February 22, 2024/CSL Research

Despite recent adjustments to the method of computing unemployment rate by the National Bureau of Statistics (NBS), rising numbers show unemployment remains a major problem in Nigeria. With the new method, the NBS defines employed persons as those in paid employment, who have worked for at least one hour in the last seven days. This compares with the previous method where to qualify as being employed, a person must have worked for a minimum of 20 hours within the reference period of seven days.

Again, the new method defines the labour force as those 15 years and above, who are willing, available, and able to work. Under the old method, the labour force only included those aged between 15 and 64 who were willing, available, and able to work. This, according to the NBS, is in line with the International Labour Organisation (ILO) guidelines.

The newly released Nigeria Labour Force Survey showed that unemployment rate rose to 5.0% in Q3 2023 from 4.2% in Q2 2023. Time-related underemployment in Q3 2023 was 12.3%, a slight increase of 0.5% in Q2 2023. Therefore, higher levels of growth were recognized for the combined segments of unemployment and time-related underemployment which grew to 17.3% in Q3 2023 from 15.5% in Q2 2023. The increase in time related underemployment may be attributed to companies taking cost-effective measures by turning full-time staff to part-time workers and the increasing use of Artificial Intelligence (AI).

Meanwhile the youth (15-24 years of age) unemployment rate increased to 8.6% in Q3 2023 from 7.2% in Q2 2023. Though urban areas recorded a higher unemployment rate of 6.0% in Q3 2023 from 5.9% in Q2 2023, the rural areas saw a stronger growth in unemployment rate to 4.0% in Q3 2023 from 2.5% in Q2 2023.

Nigeria’s rapidly growing population creates additional pressure on the job market. The global economic slowdown as predicted by World Bank and the International Monetary Fund (IMF), and domestic economic challenges could hinder job creation in the near term. Nigeria’s unemployment rate has been rising at a fast pace since 2015. The last reported unemployment rate (Q4 2020) before the adoption of the new method was 33.3%. The economic recession witnessed in 2015-17 impacted Nigerian households significantly, worsening the employment conditions. Although the exit from recession in Q2 2017 was expected to translate into improved conditions, following five consecutive quarters of negative growth, the pace of recovery was not strong enough to encourage businesses to raise their demand for labour.

Still stuttering from the hit of that recession, the onset of the global pandemic worsened the situation and drove the country into another recession in Q3 2020. Though the new unemployment figures released appear low, what is certain is that conditions have worsened since Q4 2020, when an unemployment rate of 33.3% was released using the old methodology.