Labour productivity rises for second consecutive quarter

Labour productivity in Nigeria rose for the second consecutive quarter within the three months through July and September 2016, according to a report by state statistics body, National Bureau of Statistics (NBS).

The report, which measures the relationship between nominal Gross Domestic Product (GDP)and the total hours worked, puts labour productivity at N714 per hour in the third quarter of 2016.

This represents an increase of 12.2% quarter-on-quarter from N636 in Q2, and a decline of 7.1% year-on-year from N768 in the same period of 2015.

The NBS attributes the movement in labour productivity to the positive factor of stable power output in the period, though balanced by weak investment relative to earlier periods.

It also observes that agriculture has become one of the faster growing segments of the economy, and floats the argument that the harvesting season in the quarter could well have contributed to the boost in labour productivity.

“The increase q/q is the result of output rising by 13.1% and hours worked by just 0.8%,” according to analysts at investment bank, FBN Quest.

“Nigeria is, of course, mired in recession (on a y/y basis) and there is an unscientific argument that people may work harder and produce more when unemployment is rising,” the analysts observed in a Jan. 5 note to investors.

While economic output has contracted in the three successive quarters of 2016, Nigeria’s unemployment rate climbed to a six-year high of 13.9% in the third quarter of 2016, according to NBS data.

A shortage of foreign exchange, brought on by lower crude oil prices and output, has snuffed out economic growth in Africa’s largest economy.

The economy contracted by 2.24 percent in the third quarter of 2016.

The dearth of infrastructure in the country is being exacerbated by low public finances, and it has pushed up business costs and marred labour productivity in the process.

However, fairly stable power and better access to premium motor spirit, otherwise known as petrol, aided labour productivity in Q3, according to the NBS.

“We do not think that international comparisons are worthwhile because of the many operating challenges for businesses. The power supply was stable but the same cannot be said of access to fuel and foreign exchange.

“This is very much vanilla analysis of productivity. It measures only one input and makes no distinction between sectors of the economy. Indeed, we have to allow for some flexibility in the calculation of hours worked in the informal sector,” FBN Quest analysts added.