According to data released by the National Bureau of Statistics, Nigeria’s unemployment rate has dropped to 4.1%, an unprecedented drop from the 33% recorded when Nigeria’s unemployment figures were last released in 2020.
In the Nigeria Labour Force Survey released by the National Bureau of Statistics, the unemployment rate dropped from 5.3% in Q4 2022 to 4.1% in Q1 2023. The survey also indicates that Nigeria has an under-employment rate of 12.2% and a youth unemployment rate of 6.9%.
In a press release by the Statistician-General of the Federation, Prince Adeyemi Adeniran, the reason for the drop is a revision of the methodology concerning unemployment, underemployment, informal employment, and hours worked. According to the Statistician General, the new methodology was adopted from the 19th International Conference of Labour Statisticians (ICLS) “Resolution concerning statistics of work, employment, unemployment, and labour underutilization” as well as the International Labour Organization (ILO) model questionnaire which includes unemployment among persons engaged in “Own Consumption work”.
According to the press release, the new methodology is utilized by Ghana, Niger, Chad, Cameroon, Benin Republic, and Gambia.
According to the new methodology, employed people are those who worked for pay or profit for at least 1 hour within the past 7 days. Underemployed are those working less than 40 hours in a week but want more work, and unemployed people are those not working at all but looking for a job. The new methodology also counts the working-age population as people of 15 years and older.
The previous method saw people aged 15-64 as working-age, with underemployed as those working 20-39 hours weekly and unemployed as those working 1-19 hours weekly or not at all. It also didn’t include subsistence farming and temporary work absences.
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Based on the new methodology, roughly 73.6% of working-age Nigerians had jobs in Q4 2022, rising to 76.7% in Q1 2023. This shows that the majority were working at least an hour a week for pay or profit. Also, wage jobs made up 13.4% in Q4 2022 and 11.8% in Q1 2023. Meanwhile, more Nigerians were self-employed or doing farming, at 73.1% in Q4 2022 and 75.4% in Q1 2023.
Here is Why That is a Problem
For many analysts and observers, there is a lot of doubt about the authenticity of the data, considering the modalities of the new methodology. The previous methodology sampled 33,330 households quarterly, however, the new methodology samples 35,520 households spread across 12 months. While the former methodology sampled 33,330 households in a quarter, this new methodology samples 8,880 households every quarter.
The modalities for the new sample size are not known, even the random sampling methods for selecting the houses are unknown. Thus, there are opinions that Nigeria is setting a low bar for itself. For example, according to the figures released by the NBS, 75.4% of Nigerians are either self-employed or into farming, while a measly 11.8% of Nigeria’s working-age population are in wage jobs. Essentially, it connotes that over 70% of Nigeria’s working-age population is either with a small business or in own-use work, essentially depicting a lack of opportunities for skilled workers in Nigeria. Also, sampling 8000 households every quarter in a country of over 42 million households is problematic, as it does not give sufficient room for representativeness. However, that’s just one.
Upon the publication of the labour force statistics, it appears that the new government has achieved a significant victory on the economic front, considering their struggle against less-than-positive assessments of Nigeria’s economic situation ever since taking office. While it may seem that a form of government action has improved Nigeria’s economy, this is not actually the case.
It is noted that “good statistics collected according to agreed good practices are crucial as a tool for development.” Essentially, statistical figures show how the economy is responding to government policy and other influences. With problematic data in crucial areas of the economy such as labour and productivity, evidence-based policymaking is made more difficult.
Prof Uche Uwaleke, the Director of the Institute of Capital Market Studies at the Nassarawa State University speaking to Arise TV noted, “The numbers are not such that would help policymaking at the macroeconomic level, which is where I have my fear.”
He further noted, “I recognize that we need to align with international best practices, at the same time, we also need to recognize that we have peculiar circumstances.”
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Nigeria has an unemployment problem and inadvertently, a productivity problem, and this is the reality on the streets. Wishing the problem away by redefining what “unemployment” means doesn’t take away the problem.
Prof Uwaleke noted in the Arise TV interview, “This figure is good enough for external consumption, for our development partners, for foreign investors, but internally, we need to develop our own country-specific threshold. For example, the DMO states that the international threshold for the debt-to-GDP ratio is 56%, but the DMO has also set for itself a country-specific threshold of 30%.”
