September 29, (THEWILL) – Most Nigerians with access to the National Bureau of Statistics (NBS) website are getting confused and worried over the drastic drop in the country’s unemployment rate from the surge towards 40 per cent in 2020 to the slump to the current 5-6 percent. The statistics agency said the “drop” arose from the adoption of a new methodology in calculating employment and unemployment situations in the country.
Part of the recent NBS “Nigeria Labour Force Survey” reads: “ In 2013, however, following the conclusion of the 5-yearly International Conference of Labour Statisticians, ICLS, new resolutions were reached on certain definitions and concepts used in the computation of labour force statistics.
“The main objectives of these new resolutions were to address limitations in the unemployment statistics by providing broader measures of labour underutilisation. It also recognises all forms of work, both paid and unpaid, and integrates labour statistics with other topics, such as national accounts amongst others.
Following the publication of the Q4 2020 labour force survey report, which produced headline unemployment and underemployment rates of 33.3 per cent and 22.8 per cent, NBS as part of its routine methodology review and enhancement processes, commenced work in 2021 with the World Bank and the International Labour Organisation (ILO) to update the methodology and process for conducting the NLFS in Nigeria.
The review and methodology update in line with the 2013 ICLS resolutions have culminated in the publication of new labour force estimates\ which are now internationally comparable and provide more detailed and precise information on the labour market in Nigeria.
Since the fourth quarter of 2022, the NBS has been producing new labour force statistics using the revised methodology. This new model is designed to report quarterly estimates at the national level and state-disaggregated estimates annually.
Accordingly, this report presents the state-level findings for the year 2023, following 12 months of data collection from the fourth quarter of 2022 to the third quarter of 2023 – specifically, October 2022 to November 2023.
NBS has significantly enhanced the methodology it uses to collect labour market data through the NLFS. This is in terms of the concepts and definitions used, as well as in the actual conduct of the NLFS survey. This has been done following International Labour Organisation (ILO) guidelines in the 19th (International Conference of Labour Statisticians) ICLS Resolutions to bring the NLFS methodology in line with best international practice. In terms of the definitions, below are the most significant changes in the definition made under the recent revision –
I. Working Age Population – previously was persons aged 15 -64 but is now persons aged 15 and above.
II. Labour Force – previously those between the ages of 15 – 64, that were willing and available for work, which includes those employed and those unemployed. However, it is now those aged 15 and above who are willing and available for work, including those employed and those unemployed.
III. Unemployed Persons – the new definition of unemployed persons, is anyone within the Labour force, who within the reference period, (previous 7 days) did nothing or worked for less than 1 hour.
This is a significant change from the old definition, where to qualify to be employed, a person needed to have worked for a minimum of 20 hours within the reference period of 7 days.
IV. Underemployed Persons – Under the old definition, a person is considered Underemployed if he or she worked between 20 and 39 hours within the reference period of a week. Under the new definition, however, anyone working under 40 hours, which is 1 – 39 hours a week, and is willing to accept more hours of work is considered underemployed. A rise in the unemployment rate is not entirely equivalent to an increase in job losses or vice versa. Rather, an increase in unemployment can occur because of several reasons, of which loss of an existing job is just one.
A rise in the unemployment rate generally means the number of people searching for jobs has increased, which can occur because a people previously outside the la bour force (e.g. students, housewives, etc) have decided to join the labour force and are now in search of jobs. People previously working have lost their jobs and are now in search of jobs.However, it is often a combination of these two factors. As mentioned in statements a and b, an increase in the labour force size can lead to a decrease in the unemployment rate. What drives an increase in the labour force? The labour force does not change simply from job losses, since those people previously had jobs and were already in the labour market, which does not change because of them losing their jobs.
Rather, what causes an expansion in the size of the labour force is the increase in the number of persons within the working-age population, who were previously not willing or able to work, but who are now available and actively looking for work.
The 1 hour per week benchmark for determining whether a person is employed or not, does not suggest that working an hour a week is sufficient to cater for the person’s needs. It is only used as a benchmark.
Furthermore, labour force statistics deal with whether persons are engaged or not in any activity for pay or profit, and the nature of that engagement. The living standards or welfare of a person are captured by different indicators, such as poverty and other welfare statistics.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
