Killing NBS’ Credibility Softly?

Obinna Chima advises the present leadership of the National Bureau of Statistics against taking steps that could erode the credibility of the agency.

The National Bureau of Statistics (NBS) under the leadership of its Statistician-General of the Federation (SGF)/Chief Executive, Semiu Adeniran, set tongues wagging last week, when it released what it termed the revised methodology for unemployment in Nigeria. To the shock of many economic analysts, users of statistics and market participants,  the report 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.

Interestingly, 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.

From market participants, analysts, civil society organisations and other statistics users in and outside the country, the feeling was that of disbelief, rage, disappointment and concern that the Adeniran-led agency may shatter the credibility that his predecessors, especially Dr. Yemi Kale, had built for this all-important institution.

Beside the unemployment figures, in recent times, there have been reasons to also doubt the inflation figures being churned out by the bureau.

According to the NBS, its latest Nigeria Labour Force Survey (NLFS) figures followed the review and unveiling of a new methodology for the calculation of unemployment which it stated was consistent with the International Labour Organisation (ILO) standard methodology adopted in several jurisdictions.

It stated that the “enhanced methodology which was informed by the need to produce comparable labour statistics focuses on the review of definitions and concepts, data collection, coverage etc.”

The revised methodology defines employed  persons as those working for pay or profit and who worked for at least one hour in the last seven days, and considers underemployed persons as those working less than 40 hours per week and declaring themselves willing and available to work more.

 It also describes unemployed persons as those not in employment but actively searching and are available for work (that is, did nothing for pay or profit). In addition, it states that working-age population covers ages 15 and above, and a distinction was made between commercial and subsistence agriculture in the revised methodology.

The old methodology defined the working-age population as those within the age bracket of 15-64 years, considering those working between 20 and 39 hours as underemployed, and those working between one and 19 hours as unemployed (including those who did nothing). Also, subsistence agriculture and temporary absentees from employment work were not properly represented in the old methodology.

According to Adeniran, “about one-third (36.4 per cent in Q4 2022 and 33.2 per cent 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 10.6 per 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 per cent 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.”

He stated that using the ILO definition, the underemployment rate stood at 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.

“The figures today are not based on any performance of any sort, but strictly, and I repeat, strictly on the change in methodology.”

Despite all Adeniran has tried to explain, users of statistics in Nigeria are yet to come to terms that the unemployment in Nigeria is 4.1 per cent.

Statistics are very essential in policymaking as it enables policy makers to identify existing economic, social or environmental issues that need to be addressed and guides them in fixing same. Additionally, statistics are also important for developing a better understanding of issues by analysing socio-economic trends over time. That is why the NBS must ensure that its numbers are reliable at all time.

Reacting to the NBS unemployment number which showed that Nigeria presently has the third lowest unemployment rate in the world, after Japan and the United States,  the Founder of Stanbic IBTC, Atedo Peterside, said, he didn’t “know whether to laugh or cry.”

To the Chief Executive Officer of Proshare, Mr. Olufemi Awoyemi, the country is presently at a point where it is courting foreign investors to unlock opportunities in critical sectors, and this becomes difficult where the integrity of official data is in question.

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.”

He added 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. This is not an accurate reflection of the reality of the Nigerian labor market.

“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.”

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, tantamount 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, an analyst who pleaded to remain anonymous, 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 is tracking and what the NBS is tracking, adding that evidence-based policy decisions remains the primary and most important objective of data.

The source said, “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.”

The source added, “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.

“But more important policy makers cannot have a target to increase full time employment and be tracking one-hour work. It’s a mismatch.”

From the foregoing, the NBS under Adeniran must understand that the usefulness of statistics has to be considered over adherence to some international standards so that the agency would not lose its credibility.

The current leadership of the NBS must also know that any attempt to manipulate government data, mislead the citizens under the guise of a partnership with the ILO and World Bank-sanctioned revision of the country’s unemployment figures would be counterproductive and may dampen investors’ confidence.