…Underemployment, 21.2 percent
The Nigeria Labour Force Survey (NLFS) released by the National Bureau of Statistics (NBS) on Thursday puts the country’s unemployment rate at 4.1 percent in the first quarter of 2023 and 5.3 percent in Q4 2022.
The new figures show a significant drop from the 33.3 percent for Q4 2020 released in March 2021, and suggest that Nigeria is now comparable to the United States with an unemployment rate of 3.4 percent and the United Kingdom (4.2 percent) despite a high poverty rate.
The NBS said last year that 63 percent or 133 million Nigerians were living in multidimensional poverty. Inflation pushed an estimated four million more Nigerians into poverty in the first five months of this year, the World Bank said in June.
During the launch of the NBS report in Abuja, Adeyemi Adeniran, statistician general of the federation, said it was an outcome of a recalibration in methodology using standards set by the International Labour Organisation (ILO) and not necessarily that the government had performed better.
The LFS, a quarterly survey designed with the objective to produce official national statistics on the labour force, employment and unemployment for monitoring and planning purposes, however, was delayed for almost two years.
Amongst other findings, the survey conducted by the NBS in collaboration with the World Bank classified employed individuals as those who are working for pay or profit and who worked for at least one hour in the last seven days.
The new unemployment data have been faulted by many Nigerians and analysts. Those who spoke to BusinessDay say it does not reflect current realities, and could send wrong signals to policymakers.
“If we are happy with one hour, then let it be clear that’s what policymakers are promising Nigerians in terms of employment. But you can’t be promising full-time employment or living wage employment and be tracking something else,” a top financial analyst said on condition of anonymity. “Your data methodology should track whatever your policy direction is.”
“Data is primarily used to give policymakers an idea of the problem so they can proffer solutions and monitor the impact of those solutions. If you say the problem is 4 percent, they will proffer solutions for 4 percent and monitor progress towards that 4 percent,” he added.
He wondered why a country with a 4 percent unemployment rate has rising crime and poverty rates.
Uche Uwaleke, a professor of Finance and Capital Market at the Nasarawa State University, does not believe the new unemployment numbers reflect current realities.
He said: “I think the unemployment number of 4.1 percent for quarter one in 2023 recently announced by the NBS may not reflect the true situation on ground owing to a number of reasons including the low sample size of under 40,000 persons used in the survey as well as the adoption of the International Labour Organisation guidelines for employment computation which considers employment from the perspective of persons of working age who are engaged in some type of jobs for at least one hour in a week for pay or profit.
“Compared to the old methodology adopted by the NBS, this new methodology, which includes apprentices, is tantamount to significantly lowering the bar and could lead to wrong policy decisions by the government.
“Much as the ILO guidelines provide a basis for global comparison, it is important that Nigeria adopts country-specific guidelines which closely reflect unique employment conditions prevalent in the country.”
Adeniran, the statistician general, insisted, however, that the new figures were not based on any government performance, but strictly on the change in methodology.
“NBS has not said that the unemployment rate in Nigeria has ‘reduced from the 33.3 percent to whatever the figure it is now, therefore the government should go to sleep’,” Adeniran said.
According to him, the NLFS is a survey for measuring whether people are engaged or not, the type of that engagement, and the nature of it, be it for pay, profit, own consumption or for free.
The survey finds that about three quarters of Nigerians in the working age population, 73.6 percent in Q4 2022 and 76.7 percent in Q1 2023, were engaged in some form of work for pay or profit during the quarters under review.
This workforce is composed of individuals engaged in various types of work, including formal and informal employment. A further 4.96 percent were engaged in subsistence agriculture in Q4 2022, while 3.56 percent of the working age population were engaged in subsistence agriculture in Q1 2023.
The results also indicate a scarcity of wage-employment, as the share of those employed in wage-employment was 13.4 percent in Q4 2022 and 11.8 percent in Q1 2023.
This, he said, means that a lot more Nigerians operate their own businesses or engage in agriculture, and that this figure was 73.1 percent in Q4 2022 and 75.4 percent in Q1 2023. The high share of self-employed persons amongst the employed shows that most Nigerians struggle to find wage employment, which is most desirable by Nigerians, he added.
The share of the working age population that are not working was 21.4 percent in Q4 2023 and 19.8 percent in Q1 2023.
According to him, not working is a combination of those within the working age population who are unemployed and not in the labour force, such as students, housewives and those not available and searching for work, hence the not working rate should not be taken as the unemployment rate.
Adeniran said Nigeria’s 4.1 percent unemployment figure “aligns perfectly with neighbouring countries around Nigeria. Ghana (3.9 percent), Niger (0.5 percent), Chad (1.4 percent), Cameroon (4.0 percent), Togo (4.1 percent), Benin Republic (1.7 percent) amongst others.”
He said: “Unemployment amongst those with post-secondary education was highest, at 9.1 percent in the fourth quarter of 2022. This figure is almost double the headline unemployment rate for that quarter and highlights the challenging problem of graduate unemployment.
“Underemployment is also a more significant issue for Nigerians, whereby persons engaged in one activity or the other yet indicate interest and availability to take on more work, due to inadequacy of the jobs they are engaged in at the time.”
Findings from the survey estimate the underemployment rate to be 13.7 percent in Q4 2022 and 21.2 percent in Q1 2023.
“This indicates that, though persons are engaged, the engagement is not sufficient for them, and they would like to work additional hours of work,” he said.
“Using the ILO definition, the survey estimates that 93.5 percent of employed persons were engaged informally in the fourth quarter of 2022, while 92.6 percent of employed persons in the first quarter of 2023 were also engaged informally,” he added.
Another top analyst believes that even though embracing the benefits of international comparison is good, ignoring the reality of problems policies must fix is detrimental.
He said: “So your unemployment rate is officially now 4% and has improved since Q4 2022, according to the new method. While international comparison benefits kind of exist, whether we choose to assume this makes sense for policymakers is up to each person’s perspective.
“The old method had these new numbers for international comparison purposes, all that has happened is that they removed the other numbers and want to focus only on ILO which was always there. I reiterate my view that while international comparison is good, it shouldn’t be at the expense of policymaking. Evidence-based policy decisions are the primary and most important objective of data, and your methodology should first speak to that.
“If the government plans to encourage full time employment for Nigerians and expends resources towards that, then why should we be tracking one hour? Government cannot be targeting full time and statistics is using something else. How will policymaking know whether it’s working or not when there is a mismatch between the data they are collecting and the policy they are pursuing?”
Muda Yusuf, CEO of Centre for the Promotion of Private Enterprise, said empirical evidence abound of many young people, especially the educated ones, who practically have nothing to do.
He argued that while it is true that there are several individuals who are engaged in different activities to make a living, one hour engagement would not pass for being an employed person.
Damilare Asimiyu, head of investment research at Afrinvest, said the age bracket for a country’s workforce cannot be without limit, as the report stated that Nigeria’s working age population are from 15 years and above.
He also decried the part of the report which states that individuals who work for pay or profit for at least one hour in the last seven days are employed.
He said: “This report will definitely cloud reality, making the government look as though they are working; it will make them relaxed and reckless and this may lead more people into poverty and economic chaos.
“The NBS report indicated that the age of the workforce covers from 15 years and above; it is wrong. We cannot leave the employment age bracket open. At 85 years, people are supposed to be retired because their productivity levels will drop.
“With Nigeria’s minimum wage at N30,000, how many jobs do we have in Nigeria that can pay up to N30,000 in an hour? The report is not accurate.”
