- NBS 4% unemployment rate raises eyebrows
- New methodology downplays misery reality
After over two years of anticipation from the Nigerian populace, the National Bureau of Statistics (NBS) eventually published Nigeria’s labour statistics, considered an official analysis of the employment level of Africa’s most populous country.
Prior to the report, economic and finance experts had difficulty assessing the real time data of the nature of the labour market and how to measure the impact of government policies and numerous pledges to create jobs. But from the country’s grim economic realities, it was as clear as crystal that the country was facing a dire risk of high unemployment.
Infact, the International Labour Organisation (ILO), had in January 2023, expressed worry that “current monetary tightening to fight inflation could overshoot, potentially leading to high levels of unemployment.”
In the same vein, multinational consulting firm, KPMG projected that Nigeria’s unemployment rate would rise from the 33.3 percent official rate of Q4 2020 to 40.6 per cent in 2023.
In a 2023 report titled, “Global Economic Outlook”, KPMG projected that unemployment is expected to remain a major challenge given the limited investments by the private sector, low industrialisation, slow economic growth among other factors.
However, many Nigerians were left in disbelief when the National Bureau of Statistics (NBS) released its report stating that the country’s unemployment rate reduced sharply in two consecutive quarters from 33.3 percent in 2020 to 5.3 percent in the fourth quarter of 2022 and 4.1 percent in the first quarter of 2023
Unemployment rate in this context was defined as the share of the labour force, which is the combination of unemployed and employed people, who were not employed but were actively searching and were available for work.
The NBS unemployment findings titled, “Nigeria Labour Force Survey (NLFS) 4th Quarter 2022 and 1st Quarter 2023 Report,” said the decline in Nigeria’s unemployment figures aligns with the rates in other developing countries “where work, even if only for a few hours and in low-productivity jobs, is essential to make ends meet, particularly in the absence of any social protection for the unemployed.”
The report showed that about three-quarters or 73.6 percent of working-age Nigerians were employed in Q4 2022 and 76.7 percent in Q1 2023. It also indicated that most people were engaged in some type of jobs for at least one hour in a week, for pay or profit.
According to the NBS, about one-third or 36.4 percent of employed persons worked less than 40 hours per week in Q4 2022 and 33.2 percent in Q1 2023. This, it stated, was most common among women, individuals with lower levels of education, young people, and those living in rural areas.
It stated further that the underemployment rate which is a share of employed people working less than 40 hours per week and declaring themselves willing and available to work more stood at 13.7 percent in Q4 2022 and 12.2 percent in Q1 2023.
Further analysis of the NBS data found that the share of wage employment was 13.4 percent in Q4 2022 and 11.8 percent in Q1 2023.
The NBS report noted that 73.1 percent of Nigerians operated their own businesses or engaged in farming activities in Q4 2022 compared to 75.4 percent in Q1 2023. A further 10.7 percent in Q4 2022 and 10.6 percent in Q1 2023 were engaged helping without pay or profit in a household business, while 2.6 percent were engaged as apprentices/Interns in Q4 2022, and 2.2 per cent in Q1 2023.
Meanwhile, 20.1 percent of the working age population were recorded to be out of the labour force in Q1 2023, against 22.3 percent in Q4, 2022. Notably, the rate of informal employment among the employed Nigerians stood at 93.5 percent in Q4 2022 and 92.6 percent in Q1 2023.
The NBS disclosed that the unemployment data is a redesign of the Nigerian labour force survey termed “Labour Force Statistics Framework’’ to replace the former “Labour Force Statistics: Unemployment and Underemployment Report”.
The statistics bureau argued that the new methodology of collecting labour market data through the Nigeria Labour Force Survey (NLFS) is in line with International Labour Organisation (ILO) guidelines and places Nigeria at the frontier of global labour market statistics.
It noted further that the data collection for the revised NLFS is based on a sample of 35,520 households nationwide, and conducted continuously throughout the year, with national-level results produced quarterly and state-level results at the end of a full year.
Responding to the NBS labour force report, the Centre for Social Justice (CSJ) dismissed the new methodology employed by the statistics bureau in determining the country’s unemployment level, describing it as “an act deliberately antithetical to Nigeria’s lived reality.”
Eze Onyekpere, the lead director, CSJ, in a statement, said that since 2020 when the unemployment level stood at 33.3 percent, Nigeria’s economic challenges have increased with galloping inflation, factory closures, rural dwellers who have been prevented by insecurity from planting and harvesting, and a public sector with a moratorium on new recruitments.
Onyekpere argued that the NBS report is not an accurate reflection of the reality of the Nigerian labour market and does not in any way reflect the prevailing economic challenges experienced by Nigerians, especially in recent times.
The CSJ lead director stated further, “Before today’s report, Nigeria’s last unemployment data was released in the fourth quarter of 2020, leaving a substantial gap in our understanding of the employment situation. CSJ previously emphasised the urgency for the NBS to provide up-to-date employment data for the years 2021 and 2022.
“CSJ recognized that robust job reports serve as a crucial tool for governmental planning and policy evaluation. However, the reported unemployment rate of 4.1 percent in the NLFS raises serious concerns about the relevance and accuracy of the methodology and the relevance of the findings to the lived experiences of Nigerians.
“This reported rate is incongruent with the economic challenges faced by a significant percentage of the population.”
CSJ, therefore, advised the NBS to reconsider its methodology and ensure that it accurately captures the full spectrum of employment challenges faced by Nigerians. The think tank also called on the government to ignore the report, take steps to create more decent jobs and to improve the livelihoods of Nigerians.
Onyekpere noted that it is essential that job reports reflect the realities and provide an honest assessment of the economic landscape, adding that it is only through accurate data can the government develop effective strategies that deliver on its promises and address the pressing issues facing the nation.
Uche Uwaleke, president, Association of Capital Market Academics of Nigeria, remarked that the new methodology employed by the NBS which includes apprentices, could significantly lower the bar and lead to wrong policy decisions by the government.
“I think the unemployment number of 4.1 percent for quarter 1 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,” Uwaleke said.
The professor of Capital Market at the Nasarawa State University, Keffi, noted that as 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.
Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said it was difficult to accept the recently released unemployment report, stressing that the methodology used to generate the statistics needs to be reviewed to reflect what is real.
According to Yusuf, “Four percent unemployment rate in this part of the world is as good as full employment. Empirical evidence abounds of many young people, especially the educated ones, who practically have nothing to do.”
The CPPE chief noted that though it is true that there are several Nigerians who are engaged in different activities to make a living, with millions engaged in the informal sector, one-hour engagement would not pass for being an employed person.
Also commenting on the report, Peter Esele , a former president of the Trade Union Congress (TUC), stated that the new unemployment rate published by the NBS is not indicative of Nigeria’s employment situation.
Esele noted that while the enhanced methodology adopted by the NBS is acceptable, it does not necessarily mean that it reflects the reality on ground.
According to the former president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), “If you go back you will see that NBS has been under pressure from the days of the former Minister of Labour, Dr Chris Ngige talking about the various methodologies employed by the NBS.
“What the NBS has done is to pick one of those methodologies and you cannot also fault it because of the way it is on paper because it is an international standard and it is acceptable, but does it reflect where we are as a country? My answer is no. What we have in this country now does not in any way reflect 4.1 percent. But again, the NBS was very clear that yes, this is not an indication that the government has created such a quantum job for it to drop to what we have now.”
In terms of policy formulation, Esele suggested that the government should rather take the statistics from the NBS and examine the areas that are useful and then use them to formulate its policies. He also advised the government to look at the areas that are not useful and discard them so as not to formulate policies that are contradictory to the country’s economic realities.
Speaking in justification of the report, Semiu Adeniran, the statistician-general and chief executive officer of the National Bureau of Statistics, clarified that the latest unemployment figure which is based on an updated methodology does not imply a reduction from the previous 33.3 percent of the new unemployment data, but was only arrived at as a result of the change in the measuring template.
Adeniran said, “The figures today are not based on any performance of any sort, but strictly, and I repeat, strictly on the change in methodology.
“As we have shown, this is based on the new ILO standard, which Nigeria is part and parcel of, as a country. As a matter of fact, the current chair of the ILO governing board is Nigeria’s permanent representative to the United Nations in Geneva, H.E, Ambassador Abiodun Richards, so with this, we cannot continue to be at odds with the ILO standard.”
The NBS chief also stressed that the new numbers do not necessarily change the dire unemployment challenge in the country and urged the government not to go to sleep over the announcement.
According to the statistician-general, the new methodology altered the definition of the computation of the labour data.
According to him, the new definition of the labour force consists of anyone from the age of 15 years and above, who is willing, available, and able to work and contrasts with the old definition which recognised those aged between 15 and 64 who were willing, available, and able to work during the reference period of seven days.
Dwelling on this, he said the new definition of an unemployed person is anyone within the labour force who within the reference period, did not work for a minimum of one hour, which was previously tagged at seven days.
This, according to Adeniran, is a significant change from the old definition, where to qualify to be employed, a person needed to have worked for a minimum of 20 hours within the reference period of seven days.
The NBS chief pointed out that the definition of under-employed was also altered in the new framework, noting that under the old definition, a person is considered under-employed if he or she worked between 20 and 39 hours within the reference period of a week.
He explained further that under the new definition, anyone working under 40 hours, that is 1-39 hours a week and willing to accept more hours of work is considered under-employed.
Adeniran admitted that underemployment remained 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.
This, he explained, meant that though these persons are engaged, the engagement is not sufficient for them, and they would like to work additional hours of work.
He concluded that the labour force report is useful information for the government, particularly at a time when discussions are ongoing on palliative measures to be taken following the removal of petrol subsidies.
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