BY FESTUS OKOROMADU
The controversy trailing the release of Nigeria’s unemployment rate last week by the National Bureau of Statistics remained stiff at the weekend as experts continue to criticize the methodology adopted and the consequent outcome.
The NBS had Thursday during the launch of the new Nigeria Labour Force Survey announced that the country’s unemployment rate dropped to 4.1 per cent in the first quarter of the year, compared to 5.3 per cent in the preceding quarter.
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 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.
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 populations 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.
The NBS is counting people who are working for at least one hour in a week or who are self-employed in low-productivity activities as employed. This is not an accurate reflection of the reality of the Nigerian labour market
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.
The new unemployment data have been faulted by many Nigerians and analysts. Those who spoke with our correspondent said it does not reflect current realities, and could send wrong signals to policymakers.
Dismissing the NBS report as unrealistic, economic analysts from Cowry Securities Limited in a publication titled, “Flattering Unemployment Numbers at 4.1% in Q2, but 133m Nigerians in Multi-dimensional Poverty,” said the methodology used was wrong.
The report reads in part, “Interestingly, an analysis of the previously reported unemployment rate for Q4 ’20, utilizing the stringent definition of the new NLFS based on a zero-hour work week, reveals a substantially higher figure of approximately 17.5. This stands in stark contrast to the 4.1% rate for Q1 ’23 and 5.3% for Q4 ’22. This disparity raises concerns regarding the accuracy of these figures, particularly when considering that around two-thirds of Nigerians (133 million) live in multidimensional poverty.
“Nigeria’s ranking on the misery index is notably high. In light of the prevailing economic realities, the single-digit unemployment rate of 4.1 percent appears somewhat flattering.
However, this largely stems from the altered methodology of the new NLFS.”
Similarly, analysts at Cordros Securities Limited questioned the viability of the assumption of the revised methodology, which defined employed persons as those working for pay or profit and who worked for at least one hour in the last seven days.
Scrutinizing the report, they noted: “The NBS revised methodology, employed persons are those working for pay or profit and who worked for at least one hour in the last seven days. At the same time, the revised methodology considers underemployed persons as those working less than 40 hours per week and declaring themselves willing and able to work more. Finally, unemployed persons are those not in employment but actively searching and are available for work. Based on the preceding, the unemployment rate settled lower at 4.1% as of Q1-23, relative to 5.3% in Q4-22.”
Passing their verdict, the economic analysts said the report is misleading, arguing that although the revised methodology aligns with global practices, it does not consider Nigeria’s peculiarities and can be misleading for policy making.
The analysts warned that at a 4.1 percent unemployment rate, the data suggests that policymakers should only proffer employment solutions to 4.1 percent of the working-age population and track progress towards the same proportion, which can be misleading.
On his part, the Lead Director of Centre for Social Justice, Eze Onyekpere, dismissed the new methodology employed by the NBS, describing it as “an act deliberately antithetical to Nigeria’s lived reality.”
He raised objections to the NBS’ findings, arguing that they were not supported by the increasing unemployment in Nigeria since the last report in 2020 which reported 33.3 percent unemployment rate in Nigeria.
“Since 2020, 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,” he stated.
Onyekpere argued that the whole basis of a job report is to help the government to determine whether its plans, policies and laws geared at reducing unemployment are achieving the desired milestones.
“What is the point of a job report that tells the government that more Nigerians are employed when it is a clear and notorious fact that unemployment is increasing?” he asked.
He said, “The NBS is counting people who are working for at least one hour in a week or who are self-employed in low-productivity activities as employed. This is not an accurate reflection of the reality of the Nigerian labour market.”
Onyepkere alleged that the report was simply to satisfy a fad, adding that it is a waste of taxpayers’ money to produce a report that adds no value to the Nigerian people and their economy.
The CSJ executive believes that the employment statistics do not in any way reflect the prevailing economic challenges experienced by Nigerians, especially in recent times.
“This reported rate is incongruent with the economic challenges faced by a significant percentage of the population,” he said.
He called on the NBS to reconsider its methodology and ensure that it accurately captures the full spectrum of employment challenges faced by Nigerians.
“It is essential that job reports reflect the realities and provide an honest assessment of the economic landscape. Only through accurate data can the government develop effective strategies that deliver on its promises and address the pressing issues facing our nation,” Onyekpere said.
Commenting on the report, Professor of Capital Market at Nasarawa State University, Uche Uwaleke in reaction to the report, described the new methodology as inadequate, adding that it could lead to government implementation of wrong policy decisions.
Evaluating the report, he said: “I think the unemployment number of 4.1 per cent for second quarter of 2023, 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, 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.”
Also speaking, the CEO, Centre for the Promotion of Private Enterprise, Muda Yusuf, condemned the new methodology used calling for reversal to properly reflect Nigerian current reality.
“What can a one-hour job do? There are so many people who are doing jobs that cannot even feed them. So, if such people work for just one hour, how much would they get?” he queried.
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.
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
“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”?
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 is 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.”
