NIGERIA’S latest unemployment data released by the National Bureau of Statistics flies in the face of lived realities with the potential to mislead economic planners. The NBS estimates that the unemployment rate declined to 4.3 per cent in the second quarter of 2024, down from 5.3 per cent in the previous quarter and 5.0 per cent in Q3 2023. This reflects improved labour conditions.
Self-employment remained dominant, accounting for 85.6 per cent of total employment, an increase from 84 per cent in the preceding quarter. Informal employment rose slightly to 93.0 per cent, highlighting the economy’s reliance on informal jobs.
The agency reported that the Labour Force Participation Rate rose to 79.5 per cent, up from 77.3 per cent in the previous quarter, highlighting increased workforce engagement while the Employment-to-Population Ratio showed significant improvement, climbing to 76.1 per cent in Q2 2024 up from 73.2 per cent in Q1 2024.
The dismissal of these figures in strong terms by the Nigeria Labour Congress and members of the Organised Private Sector is justified by worsening poverty and distress facing businesses.
The new methodology adopted in arriving at these numbers, albeit in line with International Labour Organisation recommendations, is questionable. It does not paint an accurate picture of the grim realities on the ground. That the NBS regards working one hour a week following its recent recalibration of labour statistics is a joke.
The NBS had defined unemployed persons as those not employed for up to 40 hours per week, those working for only 20-29 hours per week, actively searching for paid work or available to start paid work within the next two weeks. The change in calculation methodology, effective April 2023, considers anyone who worked at least one hour in the last seven days for pay or profit as employed.
Working age has been redefined as 15 years and above rather than 15 to 64 years. This means that an individual earning N1,000 for a once-off task within a week is considered employed. This is unrealistic. Employment is a means of livelihood meant for sustenance. This should be the minimum consideration when computing the figures.
It is incongruous that unemployment rates are seen as improving at a period when companies are downsizing and closing shop. The Manufacturers Association of Nigeria reported that 767 manufacturers shut down in 2023 and 335 manufacturing companies became distressed.
The NLC insists that the data is inconsistent with the deteriorating economic landscape characterised by factory closures, dwindling manufacturing activity, and rising inventories. This can hardly be faulted.
The recalibration of the threshold for what constitutes employment to working one hour a week amounts to feel-good statistics. It has dramatically lowered unemployment numbers without reflecting significant improvements in job quality or income levels.
The dominance of informal employment points to the possibility that most of the jobs available do not even meet the minimum wage threshold. Some graduates in cities have turned to commercial motorcyclists after searching for jobs for years. This is a waste of potential.
GDP data indicate that some of the employment-generating sectors are slowing down with agriculture and manufacturing recording just 1.14 per cent and 0.92 per cent in the last quarter. Trade largely populated by informal sector players recorded 0.65 per cent GDP growth while real estate managed 0.68 per cent growth.
The question being asked is where are the new jobs being created?
There are arguments for a change in the parameters or the adoption of parallel methodologies for calculating unemployment to reflect the realities of meaningful earnings and general price levels. Employment that cannot deliver basic needs of food and shelter cannot be classified as such.
The government should focus on the quality of jobs available. This requires massive investments in critical infrastructure. The overall business environment needs to improve to create meaningful jobs.
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