Robotic Labour: Implications For Employee Benefits in Nigeria – by Frank Ofili

Let us start off with the assertion that robotics, artificial intelligence (AI), or automation penetration in Nigeria and Africa is still relatively low. However, in recent years, Africa has begun embracing the Fourth Industrial Revolution, with robotics, AI, and automation gradually transforming industries. While these technological advances promise increased efficiency and productivity, they also raise critical questions about labour dynamics, job displacement, and, importantly, the future of employee benefits on the continent.

Robotic labour refers to work performed by robots – machines or automated systems designed to carry out tasks that would otherwise be done by humans. As Nigeria is a major economic player in the African continent (even with robotic still very low) this article will explore the implications of a massive shift from current labour paradigm to robotic labour. We will explore how it affects employment, what it means for employee benefits (pensions, healthcare, employment benefits, welfare and collective bargaining), and what policy and business strategies might help manage the transition.

Implications for the Labour Market

The integration of robotic labour will impact employee benefits in the following key ways:

• Job Displacement and Loss of Benefits: The primary implication for a significant portion of the workforce is job loss, particularly in routine and middle-skilled occupations. Displaced workers immediately lose access to traditional employee benefits such as salaries, allowances, leave days, pensions, and health insurance. Employers may be tempted to lay off workers without following proper procedures, creating legal and ethical challenges.
• Shift in Benefits Focus to Skill Development: For the workers who remain employed or transition to new roles, the nature of benefits will change. Employers will focus on upskilling and reskilling programs to equip employees with the skills needed to work alongside AI and robots (e.g., data analysis, robotics maintenance, AI development). This training will become a crucial benefit that ensures continued relevance and employability in the evolving job market.
• Creation of New Job Categories and Remuneration Models: New tech-centric roles will emerge with different compensation and benefits structures tailored to a specialized, skilled workforce. There will be a positive and significant relationship found between automation and enhanced wages and benefits for those who can adapt to the new technologies.
• Ethical and Regulatory Considerations: A robotic workplace will also lead to development of new regulatory frameworks to address the implications on labour. Policies like a “robot tax” to fund social benefits and continuous education for the unemployed will emerge.
• Workplace Health and Safety: While job displacement is a concern, robots can take over “dull, dirty, and dangerous” tasks, which can improve the workplace health and safety conditions and overall welfare for the remaining human workers. This enhanced safety can be considered an indirect benefit.

Effects on Current Employee Benefits

Though the National Pension Commission (PenCom) has stated that AI and digital transformation will enhance the pension system’s efficiency (not threaten retirement security), it is worth stating however that if robots increasingly replace or supplement human labour, Nigerian employers may adjust benefit structures in several ways. Some of the ways to do this are

1, Reduction in traditional benefits

As firms automate:

• They may hire fewer full-time employees, reducing obligations for benefits like pensions, health insurance, housing allowances, transport allowances, and gratuities.
• More firms may shift toward contract or short-term project-based jobs for independent contractors, including freelance roles like graphic designers and writers, and on-demand services like ride-sharing drivers and delivery workers – which generally come with fewer statutory benefits. Note that with full robotic penetration in an economy, the Uber or Bolt model of ride-sharing may be replaced with driverless cars.

2. Increased investment in high-skill workers

Companies will need:

• Automation engineers
• Data/AI specialists
• Machine maintenance experts

These workers may receive enhanced benefits (higher pay, better insurance, training allowances) to attract scarce talent.

3. Potential pressure on statutory pension contributions

With fewer human employees:

• Total employer pension contributions under the Contributory Pension Scheme (CPS) could decline. As of middle of 2025, the National Pension Commission (PenCom) estimates the total pension-fund assets under Nigeria’s formal pension scheme (Contributory Pension Scheme) to be ₦ 24–25 trillion. This will potentially decline as AI, robotics and automation penetration increases. It will undoubtedly reduce the overall inflow into pension funds – unless offset by population or wage growth.
• Also, there could be a serious challenge with future funding of the pension system. As robots replace human workers, particularly in manufacturing and other routine-task sectors, the number of employed individuals contributing to pension schemes (through payroll deductions) may shrink. This could potentially strain the overall system’s ability to pay out benefits in the long term if not addressed with new funding models (e.g., robot taxes).

Effects on Retired Employees

Retirees will be affected indirectly, mainly through the national pension system and economic conditions.

a. Lower pension fund inflows could affect returns

If automation reduces formal employment:

• Pension Fund Administrators (PFAs) may experience slower growth in contributions.
• Lower inflows could reduce investment opportunities and potentially depress long-term returns.
• This can influence retirees’ programmed withdrawals and annuity rates.

b. Possible reallocation of pension fund investments

If Nigeria embraces automation:

• Pension funds may invest more in tech infrastructure, robotics firms, or automation-driven industries.
• This could boost returns if the sector grows.

c. Increase in economic pressure on social safety systems

If automation causes structural unemployment:

• Government may face pressure to strengthen non-contributory old-age benefits (e.g., conditional cash transfers, social pensions).
• Retired people without strong savings, investment or pensions may struggle more unless policies adapt.

d. Potential reduction in employer-sponsored retirement perks

Some Nigerian institutions offer:

• Post-retirement medical coverage
• Retiree welfare programs

Automation could push employers to scale these back if human labour costs decline but tech investment costs rise.

Policy factors that will shape the Outcome

What actually happens depends on how the government responds, especially through:

1. Labour laws

New regulations could:

• Require companies using robots to contribute to a “tech tax” that funds social welfare or pensions.

Set minimum staffing or retraining obligations.

2. Pension reforms

Government may need to:

• Broaden coverage to informal workers through micro-pension schemes.
• Adjust Contributory Pension System guidelines to stabilize retiree payouts.

3. Upskilling initiatives

Robotic driven economies reward countries that reskill workers. Nigeria’s policies on digital skills will determine how many workers remain employable—and able to fund their pensions.

Conclusion And Caveat

Robotic labour presents both challenges and opportunities for Nigeria. While automation may displace certain workers and reduce traditional employee benefits, it can also improve workplace safety, create new high-skill jobs, and accelerate economic modernization. The key lies in balancing technological progress with inclusive labour policies, strong pension reforms, and robust reskilling initiatives. With proactive governance and corporate responsibility, Nigeria can leverage robotics to build a more productive and equitable future of work.

Without doubt, automation and AI are steadily making in-roads into Nigeria’s economy — particularly in formal sectors like banking, services, manufacturing, and tech-enabled industries.

However, as of now, automation remains partial – it tends to augment rather than fully replace human labour. Be that as it may, the claim that “robotic labour will erase large numbers of traditional jobs and associated employee benefits is hypothetical. What is more plausible (and already underway) is a transformation of employment patterns: fewer unskilled/routine jobs, more demand for digital and technical-skills jobs, and an increasing divide between workers with relevant skills and those without.

Given Nigeria’s massive informal sector and historically low levels of formal pension/benefit coverage, automation is unlikely to be the main driver of a pension-system collapse. Instead, the larger challenge remains the long-standing under-inclusion of informal and small-enterprise workers in formal pensions. As automation spreads, there is a real risk that inequality will deepen between skilled and unskilled workers, between urban and rural populations, and between formal and informal sector employees unless deliberate, inclusive policies are adopted. Institutional reforms (like those by PenCom) and efforts to expand pension coverage to informal workers are promising, but they currently address pre-existing structural gaps more than a robotics-driven paradigm shift.