AN ASSESSMENT OF THE EFFECT OF GHOST WORKERS ON PAYROLL ON THE PROVISION OF SERVICE DELIVERY IN BORNO STATE

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Ghost worker or payroll fraud has been a major problem faced by many nations, including Nigeria and the rest of the world. The problem of ghost workers on payrolls is a pandemic for many countries around the world, particularly the less developed. Billions of tax payer dollars are pumped out annually from the government coffers by paying wages to non-existent employees who have been fraudulently placed in the payroll system of most of these nations. The ghost worker is one who is listed in the payroll system but who does not work for the company and who often steals from the government. Ghost workers on payrolls may be a real person who, knowingly or not, is put on a payroll, or a fictional person invented by a fraudster. Government at all levels in Nigeria is undoubtedly the largest employer of labour. However this large workforce is faced with a variety of problems, including the issue of ghost workers.

Ghost workers or payroll fraud refers to all processes of worker impersonations which according to Oguzierem (2015), have a cost-salary effect on the government concerned. This mechanism covers all unlawful, unpaid, unqualified, fictional and non-existent workers who make pay claims from government coffers. This means that underage, overage, backdated jobs, inherited employment, unqualified employees and illegal staff, even though they report for work on a regular basis; are classified as part of ghost workers and payroll fraud in the public sector. In most cases, these dishonest public office holders fake the requisite paperwork and authorisations to add a worker to the payroll. McCallum and Tyler[2011] argued that apart from conventional ghost workers who are fictional and non-existent workers who have been attached to payroll managers, there are also non-apparent ghost workers. These types of ghost workers are actual public sector employees who earn fake compensation by pay irregularities. They include employees who receive unpaid wages by false means; for example, employees who have several jobs in the civil service, receive dual or multiple salaries using pseudo-names, workers who earn higher pay or benefits than their level, workers on temporary absence or leave of absence but who continue to earn full pay, and workers on transition or retirement but whose names are The Ghost Workers’ Syndrome is not limited to payroll but also to pension payroll, as many of the Ghost Workers mentioned above naturally graduate to the pension scheme, while others are added to the pension payroll managers. The issue was so bad that the pension plans of many of the government’s parastatals spent considerable resources attempting to apprehend the guilty and in some cases, collapsed under their weight. Ghost jobs are a massive drain on the country’s finances, as hundreds of billions of Naira spend paying salaries and pension entitlements to non-existent workers and in many instances, to people who have no excuse to receive those wages other than the fact that they knew someone who could easily add their name to the payroll. There are several explanations for the threat of ghost workers in Nigeria and other developing countries around the world. Olken and Pande [2012] suggest that fraud as a result of Ghost Workers’ Syndrome is mostly due to insufficient research/information on phenomena. The problem has become very pronounced and visible given the current economic realities in the region. With the dropping prices of crude oil the country’s key source of revenue, the government has been known to borrow to pay the wages of employees many of whom are ghosts.

Salary leakage in public services has been a major problem for most developed nations (Hossain, 2013). The epidemic of ghost workers is high among the problems impacting Nigeria’s public service. The problem now is a national crisis and a major drag on the national economy. In a nation where personnel costs account for forty per cent of the overall recurring expenditure of the government, government bilking by ghost employees constitutes a portion of recurring expenses (Oseloka, 2016). The malaise has blossomed into a canker worm of gargantuan proportions and has continued to pose a terrible threat to all levels of government over the years, leading to massive leaks of several billion Naira per month from public treasury by wage transfers to non-existent employees. Put differently, payroll theft has managed to drain huge amounts of money from Nigeria’s civil service for decades. Infamously known as ‘ghost workers,’ different approaches have been used to check the syndrome, but those behind it are still seeking new techniques. There is renewed fervor at all levels of government to tackle the issue, particularly after the arrival of President Muhammadu Buhari, the search for accountability and the economic downturn (Gbemre, 2016). Ghost worker on payroll is as old as the civil service establishment in Nigeria as Faustinus (2013) has noted. This pattern has dominated the minds of policy planners with many tons of millions of tax payers being spent on government looking for false names that are rising in number and disrepute. Despite the fact that attempts are being made to root out these names, the scenario continues to repeat itself. President Muhammadu Buhari has promised to crack down on corruption, and the government has been trying to reduce the costs of running the government, rather than to slash jobs to help fix Nigeria’s worst economic crisis in years (VOA, 2016). Billions of Naira are lost every year in the public sector by fraudulent means. This is just the number that is ferreted out and made public. As other forms of corruption, the problem of ghost workers in Nigeria is a severe drain on state funds. It may be argued that in cases where it has reached immense proportions, ghost workers are not simply a problem of corruption, but rather a problem of growth.

STATEMENT OF PROBLEM

In recent years, the Borno State has reported a rise in its wage bill without a corresponding increase in the workforce. This has culminated in the government’s over-bloated salary bill for civil servants alone. Ghost worker fraud or payroll fraud, an avenue by which large amounts of money are siphoned off public treasury, has become an age-long issue in Nigeria and seems to be irresolvable despite the numerous attempts made by the Government to eradicate it. Thurston, as cited in Nyaledzigbor (2015), reported that in many countries the public sector has ghost employees on their payrolls who earn salaries without working for them. Ghost workers are economic sabotage and drainage of scarce resources from various sections of government and other organisations. Oyelade (2016) investigation found that the money lost to this payroll fraud as a result of ghost workers is massive and capable of derailing and distorting government development plans. Oyelade pointed out that phantom workers have a detrimental effect on government and governance through compensating for idleness; that is, the government pays for inactivity that runs contrary to the cost-benefit analysis principle This situation has stimulated the government’s curiosity to recognize the actual workforce through various exercises, such as biometric capture, staff verification and table payment. In the light of this this study focuses on evaluating the effect on payroll of ghost workers on the provision of services in Borno State.

AIMS OF THE STUDY

The main aim of this study is to assess the impact of ghost workers on payroll on the provision of services in Borno State. Other general objectives of the analysis are as follows:

1. Assess the extent of ghost employees in Borno state government departments.

2. To investigate the impact of ghost workers on payrolls on service delivery in Nigeria.

3. To investigate the factors that give rise to opportunities for the development of ghost workers in the Borno State Public Service.

4. To investigate the effects of fraud involving ghost employees in the payroll of workers in Borno State.

5. To determine the impact of payroll fraud on the state economy.

6. Recommend alternatives to ghosts employed in Nigeria..

RESEARCH QUESTIONS

1. What is the level of ghost workers in Borno state government agencies?
2. What is the effect of ghost workers on payroll on provision of service delivery in Nigeria?
3. What are the factors that provide opportunities for the creation of ghost workers in Borno state public service?
4. What are the consequences of ghost workers fraud on the payroll of staff in Borno state?
5. What are the effects of payroll fraud on the economy of the state?
6. What are the recommended solutions to ghost working in Nigeria?

RESEARCH HYPOTHESIS

H0: There is no effect of ghost workers on payroll on the provision of service delivery in Borno state.

H1: There is a significant effect of ghost workers on payroll on service delivery in Borno state.

SIGNIFICANCE OF THE STUDY

This research on the impact of ghost workers on payrolls on the provision of services in Borno State has many contributions to make in Nigerian society. Not only does it aim to curb corruption in our culture, it is also an effort to give Nigeria and Nigeria a picture abroad. In view of these the study would be of great interest to security forces, government and non-governmental organizations (NGOs) and members of the public. Government and security agencies will help to provide the requisite information on corruption in the Nigerian civil service, its forms and ways of tackling the problem. It would also help bring to the attention of the appropriate authorities, provide information about how the state funds are stolen by organized criminals within the civil service organization, and enable better measures to be placed in place and enforced to fix the issue. Job results would be important for sociologists, criminologists, economists, legal professionals, political scientists, as well as crime tracking and management experts. Knowledge on ghost workers will allow politicians to devise strategies to decrease ghost workers and reduce the public wage bill. This work will contribute to the literature in this field of study for prospective researchers who might find it useful as a reference material. It will also bring new insights to the current knowledge body.

SCOPE OF THE STUDY 

The study is based on the Assessment of the effect of ghost workers on payroll on the provision of service delivery in Borno state.

LIMITATION OF STUDY

Financial restriction – Inadequate funds appear to hinder the researcher’s efficiency in the acquisition of appropriate content, literature or information and in the data collection phase (internet, questionnaire and interview).

Time Constraint-The researcher will engage with other academic work in this analysis at the same time. This would also decrease the time available to research work.

DEFINITION OF TERMS

Ghost Worker: There is just a ghost worker in his name. The worker appears to exist and to be hired by the company and to be paid by the company, but does not actually exist. It’s a type of fraud that is not rare in countries like Nigeria.

Payroll: applies to the charge by the employer of employees. Payroll can be a noun as it identifies a company’s payroll financial reports. It can also define the method of paying employees by the corporation and any related taxes.

Payroll theft: Payroll fraud happens when employees secretly steal money from the company via the payroll in order to appropriate the money themselves.

Payroll Accounting: Payroll Accounting relates to the part of accounting required to maintain correct records of salaries and wages paid to employees. Business entities are of course, mandated by law to maintain correct payroll records. Apart from the need to measure the exact sum of employees’ salaries and wages, payroll accounting is required to assess the different costs related to salaries and wages (Okoye, 2010).