Analysis of the Impact of COVID-19 on Service Sector Employment in Lagos State

The COVID-19 pandemic disrupted service sector employment through lockdowns and reduced demand, and analysing its impact in Lagos State, Nigeria's largest service economy, provides evidence for post-pandemic economic recovery policy. This study analysed the impact of the COVID-19 pandemic on service sector employment in Lagos Island, Ikeja, and Victoria Island business districts, Lagos State, between January 2020 and December 2021. Secondary employment data from the National Bureau of Statistics and Lagos State Employment Trust Fund were supplemented by a primary survey of 200 service sector firms. Data covered workforce size changes, revenue decline, remote work adoption, and government support receipt. Descriptive statistics and difference-in-differences analysis (comparing 2019 and 2020 to 2021 employment levels) were applied. Results showed that service sector employment in surveyed firms declined by an average of 31.2 percent between Q1 and Q2 2020. Hospitality, tourism, and retail showed the largest declines exceeding 45 percent. Financial services showed the smallest decline at 12.3 percent. By Q4 2021, employment had recovered to 83.6 percent of pre-pandemic levels. Only 18.5 percent of surveyed firms had accessed any form of government economic stimulus. Informal service workers without contracts experienced permanent income losses averaging N180,000 annually. The study concludes that COVID-19 inflicted severe but uneven employment losses on Lagos service sectors. Recommendations include targeted stimulus access for small service firms, formalisation incentives for informal service workers, and emergency income support for vulnerable service sector workers.

Keywords: COVID-19, service sector, employment, Lagos State, pandemic economics