Nigeria’s unemployment rate fell to 4.1% in Q1 2023

The highly anticipated labour force report by the National Bureau of Statistics (NBS) was released on Thursday revealed that Nigeria’s unemployment rate stood at 4.1 per cent in Q1 2023.

This represents a stack difference from the 33.3per cent recorded in Q4 2020, which has triggered reactions from several quarters, citing that the numbers do not reflect the reality of the Nigerian job market.

The reactions were following the tough economic and business environment in the country, largely due to high inflationary pressure, FX shortages, and increased operating costs amongst others, which have stiffened the operations of several businesses across the country and is believed to have driven an increase in the unemployment rate.

According to the report, “About three-quarters (76.7 per cent) of working-age Nigerians were employed in Q1 2023 compared to 73.6% in Q4 2022. This shows that most people were engaged in some type of job for at least one hour a week, for pay or profit.

“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.

“The 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.”

 The NBS has attributed the huge difference to the revision of its methodology, which it explained to be in line with the International Labour Organization (ILO) guidelines. Meanwhile, some major differences were noticeable between the two methodologies.

The NBS in its latest report considered persons aged 15 years and above as the working-age population. This is compared to an age group of 15 to 64 years adopted in previous surveys.

While this is in line with ILO’s general definition, it contradicts that of the Organization for Economic Co-operation and Development (OECD).

According to the OECD, the working-age population is between the ages of 15 to 64 years. It is worth noting that individuals above the age of 64 years are often not in full productive capacity, as evidenced by the retirement age limit of 60 years adopted in Nigeria.

On the flip side, due to the high level of poverty in Nigeria, with about 133 million multi-dimensionally poor people in the county, individuals tend to engage in working activities even in their old age in other to ensure survival.

The new methodology defines employed individuals as those of working age people who engaged in any activity to produce goods or provide services for pay and profit during the review period. This compares with the initial methodology of anybody who engaged in any productive activity for at least 20 hours a week.

This significantly increases the pool of individuals who are regarded as being employed, hence, the sharp decline in Nigeria’s unemployment rate from a staggering 33.3 per cent to 5.3 per cent in Q4 2022 and a further decline to 4.1 per cent in Q1 2023.