Concerns as NBS Revised Methodology Puts Nigeria’s Unemployment Rate at 4.1%
*Bureau says latest figure not influenced by govt performance, doesn’t change current jobs crisis
*Analysts insist new methodology will mislead govts, policymakers
*CSJ cites discrepancies with reality, declares report waste of taxpayers’ money
James Emejo and Michael Olugbode in Abuja
The National Bureau of Statistics (NBS) revised methodology released yesterday, which put the country’s present unemployment rate at 4.1 per cent in the first quarter of the year (Q1 2023), compared to 5.3 per cent in the preceding quarter, has attracted criticism.
Analysts faulted the methodology, arguing that it does not allow for a better understanding of the actual level of unemployment in the country, which remains a major socio-economic challenge. This, according to them could mislead the governments, policymakers and other users of the NBS figures.
The new figures followed the review and unveiling of a new methodology for the calculation of unemployment which according to the NBS, was consistent with the International Labour Organisation (ILO) standard methodology adopted in several jurisdictions.
Speaking at the launch of the new Nigeria Labour Force Survey (NLFS), using the revised methodology, the Statistician-General of the Federation (SGF)/Chief Executive, National Bureau of Statistics (NBS), Semiu Adeniran, stressed that the new numbers do not necessarily change the dire unemployment challenge in the country and urged the government not to go to sleep over the announcement.
He added that the new unemployment data was only arrived at as a result of the change in the measuring template and not what the government had done.
“About one-third (36.4% in Q4 2022 and 33.2% in Q1 2023) of employed persons worked less than 40 hours per week in both quarters. This was most common among women, individuals with lower levels of education, young people, and those living in rural areas.
“Underemployment rate which is a share of employed people working less than 40 hours per week and declaring themselves willing and available to work more was 13.7 per cent in Q4 2022 and 12.2 per cent in Q1 2023. The share of wage employment was 13.4 per cent in Q4 2022 and 11.8 per cent in Q1 2023.
“Most Nigerians operate their own businesses or engaged in farming activities. The shares are 73.1 per cent and 75.4 per cent in Q4 2022 and Q1 2023 respectively. A further 10.7 per cent in Q4 2022 and 10.6per cent in Q1 2023 were engaged helping in a household business. In Q4 2022, 2.6 per cent were engaged as Apprentices/Interns and 2.2% in Q1, 2023.
“Unemployment stood at 5.3 per cent in Q4 2022 and 4.1 per cent in Q1 2023. This aligns with the rates in other developing countries where work, even if only for a few hours and in low-productivity jobs, is essential to make ends meet, particularly in the absence of any social protection for the unemployed,” it stated.
However, the NBS boss stated that using the ILO definition, the underemployment rate stood 21.2 per cent in Q1 compared to 13.7 per cent in Q4 2022.
He said underemployment remained 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.”
This, he said, meant that though persons are engaged, the engagement is not sufficient for them, and they would like to work additional hours of work.
The report further revealed that 92.6 per cent of employed persons were also engaged informally in Q1 compared to 3.5 per cent in the preceding quarter.
Adeniran said, “This is very interesting and useful information for the government, particularly at this time when discussions are ongoing on palliative measures to be taken following the removal of petrol subsidies.”
He added that unemployment remained a challenge faced by countries across the world including Nigeria.
The last time the statistical agency released the country’s jobs data was in November 2021 when it made public the labour statistics for the fourth quarter of 2020, which then revealed that 23.18 million Nigerians were jobless while the unemployment rate was then put at 33.3 per cent.
Nonetheless, Adeniran clarified that the latest unemployment figure does not imply a reduction from the previous 33.3 per cent adding, “therefore government should go to sleep.”
Rather, the statistician-general said, “The figures today are not based on any performance of any sort, but strictly, and I repeat, strictly on the change in methodology.
“As we have shown, this is based on the new ILO standard, which Nigeria is part and parcel of, as a country. As a matter of fact, the current Chair of the ILO Governing Board is Nigeria’s Permanent Representative to the United Nations in Geneva, H.E, Ambassador Abiodun Richards, so with this, we cannot continue to be at odds with the ILO standard.”
He explained that the updated methodology altered the definition of the computation of the labour data.
According to him, the new definition of the labour force consists of anyone from the age of 15 years and above, who is willing, available, and able to work and contrasts with the old definition which recognised those aged between 15 and 64 who were willing, available, and able to work during the reference period of seven days.
In addition, the new definition of an unemployed person is anyone within the labour force who within the reference period, (previous seven days) did not work for a minimum of one hour.
He said, “This is a significant change from the old definition, where to qualify to be employed, a person needed to have worked for a minimum of 20 hours within the reference period of seven days.”
The NBS boss further pointed out that the definition of under-employed was also altered in the new framework.
He said under the old definition, a person is considered under-employed if he or she worked between 20 and 39 hours within the reference period of a week.
However, under the new definition, anyone working under 40 hours, that is 1 – 39 hours a week and willing to accept more hours of work is considered under-employed.
However, a former head of a government agency who pleaded to remain anonymous, in reacting to the report, pointed out that while international comparison was good, it shouldn’t be at the expense of policy making.
The source stressed that there should be an alignment between what the government was tracking and what the NBS was tracking, adding that evidence-based policy decisions remains the primary and most important objective of data.
He explained: “The old method had these new numbers for international comparison purposes. All that has happened is they removed the other numbers and want to focus only on ILO which was always there. If government plans to encourage full time employment for Nigerians and expends resources towards that, then why should they be tracking one hour?
“Government can’t be targeting full time and NBS is using something else. How will policy making know whether it’s working or not, when there is a mismatch between the data they are collecting and the policy they are pursuing?
“Now they only want to focus on data comparability and it isn’t even really comparable internationally because there are still significant differences across countries. Data is primarily used to give policy makers an idea of the problem so they can proffer solutions and monitor impact of those solutions. If you say the problem is four per cent, they (policymakers) will proffer solutions for four per cent and monitor progress towards that four per cent.
“When at four per cent, we claim we are almost full employment with rates less than the United States and the United Kingdom and most of Europe then, it won’t affect crime though or poverty so you will wonder why a country with four per cent unemployment rate has rising crime and poverty since employment is supposed to correct both to an extent
“But more important policy makers cannot have a target to increase full time employment and be tracking one-hour work. It’s a mismatch. Let it be clear that policy is directed towards providing just an hour work and then it’s aligned. The intuitiveness and usefulness of data has to take precedence over adherence to some international standards.
In the same vein, the Centre for Social Justice (CSJ) dismissed the new methodology employed by the NBS, describing it as “an act deliberately antithetical to Nigeria’s lived reality.”
The CSJ rejected 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 per cent unemployment rate in Nigeria.
It stated: “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.”
The Lead Director of CSJ, Eze Onyekpere added, “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,” adding that: “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?
“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,’” said Onyekpere. “This is not an accurate reflection of the reality of the Nigerian labor market.”
He said further: “Simply to satisfy a fad, it is a waste of taxpayers’ money to produce a report that adds no value to the Nigerian people and their economy.”
According to him, the “CSJ believes that these statistics do not in any way reflect the prevailing economic challenges experienced by Nigerians, especially in recent times.
“The reported unemployment rate of 4.1 per cent in the NLFS raises serious concerns about the relevance and accuracy of the methodology and the relevance of the findings to the lived experiences of Nigerians.
“This reported rate is incongruent with the economic challenges faced by a significant percentage of the population.
“We call 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 added.
The CSJ also called on the government to ignore the report, take steps to create more decent jobs and to improve the livelihoods of Nigerians.
Also reacting to the updated data, Wealth Management and Business Development Consultant, Mr. Ibrahim Shelleng, told THISDAY that “While this does not mean Nigeria’s unemployment figures have drastically turned around, it does allow for a better understanding of those in the population that are unproductive and require the greatest intervention.”
He said, “The new ILO methodology used by the NBS aims to stratify all aspects of employment. The previous methodology focused on the working population that was engaged in productive activities (goods or services) for a minimum of 20 hours a week.
“It considered the unemployed as those who worked for less than 20 hours per week or did not work at all but were actively searching. This essentially excluded the informal economy that forms a large base of the Nigerian economy.”
According to him, “The new methodology now factors all those of working age that are involved in productive activities for pay or profit. This allows for the capture of informal productive activities that would otherwise not be represented in employment statistics.
“With this new methodology, there is more of a focus on productive output over hours worked. However, this new amethodology, though in alignment with international best practice, may downplay the scale of the unemployment/underemployment situation in the country.”
Also, speaking to THISDAY on the jobs data, President Association of Capital Market Academics of Nigeria, Prof. Uche Uwaleke, said the new methodology which includes apprentices, could significantly lower the bar and lead to wrong policy decisions by the government.
He said, “I think the unemployment number of 4.1 per cent for quarter 1 in 2023, recently 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.”
He added, “Compared to the old methodology adopted by the NBS, this new methodology which includes apprentices, tantamounts to significantly lowering the bar and could lead to wrong policy decisions by the government.
“Much as the ILO guidelines provides 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, Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said, “the rate of the under-employed who do not even earn the minimum wage is higher.
“Based on the new unemployment rate of 4.1 per cent for Q1, there is no relief in sight and the jobless challenges still persist.
“The government need to intensify action in various interventions in the agricultural sector, SMEs and manufacturing to enable us witness a little relief by Q4.”
