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New unemployment methodology; A case of the proverbial ostrich?



Based on data from the National Bureau of Statistics (NBS), the unemployment rate was 5.3% in Q4 2022 and 4.1% in Q1 2023.

The NBS Chief noted that the bureau has adopted a new method in computing the labour statistics, which he notes is in line with International Labour Organisation (ILO) guidelines.

With the new method, the NBS defines employed persons as those in paid employment, who have worked for at least one hour in the last seven days.

This compares with the previous method where to qualify as being employed, a person must have worked for a minimum of 20 hours within the reference period of seven days.

Again, the new method defines the labour force as those 15 years and above, who are willing, available, and able to work.

Under the old method, the labour force only included those aged between 15 and 64 who were willing, available, and able to work.

This, according to him, is in line with the International Labour Organisation (ILO) guidelines.

Nigeria’s unemployment rate has been rising at a fast pace since 2015.

The last reported unemployment rate (Q4 2020) was 33.3%. Unemployment rate in Nigeria averaged 10.63% from 2006 until 2017, reaching a high of 19.70% in the fourth quarter of 2009 (the peak of the global financial crisis) and a record low of 5.10% in the fourth quarter of 2010 (the period of high oil prices).

The former Statistician-General of the National Bureau of Statistics had linked the Bureau’s inability to release the unemployment data promptly to lack of funds.

The economic recession witnessed in 2015-17 impacted Nigerian households significantly, worsening the employment conditions.

Although the exit from recession in Q2 2017 was expected to translate into improved conditions, following five consecutive quarters of negative growth, the pace of recovery was not strong enough to encourage businesses to raise their demand for labour.

Still stuttering from the hit of that recession, the onset of the global pandemic worsened the situation and drove the country into another recession in Q3

Though the new unemployment figures released appear low, what is certain is that conditions have worsened since Q4 2020, when an unemployment rate of 33.3% was released.

Reporting these low rates using the new methodology appears to us like a case of the proverbial ostrich who buries its head in the sand to pretend not to see the chaos around. In our view, the government needs to urgently address the menace of rising prices and galloping unemployment irrespective of what the numbers say.

One of the factors that has been identified over time as a major cause of unemployment is the absence of an enabling environment for businesses to thrive.

The government needs to improve business conditions by tackling insecurity headlong and improving primary infrastructure that would aid commerce and attract more private sector investments.