August 25, 2023/FBNQuest Research

The National Bureau of Statistics (NBS) finally released the much-awaited Nigeria Labour Force Survey (NLS) report for Q4 ’22 and Q1 ’23. The new survey methodology aligns with international best practices as recommended by the International Labour Organisation (ILO). According to the report, the national unemployment rate decreased to 4.1% in Q1 ’23 from 5.3% in Q4 ’22. It is important to note that the last labour force survey was conducted in Q4 ’20, and it showed an unemployment rate of 33.3% based on the old NLS methodology. The significant difference in unemployment rates under the old and new NLS methodologies is due to differences in employment definitions.

According to the report, about 76.7% of Nigeria’s working-age population were employed as of Q1 ’23, a slightly higher percentage relative to 73.6% in Q4 ’22.

Notably, the new NLS methodology adopts more comprehensive criteria for defining employment, particularly with respect to factors such as weekly work hours, age bracket of the labour force, and underemployment amongst others.

For instance, the updated NLS methodology now considers those who work for at least one hour per week as employed individuals. This broadens the scope of inclusion in the labour force compared to the previous requirement of working for 20 hours per week under the old NLS.

The working age population is defined as those aged 15 years and above under the new NLS, compared with a working age bracket of 15 to 64 years under the old NLS.

Furthermore, the criteria for underemployment now encompass only those working fewer than 40 hours per week, as opposed to the previous range of 20 to 39 hours weekly defined by the old NLS.

Based on this new definition, the underemployment rate declined to 12.7% in Q1 ’23 from 13.7% in Q4 ’22.

Similarly, considering the new criteria, the combined rate of underemployment and unemployment, as a share of the total labour force dropped from 18.2% in Q4 ’22 to 15.8% in Q1 ’23.

The report also shows a higher unemployment rate of 5.4% for the urban economy in Q1 ’23 compared with a 2.9% rate for rural communities.

Of primary concern is the observation that roughly 22.3% of the working-age population remained outside the labour force in Q4 2022, with this figure reducing to 20.1% in Q1 2023.

Also, the rate of informal employment in the labour force remains high at around 92.6% in Q1 ’23, down from 93.5% in Q4 ’22.

Curiously, the unemployment rate for Q4 ’20 using the strict definition of the new LFS based on a zero-hour work week shows a much higher figure of 17.5%, compared with the 4.1% rate for Q1 ’23.

Given the economic realities, the low-single digit unemployment rate is flattering, largely because of the new NLS methodology.

However, of greater concern is the fact that approximately two-thirds of Nigerians continue to live in multidimensional poverty.