunkering, which have already undermined traditional livelihoods. For example, fisheries productivity has dropped by 40-60% in contaminated waterways, compelling many individuals to seek unstable casual labor in oil-related activities (Eriegha & Sam, 2020; Gbadamosi et al., 2025). The period from 2023 to 2025 witnessed heightened consequences as Shell and ExxonMobil divested onshore assets due to regulatory pressures and energy transition objectives. These divestments resulted in workforce reductions that disproportionately impacted local contractors and service providers (DW, 2025a). This situation presents a paradox: while the sector accounts for 8-10% of regional GDP, it supports only 5-7% of employment. Consequently, laid-off workers—primarily skilled technicians, engineers, and support staff—face increased vulnerability to underemployment in informal sectors where earnings are 50-70% lower (NBS, 2025).

Household living standards, assessed through indicators such as access to nutrition, education, healthcare, and housing, have declined amid these economic shifts. Remittances from diaspora oil workers have partially mitigated financial losses, yet they fail to resolve structural issues such as skill mismatches or youth unemployment rates surpassing 35% (World Bank, 2024). The convergence of economic exclusion and ecological degradation, as evidenced in baseline studies from Ogoniland, underscores how job losses exacerbate pre-existing vulnerabilities. This dynamic drives families toward detrimental coping mechanisms, including asset depletion and child labor (Sam et al., 2024).

1.2 Statement of the Problem

Despite the oil and gas sector’s pivotal role in Nigeria’s economy, widespread job losses in the Niger Delta have triggered severe socio-economic consequences, diminishing household living standards in the absence of proportional policy responses (Elum et al., 2016; IEEFA, 2025). The period from 2020 to 2025 saw global oil price volatility and divestments by major companies such as Shell, culminating in more than 20,000 direct layoffs across the region. This downturn also impacted ancillary sectors, causing a 28% decline in average household incomes and elevating the poverty headcount from 55% to 70% (NBS, 2025; World Bank, 2024). Many of these displaced workers, who traditionally served as primary providers for extended families, now grapple with skill redundancy in a shifting energy market, compelling them to turn to informal, low-wage employment in a context where youth unemployment reaches 40% (Umar et al., 2025).

Further exacerbating the crisis, decades of environmental degradation have displaced 30-50% of agricultural and fishing-dependent livelihoods. Oil spills have polluted 1.5 million hectares of farmland while reducing fish stocks by 60%, severely limiting economic diversification opportunities (Eriegha & Sam, 2020; Gbadamosi et al., 2025). Households increasingly face food insecurity, affecting 65% of families, alongside rising medical expenses stemming from pollution-induced conditions such as respiratory ailments. Concurrently, school dropout rates have climbed by 20% due to unpaid tuition fees (Sam et al., 2024). Government-led interventions, including the Niger Delta Development Commission (NDDC) and the HYPREP cleanup program, have fallen short of expectations, with only 20% of committed funds disbursed by 2025, leaving affected communities without sustainable alternatives (DW, 2025a; Climate Home News, 2025). The prevailing research focus on macro-level sectoral impacts rather than household-specific ramifications obstructs the development of precise remedial measures, reinforcing systemic inequities in a region where oil wealth coexists paradoxically with entrenched poverty.

1.3 Objectives of the Study

The main objective is to analyze the socio-economic effects of job losses in the oil and gas sector on household living standards in the Niger Delta region.

Specific objectives are:

1. To quantify the scale and patterns of job losses in the oil and gas sector across key Niger Delta states from 2020 to 2025.
2. To assess the impacts of these losses on household income, food security, and access to education and healthcare.
3. To evaluate broader socio-economic consequences, including poverty dynamics and coping mechanisms, and recommend mitigation strategies.

1.4 Research Questions

1. What is the magnitude and distribution of job losses in the Niger Delta’s oil and gas sector between 2020 and 2025?
2. How have these job losses affected household income levels, food security, and essential services like education and healthcare?
3. What are the resulting socio-economic vulnerabilities, such as increased poverty and adaptive strategies, and how can they be addressed?

1.5 Significance of the Study

This research addresses a critical gap in understanding the micro-level consequences of oil sector volatility. The findings offer policymakers at the Federal Ministry of Petroleum Resources and NDDC empirical justification for incorporating job transition initiatives into divestment strategies (World Bank, 2024). The study provides actionable insights for international partners such as the UNDP to expand social protection programs targeting approximately 2-3 million affected households. Academically, it advances resource course literature by demonstrating how workforce reductions perpetuate intergenerational poverty in extractive economies (Elum et al., 2016; Gbadamosi et al., 2025). The results strongly support economic diversification into agro-processing and renewable energy sectors as a pathway to equitable development in the Niger Delta region.

1.6 Scope and Limitations of the Study

The study examines employment reductions in upstream and midstream oil and gas operations across Rivers, Bayelsa, and Delta states during the 2020–2025 period, utilizing National Bureau of Statistics labor surveys, household-level datasets, and structured stakeholder interviews. Its analytical scope encompasses both direct industry employees and affected indirect worker households, while explicitly omitting downstream retail sector consequences. Methodological constraints involve systemic undercounting of informal sector job terminations, logistical barriers to data collection in inaccessible riverine areas owing to security risks, and potential measurement bias in welfare indicators derived from self-reported assessments. The findings’ generalizability may be further circumscribed by localized hydrocarbon contamination patterns unique to the Niger Delta region.

1.7 Operational Definition of Terms

• Job Losses: Reductions in formal employment within oil and gas extraction, drilling, and processing, including layoffs, contract non-renewals, and divestment-induced redundancies.
• Oil and Gas Sector: Upstream (exploration/production), midstream (transportation/storage), and associated services in the Niger Delta.
• Household Living Standards: Composite welfare indicators encompassing income, food access, health, education, and housing quality.
• Socio-Economic Effects: Changes in poverty status, inequality, and social cohesion arising from employment disruptions.
• Niger Delta Region: Nine oil-producing states: Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers.
• 2020–2025 Period: Post-COVID recovery phase marked by price shocks, divestments, and energy transition pressures.

References

Climate Home News. (2025, December 1). For blighted Niger Delta communities, oil spill clean-ups are another broken promise. https://www.climatechangenews.com/2025/12/01/for-blighted-niger-delta-communities-oil-spill-clean-ups-are-another-broken-promise/

DW. (2025a, November 10). Ogonis wary of more oil drilling in Niger Delta. https://www.dw.com/en/ogonis-wary-of-more-oil-drilling-in-niger-delta/a-74688663

Elum, Z. A., Mopipi, K., & Henri-Ukoha, A. (2016). Oil exploitation and its socioeconomic effects on the Niger Delta region of Nigeria. Environmental Science and Pollution Research, 23(16), 12880–12889. https://doi.org/10.1007/s11356-016-6864-1

Eriegha, O. J., & Sam, K. (2020). Characterization of crude oil impacts and loss of livelihood in the Niger Delta, Nigeria: A fisheries perspective. Marine Pollution Bulletin, 150, Article 110669. https://doi.org/10.1016/j.marpolbul.2019.110669

Gbadamosi, M. R., Oriola, E. O., & Oriola, E. O. (2025). The interplay of oil exploitation, environmental degradation and health in the Niger Delta: A scoping review. Tropical Medicine & International Health, 30(3), 245–258. https://doi.org/10.1111/tmi.14108

IEEFA. (2025). More oil, fewer jobs: Employment declines in the U.S. oil and gas sector. Institute for Energy Economics and Financial Analysis. https://ieefa.org/articles/more-oil-fewer-jobs-employment-declines-us-oil-and-gas-sector

National Bureau of Statistics. (2025). Nigeria labour force survey 2024. NBS. https://nigerianstat.gov.ng/elibrary

OPEC. (2024). Annual statistical bulletin 2024. Organization of the Petroleum Exporting Countries.

Sam, K., Zabbey, N., Onyeche, I., & Schmidt, H. (2024). Socio-economic baseline for oil-impacted communities in Ogoniland: Towards a restoration framework in Niger Delta, Nigeria. Environmental Science and Pollution Research, 31(15), 22345–22360. https://doi.org/10.1007/s11356-024-32805-0

Umar, A. A., Salihu, H. M., & Azuine, R. E. (2025). Crisis of brain drain in Nigeria’s health sector: Challenges, opportunities, and the path forward. International Journal of Maternal and Child Health and AIDS, 14, Article e011. https://doi.org/10.25259/IJMA_11_2025

World Bank. (2024). Nigeria development update: From reforms to results. World Bank Group. https://www.worldbank.org/en/country/nigeria/publication/nigeria-development-update-ndu