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The Complexities of Nigeria's Unemployment Rates: NBS' Revised Approach Unveiled

Updated on Aug 27, 2023 1089 views
The Complexities of Nigeria's Unemployment Rates: NBS' Revised Approach Unveiled

The National Bureau of Statistics (NBS) released a report on August 24, 2023, that showed Nigeria's unemployment rate dropped to 4.1% in the first quarter of 2023 showing a significant decline from the 33.3% unemployment rate reported in 2021.

The decline in the unemployment rate is attributed to the revised methodology used by the NBS in conducting the survey. The new methodology takes into account people who are marginally attached to the labour force, such as those who are not actively looking for work but are available to work.

Under the old methodology, these people were not considered unemployed. As a result, the unemployment rate was artificially deflated.

The new methodology also makes a distinction between employed people who work less than 40 hours per week and those who work 40 hours or more per week. The former are considered underemployed, while the latter are considered fully employed.

What has changed? A lot. Notably, the statistics from the Q4 2022 and Q1 2023 reports reveal stark differences. This shift is the result of an overhauled methodology that puts the dynamics of employment, underemployment, and unemployment rates in a new light.

While the new methodology is touted to align with neighbouring African countries and global best practices, its finer details invite scrutiny. Defining an employed individual as someone who worked for at least one hour in the past week appears questionable. This standard might disregard the struggles of those surviving in informal and irregular employment arrangements, potentially leading to underestimations of underemployment and unemployment rates.

One of the glaring implications of the newly introduced methodology is the curious case of counting those who work a mere one hour a week as employed. This move raises eyebrows, questioning the practicality of such a classification. The essence of employment lies in providing meaningful economic engagement and financial sustenance. Including individuals who barely engage in an hour's worth of work in the classification of employment not only distorts the real picture but offers no tangible benefit to those trying to make a living.

Furthermore, the new methodology might not accurately capture the true unemployment rate due to the revised calculation. By including individuals willing to work but not actively seeking employment in the definition of unemployed, the methodology introduces a potential for masking the actual unemployment scenario. While the intention might be to create a more comprehensive view, it inadvertently clouds the clear distinction between those genuinely unemployed and those who are simply not actively seeking work.

Global Comparisons

Comparing Nigeria's current employment and unemployment rates to those of developed countries like the US and UK offers insights, but it's essential to do so with caution. The contexts and challenges faced by these nations are distinct from those of Nigeria. The US and UK employ ILO standards, which include actively seeking employment and willingness to work in their unemployment calculations. However, it's crucial to remember that these figures might not be directly comparable due to variations in data collection methods and economic structures.

The Realities on the Ground

The absence of viable employment prospects has led to a disheartening loss of interest in conventional employment among the populace. This sentiment is compounded by the concerning issue of diminishing wages, rendering many jobs incapable of providing a livable income, thereby pushing individuals and families towards financial uncertainty.

Adding to the intricate employment landscape is the term "japa," capturing the growing trend of Nigerian youth seeking opportunities abroad. This trend reflects the failure of local job markets, as many are drawn to foreign lands by the promise of better prospects and improved compensation

A telling statistic shedding light on Nigeria's labour market is the extremely high percentage of informal employment, which accounts for a staggering 92.6% of the workforce. This number underscores the prevalence of jobs without formal structures, benefits, or job security. Informal employment often involves occupations such as street vending, craftwork, or domestic labour, typically lacking legal safeguards or social safety nets.

As we navigate through the NLFS Q4 2022 & Q1 2023 report's insights into labour market statistics, it's imperative to maintain a balanced perspective. While the introduction of a revised methodology reflects an effort to provide a more comprehensive view of the workforce, the consequences of this approach must not be underestimated. We must critically assess its impact on data accuracy and the true representation of Nigeria's employment scenario. Let's strive for an approach that genuinely addresses the needs of all segments of the Nigerian workforce, offering a clearer and more realistic picture of the nation's economic reality.

Staff Writer

This article was written and edited by a staff writer.

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