Explainer: Why Nigeria’s unemployment rate declined by 77% in Q1 2023

Recent data from the National Bureau of Statistics (NBS) indicates a somewhat surprising trend in Nigeria’s employment landscape, with a sharp rise in the country’s employment rate despite prevailing economic challenges.

According to the report, approximately 76.7 per cent of working-age Nigerians were engaged in some form of paid or profit-oriented work in the first quarter of 2023.

This figure represents a 4.2 per cent increase from the 73.6 per cent reported in the last quarter of 2022.

Nigeria’s unemployment rate rose to 33.3 per cent in 2021, translating to some 23.2 million people and as of November 2022, 133 million Nigerians were multi-dimensionally poor, according to data released by the Bureau.

While the uptick in the recently released employment statistics may initially seem positive, a deeper look at the underlying factors driving this surge reveals that is merely represents a change in the parameters and methodology used to calculate employment rate.

Speaking at the unveiling of the new Nigeria Labour Force Survey (NLFS), which incorporates the revised methodology, the Statistician-General of the Federation (SGF) and Chief Executive of the National Bureau of Statistics (NBS), Semiu Adeniran, emphasized that the new figures do not necessarily alter the stark unemployment challenges that persist in the country.

He clarified that the new unemployment data resulted solely from the adoption of a modified measuring template and did not reflect any substantial government interventions in the labor market.

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

“This is based on the new ILO standard, which Nigeria is part and parcel of, as a country. As a matter of fact, the current Chair of the ILO Governing Board is Nigeria’s Permanent Representative to the United Nations in Geneva, H.E, Ambassador Abiodun Richards, so with this, we cannot continue to be at odds with the ILO standard,” Adeniran said.

TheNewsGuru.com (TNG) reports that the revised methodology fundamentally altered the definitions used in computing labor data.

To be qualified as employed under the new ILO definition, a person needed to have worked for a minimum of one hour within a reference period of seven days against the initial 20 hours.

Also, the definition of under-employed was also altered in the new framework. While the old definition considered a person who has worked between 20 and 39 hours within a week underemployed, under the new definition a person working between 1 – 39 hours a week and is willing to accept more hours of work is considered underemployed.

Under the revised parameters, the labour force now includes individuals aged 15 years and above who are willing, available, and able to work, against the previous definition, which included those aged between 15 and 64 who were willing, available and able to work during a reference period of seven days.

As a result of ILO’s updated methodology, an unemployed person is now anyone within the labor force who did not work for a minimum of one hour within a week, marking a significant shift from the previous minimum of 20 hours requirement.

Further examination of the NBS report indicates a shift in the balance between wage employment and self-employment.

For example, in the last quarter of 2022, wage employment accounted for 13.4 per cent of the workforce, which decreased to 11.8 per cent in the first quarter of 2023.

In contrast, more Nigerians were observed to be operating their own businesses or engaging in farming activities, with figures of 73.1 per cent in Q4 2022 and 75.4 per cent in Q1 2023.

While the shift towards self-employment and entrepreneurship may indicate a growing entrepreneurial spirit among citizens, it also raises questions about the quality of employment, job security, and income stability for those in non-wage roles.

Adeniran noted underemployment remained a more substantial concern for Nigerians, and urged government not to feel complacent by the rise in the country’s employment rate.