•It’s politically motivated– Adonri•It could lead to wrong economic policy decisions – University don•Figure still high no matter how it is painted – Chiazor•Not reflective of Nigeria’s current unemployment situation – EseleBy Peter Egwuatu; Nkiruka Nnorom; Omeiza Ajayi & Ifunanya Okafor
Amidst controversies surrounding the latest Nigeria Labour Force Statistics, NLFS, released by the National Bureau of Statistics, NBS, some financial and economic analysts have discredited the methodology employed as well as the conclusions arrived at by the Bureau.
The NBS, on Thursday, said the unemployment rate in the country fell quarter-on-quarter (QoQ) by 1.2 percentage points to 4.1 per cent in the first quarter of this year (Q1’23) from 5.3 per cent in the fourth quarter of 2022 (Q4’22).
The new unemployment rate was also a drastic crash from the 35 per cent recorded a year ago. The Bureau also said that the underemployment rate in the country fell QoQ by 1.5 percentage points to 12.2 percent in Q1’23 from 13.7 percent in Q4’22. The NBS said its NLFS for Q4’22 and Q1’23, latest unemployment report adopted a new methodology, adding, “the revised methodology aligns with our contemporaries in Africa such as Ghana, Niger, Chad, Cameroon, Benin, Gambia etc, in line with international best practices”.
Unemployment report is politically motivated — Adonri
Picking holes in the NLFS, analyst and Executive Vice Chairman at Highcap Securities Limited, David Adonri, said: “When I heard yesterday that Nigeria’s labour unemployment rate is now 4.1%, I thought it was a rumour. At year-end, the unemployment rate was over 35%. Analysts were even skeptical about the closing figure of 35% in 2022, that it may have been understated.
For NBS to employ a new method that produced the recent result beats every imagination. Is this new statistical approach globally acceptable? With the desolation of farmlands due to the reign of terror by bandits, Boko-haram and ISWAP, agriculture which absorbs majority of Nigerian labor force is beleaguered.
Lingering impact of past government’s economic disruption and recent fall out from macroeconomic reforms have caused massive loss of jobs. With these developments, can a 4.1% unemployment rate be justifiable? I consider the resort to sub-regional “substandard” approach to statistics as politically motivated.
The figure released by NBS is contradictory to reality on ground and cannot stand the test of statistical confidence, consistency and global acceptability’’.
Report is incongruent with Nigeria’s widespread economic challenges — Egbomeade
On his part, Clifford Egbomeade, economic analyst and communications expert at ID Africa, said the report provides significant insights. On the methodology used by the NBS which was a revision of its regular methodology, Egbomeade stated that, ‘‘The NBS attributed the drastic difference to the adjustment in its methodology, aligning with International Labour Organisation (ILO) guidelines.
‘‘Notable differences emerged in defining the working-age population, which now includes individuals aged 15 years and above, rather than the previous 15 to 64-year range, thereby expanding the coverage.
‘‘Moreover, the new methodology classifies employed individuals as those engaged in any activity to produce goods or services for pay and profit during the review period. This contrasts with the earlier criteria of at least 20 hours of productive activity per week. This broader definition expanded the pool of those considered employed, resulting in the substantial decline in the unemployment rate.
‘’The next issue is periodicity and underemployment: The shift to a longitudinal research design, capturing data changes over time, is a notable departure from the previous method that collected data at a single point. The classification of underemployment now includes those willing to work more hours but engaged for fewer than 40 hours per week, departing from the time-based criterion alone.
‘‘Generally, the implications of these changes highlight both positive trends and the complexity of assessing employment. The reported 4.1% unemployment rate is incongruent with Nigeria’s widespread economic challenges, from inflation to economic hardship and FX instability.
It is critical to assess the methodology used, adapt it to current economic realities, and ensure a more comprehensive understanding of employment issues.”
On under employment, he said: “The decrease in underemployment could be seen as a positive sign, indicating that a larger proportion of the workforce is gaining more hours of work, thus contributing to increased productivity and economic growth. However, it’s essential to delve deeper into the factors behind this reduction to understand its true implications.
“While the revised methodology and definitions by the NBS have contributed to this change, it’s important to assess whether this reduction in underemployment is a result of a genuine increase in quality and full-time employment opportunities or if it’s influenced by shifts in working patterns due to economic challenges.
‘‘For instance, individuals might be taking on multiple part-time jobs to make ends meet, resulting in higher employment rates but not necessarily reflecting optimal labor market conditions.“Moreover, the decrease in underemployment should be considered alongside other economic indicators such as GDP growth, inflation rate, etc.
‘‘A reduction in underemployment should ideally coincide with an improvement in overall economic conditions, suggesting that individuals are finding better job opportunities that align with their skills and qualifications. If the reduction in underemployment is not accompanied by meaningful improvements in other economic indicators, it could indicate a mismatch between job quality and workforce skills.
“To comprehensively assess the impact of the changing underemployment rate, policymakers and economists should analyse its relationship with various economic variables, considering the sustainability and quality of the employment opportunities that are contributing to this decline. This data-driven approach will enable a more accurate understanding of the broader implications of the reduction in underemployment and its significance for the overall health of Nigeria’s economy.”
It could lead to wrong policy decisions — Uwaleke
While expressing his displeasure with NLFS report, Professor Uche Uwaleke, Financial Economist and a renowned Professor of Capital Market at Nasarawa State University, said: “I think the unemployment number of 4.1% for first quarter 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.”
Compared to the old methodology adopted by the NBS, Uwaleke posited that this new methodology which includes apprentices, is tantamount to significantly lowering the bar and could lead to wrong policy decisions by the government. Continuing, he said: “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.”
Figure still high no matter how it is painted — Chiazor
Victor Chiazor, Head, Research and Investment, FSL Securities Limited, noted that the new methodology used for the computation of the latest labour statistics gives clarity on how the figures were got, especially the fact that it was conducted using the 19th International Conference of Labour Statistics (ICLS) standard.
“This methodology seem to have dropped Nigeria’s unemployment down from 33.3% reported in Q4’20 to 4.10% in Q1’23 while underemployment dropped from 22.8% in Q4’20 to 12.20% in Q1’23.“Though this figure seem low but given the new methodology that says working 1 hour a week makes you employed makes the outcome of the survey not surprising.”
He, however, said that in reality, a significant percentage of the population are either unemployed or underemployed, noting that the “report says 33.2% of the employed persons worked less than 40 hours a week.” “Summing this exact figure plus the unemployment figure and the actual underemployment figure reported amounts to a total of 42% (56.12% Q4’2022) of people who either work below 40 hours a week or have no jobs. “This remains a high figure no matter how we try to paint the situation and the government still has a lot of work to do. “Also the new report stated that 76.70% were employed, 12.20% were underemployed while 4.10% were unemployed which totals 93% of sample size. The report failed to mention what the 7% balance of that survey represents,” he asserted.
4.1% unemployment rate not reflective of Nigeria of current situation —Esele
In his own reaction, a former President of the Trade Union Congress TUC, Comrade Peter Esele described the new unemployment rate released by the National Bureau of Statistics NBS as not indicative of Nigeria’s employment situation. According to him, while the enhanced methodology adopted by the NBS is acceptable, it does not necessarily mean that it reflects the reality on ground.
Esele, also a former President of Petroleum and Natural Gas Senior Staff Association of Nigeria PENGASSAN said; “If you go back you will see that NBS has been under pressure from the days of the former Minister of Labour, Dr Chris Ngige talking about the various methodologies employed by the NBS. What the NBS has done is to pick one of those methodologies and you cannot also fault it because of the way it is on paper because it is an international standard and it is acceptable but does it reflect where we are as a country? My answer is no. What we have in this country now does not in any way reflect 4.1 percent. But again, the NBS was very clear that yes, this is not an indication that government has created such a quantum job for it to drop to what we have now”.
Esele said while the statistics is acceptable in terms of policy formulation, there is no methodology that is 100 percent agreed upon globally. When the US government of Democrats releases its unemployment records, you also have the Republican Party saying they are not in agreement with that.
“In terms of policy formulation, you have to look at the statistics whereby 93 percent of the economy is driven by the informal sector. Now, how much of this pool of the informal sector is within the tax bracket? I would rather we take these statistics from the NBS and look at the areas we think are useful and then government uses it to formulate its policies; then government looks at the areas that are not useful and discard them but I am looking forward to the next statistics on inflation and minimum wage bracket.
“The NBS has to exist and it is okay for them to have used the methodology they wanted. Now, will I be comfortable deploying it as an employer? My answer is no. Does it reflect what is on the ground? No, it does not. However, it is better to have data than no data at all. So, I may disagree with your data, but I can also use that data to arrive at an informed position. I may disagree with your what NBS is releasing but that does not mean that I cannot use it. I do not have to accept the entire thing that NBS has released. As I said earlier, no methodology is universally accepted”.
Also speaking, Executive Director of Development Specs Academy, Prof. Okey Okechukwu, said what the NBS did was simply a recalibration of the criteria for determining rate of unemployment.
Okechukwu a Senior Fellow at the Nnamdi Azikiwe University, Awka said; “It is a recalibration based on new criteria. Until few years ago, many people believed if you had six credits, that you have made your O’Levels but a new approach came up around 2007 or so that if you made all the credits in the world without English and Mathematics, that you have not made your O’Levels because you can’t get into the University.
If you used the old approach, it means you would have millions of people who claim to have passed their O’Levels but if you use the new approach, the figure will come down.
What the NBS has done is modifying the criteria for the labour force because before if you worked for less than 20 hours a week, then you were unemployed. The methodology has now changed but it does not mean that the government has done anything in reducing unemployment”.
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