Agora Policy: Nigeria Needs to Create 3.6m New Jobs Annually to Lower Unemployment Rate to 5%

•Says govt’s direct recruitment cannot solve challenge

Emmanuel Addeh in Abuja

The Agora Policy, a Nigerian think-tank, has disclosed that Nigeria needs to create at least 3.6 million net new jobs annually to reduce the current high unemployment rate to about five per cent by 2033, a period of 10 years.

In a policy memo released by the organisation, Agora stated that in the last decade Nigeria had struggled to create enough jobs to meet up with the constant flow of people entering the working age.

For instance, it stressed that since 2010, the unemployment rate has been on an upward trajectory rising from 5.1 per cent in 2010 to the last pre-covid estimate of 23.1 per cent in 2018, with the situation worse for women.

It added that unemployment rate rose to 33.3 per cent during Covid-19, combined with a much-reduced labour force participation rate, noting that there has been little official information since then.

“All we can say at this point is that unemployment is likely still high and at an undesirable level. The situation has been particularly worse for young people who, as at 2020, faced an unemployment rate of over 40 per cent. There is little doubt that this rising unemployment is linked to increasing restfulness and disenchantment among the youth,” the paper argued.

Given that the population, and hence the labour force, keeps growing, the think-tank stated that the challenge of reducing unemployment is therefore all about creating more new jobs than there are people entering the labour force.

“At the very least, to keep unemployment from rising, enough net new jobs need to be created to at least employ the majority of net new entrants to the labour market.

“What does this mean in the Nigerian context? Based on a labour force of about 90 million prior to Covid-19 in 2018, about 2.5 million net new people enter the labour force every year. Which means the economy would have to create at least 2.5 million new jobs a year on average just to keep the number of the unemployed from rising.

“If we wanted to get the unemployment rate to a healthier 5 per cent by 2033, and we assumed that the labour force grew at the same rate as population growth, then by our calculations, we would need to be creating at least 3.6 million net new jobs a year,” it pointed out.

Given that between 2010 and 2018, Nigeria only created on average 21,757 net new full-time jobs a year, Agora explained that it was clear that that the country has a serious problem challenge.

It stressed that the challenge has become even more difficult, since one of the features of current employment, especially in subsistence agriculture, is that some of the jobs do not result in enough income to lift even the employed persons out of poverty.

The report observed that some of the states with the largest employment in agriculture also happen to be the states with the highest poverty rates, noting that many of the people who are employed are still living in poverty despite their employment.

“For example, although Sokoto State had an unemployment rate of 14.3 per cent in 2018, majority of the people were employed in (presumably) subsistence agriculture (51 per cent of males and 3 per cent of females). The implication being that over 87 per cent of households were still living in poverty. In essence, it is not just jobs that are needed but decent jobs,” Agora said.

The current approaches by government to tackling unemployment, while sometimes having merit, the group hinted, have failed to resolve the problem because the majority of the approaches cannot reach the scale of what is required.

It listed the first of the common approaches as direct government employment, which it said, is particularly popular at the state and local government levels, although the federal government is not left out.

“Although it is easy to argue that the country needs more police personnel, more doctors, and more teachers, it is clear that government employment alone cannot solve the unemployment challenge.

“It is almost unfathomable to imagine the federal, state, and local governments combined being able to employ anywhere close to 3 million workers each year. This is even before you take into account their financial constraints,” the Abuja-based think-tank noted.

Also, it contended that people with only primary education had a lower unemployment rate than people with basic certificates even though they presumably had more skills.

“Although there are issues such as skills mismatch and selectivity in employment, and there is still significant room for certification for specific skills, it does signify that more skills alone will not necessarily solve the unemployment challenge,” it noted.

It said the more recent approach was that of social investment or social transfers as signified by the expansion of programmes such as trader-moni, saying that with the scale of the challenge, this is unlikely to be a sustainable approach.

Agora called for a coherent strategy to tackle the unemployment challenge, explaining that if Nigeria wants to see faster job growth, it must have faster economic growth.

“However, as we learned during the growth episodes in Nigeria in the early 2000s, growth alone does not imply jobs. There can be jobless growth and job-led growth. Specifically, what we need is growth in labour-intensive sectors,” it said.

On a macro level, it stated that the most likely path to job creation in Nigeria at the scale required, is to engineer growth in labour-intensive portions of value chains for export to large markets by resolving broader macro-economic challenges that limit growth across the board.

“This includes resolving the dysfunction of multiple rates in the foreign exchange market, and re-focusing the Central Bank of Nigeria (CBN) on its mandate of keeping inflation at optimal levels.

“Targeted infrastructure spending in particular areas that increase the competitiveness of Nigeria’s exports. This would include electricity, transport, and telecommunications investments in export processing zones.

“Developing and implementing an export-driven trade policy for labour-intensive value addition for export sectors…Developing a strategy to utilise our large diaspora network as well as our network of embassies and consulates to get Nigerian products into markets around the world.”

It further called for re-organising Nigeria’s technical and non-academic learning protocols, developing and implementing a strategy to reduce the costs of logistics, investing in certification and export processes training as well as implementing a productivity growth strategy for agriculture.