Why Nigeria’s unemployment rate may drop amid rising poverty

Nigeria’s National Bureau of Statistics (NBS) said in a Youtube video that it had been working in collaboration with the World Bank to adopt the latest International Labour Organisation guidelines for computing labour force statistics. The guidelines were initially proposed at the 19th International Conference of Labour Statisticians back in 2013.

According to the new methodology, an employed person would include anyone who works at least one hour per week, as opposed to the previous requirement of working at least 20 hours per week – effectively increasing the employment figures.

In addition, unemployed persons would only include those who have actively sought employment during a specified recent period.

This varies with the previous methodology, which recognised those who worked for less than 20 hours a week as unemployed.

Moreover, those engaged in subsistence agriculture would no longer be regarded as part of the employed population as subsistence agriculture would now be recognised as ‘own-use production of goods and services‘.

The change comes at a time of particular hardship for Nigerians. Overwhelmed by rising inflation, the devaluation of the currency and the removal of petrol subsidies, Nigerians are finding their incomes squeezed, with more potentially slipping into poverty. According to data from the World Bank, as many as four in 10 Nigerians live below the national poverty line.

The NBS has not yet released unemployment figures that reflect the new methodology. The latest figures, from March 2021, state the unemployment rate at 33.3%, making Nigeria, the most populous in Africa, the country with the highest unemployment rate in the world.

Meanwhile, data from KPMG in April 2023, shows the country’s unemployment rate hit 37.7% in 2022, and could rise to 40.6% in 2023 due to the inflow of job seekers into the job market.

In defence

Some sceptical Nigerians are questioning the new methodology, insisting that it is only a ploy to make the new government appear as if it has tackled unemployment amid rising poverty.

Unemployment could drop to 5% if this method is used and people will not buy it

However, the NBS has defended the change in direction saying: “The methodology is not peculiar to Nigeria alone. It is the global standard for computing Labour Force Statistics, which other countries in Africa and the West have since adopted.”

“The concept of in-work poverty highlights the fact that individuals can be employed, while still experiencing poverty. The population of 133 million people living in multidimensional poverty encompasses both employed and unemployed individuals. However, whether the income earned is sufficient to support the individual is an entirely separate matter, which is addressed by other surveys that specifically examine poverty levels,” it says.

Controversy

“This will be very controversial because the essence of employment is to earn a living; so, if you work for an hour as an electrician and you earn about N1,000 [$1.5] a week, should you be regarded as employ[ed]?” Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise, tells The Africa Report.

“Unemployment could drop to 5% if this method is used and people will not buy it. Nigeria needs to domesticate some of these metrics because what applies in other countries may not apply in Nigeria,” he says.

Kelvin Emmanuel, a business analyst and CEO of Dairy Hills, argues that the government should amend labour laws, which would then change the parameters for assessing employment. “In the United States, there are temporary workers known as temps. They are usually included in the Department of Labour’s Thursday report on labour statistics and they usually get unemployment claims. They receive welfare benefits.

“[…]I believe that it is important for the Nigerian government to change the structure of labour reporting statistics in Nigeria, especially for the unorganised labour sector,” he says.