New methodology improves Nigeria’s unemployment rate drops to 4.1% in Q1 2023 – NBS

NAIRAMETRICS

Nigeria’s unemployment rate has seen a dramatic drop from 33.1% reported in March 2021 to 4.1% for the first quarter of 2023 and 5.3% in the 4th quarter of 2022.

The National Bureau of Statistics (NBS) released its employment data for the first quarter of 2023, indicating a substantial improvement in the job market.

As per the newly-revised Nigeria Labour Force Survey (NLFS), which now aligns with International Labour Organisation (ILO) guidelines, the unemployment rate in the country has been reported at a promising 5.3%.

New Methodology – The NBS enhanced its data collection process for the NLFS by sampling 35,520 households across Nigeria. The new approach provides for ongoing data collection throughout the year, delivering national-level results on a quarterly basis, and state-level results annually.

…Terms Clarified

The NBS report clarified several terms:

• Employed at work –  Individuals who worked for pay or profit for at least one hour in the last 7 days.
• Employed temporarily – Those who typically work but were absent due to reasons like vacation or sick leave.
• Active search – Taking specific actions to look for paid work or start a business in the past month.
• Available to work – Being ready to start work either last week or in the next two weeks.

Optics

While the NBS’s Q1 2023 unemployment report paints an optimistic picture of Nigeria’s job market, there are important caveats that warrant attention.

• First and foremost, the new methodology—although in line with international standards—may not accurately reflect the lived experiences of many Nigerians.
• The revised NLFS categorizes people engaged in menial jobs as “employed,” even if they are earning well below the minimum wage and operating under poor working conditions.
• This raises questions about the quality and sustainability of such employment, and whether this truly represents an improving job market or merely a shift in classification.
• Additionally, the NBS’s report lacks a side-by-side comparison with data gathered using the previous methodology.
• This has traditionally been standard practice when there’s a change in methodology to offer a more transparent and comprehensive view.
• The absence of this comparative data may leave analysts, policymakers, and the general public wondering if the changes were implemented to present a rosier economic outlook deliberately.

Finally, while the reported 5.3% unemployment rate and other positive trends should be seen as encouraging indicators, they should also be taken with a grain of skepticism.