How NBS revised unemployment figures will affect Nigeria

THE National Bureau of Statistics (NBS) has received lots of knocks from its recently released figures on unemployment, which revealed that the unemployment rate slid to 4.1 per cent in Q1 of 2023 from the previous 33.3 per cent.

The Statistician-General, Adeyemi Adeniran, who admitted changing the methodology for the report, however, said the report would likely not reflect the ‘realistic’ picture of the unemployment market in Nigeria.

There has been heightened concerns on how the methodology enabled a sharp drop in Nigeria’s unemployment figures, which some informed analysts argued enabled a huge disconnect from released figures, Nigeria’s inflation and what a living wage should represent.

“Gross domestic product GDP growth is not strong, and you have rising inflation. I say again, this number does not reflect the true picture of our present realities. We have rising inflation and slow GDP growth and unemployment rate is on the decline. It is contradictory,” said Uche Uwaleke, a professor of Capital Market at Nasarawa State University.

“The numbers would not help in making policies at the macro level. In our own case, if we use this figure to make policy decisions, we would be wrong. We need an unemployment number from the NBS that more or less approximates the situation that the government can use to make decisions.

According to Uwaleke, “If you check the National Development Plan, the government intends to reduce the unemployed rate to 19.6 per cent from 33.3 per cent by 2025. This kind of report encourages complacency for policy planners. The NBS should get another report to enable the National Assembly plan for the macroeconomic base of the economy,” he said.

He observed, however, that aligning Nigeria’s methodologies with international best practices is good, but working out a homegrown solution would create a more realistic solution to our problems.

He said,” We need to develop country-specific thresholds that help to plan with specific variables.”

A professor and research fellow with Nnamdi Azikiwe, Okey Okechukwu, expressed similar concerns and said, “It is not as if the government has done anything spectacular to reduce the number of the unemployed, rather, what you have is a new methodology. The figures are what they are today because of the change of methodology.”

A unionist and former Trade Union Congress (TUC) president, Peter Esele raised concerns with the methodology, noting that it did not reflect the country’s current situation.

“If you have an employment rate of four per cent ,it means those looking for work has the opportunity of determining how much they want to be paid.

According to Esele,”What we have in the country right now does not in any way reflect 4.1 per cent.”

He suggested to the policymakers to ensure the report is used to support 93 per cent of the large pool of informal economic entrepreneurs.

What the report says

Nigeria’s unemployment rate witnessed a dramatic drop from 33.1 cent reported in March 2021 to 4.1 per cent for the first quarter of 2023 and 5.3 per cent in the 4th quarter of 2022.

The NBS released its employment data for the first quarter of 2023, indicating a substantial improvement in the job market.

As per the newly-revised Nigeria Labour Force Survey (NLFS), which now aligns with International Labour Organisation (ILO) guidelines, the unemployment rate in the country has been reported at a promising 4.1 per cent.

The NBS methodology

New Methodology – The NBS restructuered its data collection process for the NLFS by sampling 35,520 households across Nigeria.

The new approach provides for ongoing data collection throughout the year, delivering national-level results on a quarterly basis, and state-level results annually.

While the NBS’s Q1 2023 unemployment report paints an optimistic picture of Nigeria’s job market, there are important caveats that warrant attention.

First and foremost, the new methodology—although in line with international standards—may not accurately reflect the lived experiences of many Nigerians.

The revised NLFS categorizes people engaged in menial jobs as “employed,” even if they are earning well below the minimum wage and operating under poor working conditions.

This raises questions about the quality and sustainability of such employment, and whether this truly represents an improving job market or merely a shift in classification.

    BusinessDay Newspaper in its editorial of August 28, 2023 disagreed with the report, stressing that it failed to resonate with Nigeria’s current economic realities.

    “But the reality of Nigeria today does not support this. Even as the NBS has now suggested unemployment in Nigeria is now comparable with developed economies like the United States, with an unemployment rate of 3.4 per cent and the United Kingdom (4.2 per cent), poverty in Nigeria plagues over 60 per cent of the population.

    “The Nigeria Labour Force Survey (NLFS) puts Nigeria’s unemployment rate at 4.1 per cent in the first quarter of 2023 and 5.3 per cent in Q4 2022. This is odd for many reasons, and one of these is that the first quarter of 2023 was a chaotic period for the Nigerian economy. The cashless policy, with its unintended consequences, saw businesses shutting down and the accompanying job losses that followed.

    “Economic activity slowed down in what is a largely cash-driven economy, yet the NBS suggests more jobs were created as unemployment declined in that quarter,” the editorial said.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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