Nigeria’s unemployment rate could be higher than the 27.1 percent earlier reported by the National Bureau of Statistics (NBS) as at the second quarter of 2020.
BusinessDay’s analysis puts number of unemployed Nigerians as a proportion of Nigeria total labour force – the share of people with employment in addition to those without work but actively seeking employment and currently available to start work, at approximately 34 percent.
Nigeria’s unemployment rate in 2018 revealed a labour force of 90.47 million of which 20.9 million Nigerians were identified as unemployed. This placed Nigeria’s unemployment rate then at 23.1 percent.
However, in 2020, Nigeria’s labour force fell by approximately 11 percent to 80.29 million. This represents a difference of almost 10.17 million Nigerians who either lost their jobs or are not incorporated in the methodology of the NBS, etc. Irrespective, they should be considered as part of the labour force.
Consequentially, this puts number of unemployed Nigerians at 31.07 million when added to 21.76 million unemployed Nigerians in 2020, accounting for 34 percent of Nigeria’s total labour force in 2020.
This raises concern for the government given that number of unemployed Nigerians is about the population of Ghana and about 0.4 percent of the world’s population. The United Nations’ estimated population for Ghana is 31,158,344. This suggests that unemployed Nigerians can make up a country, which will be among the top 15 most populous countries in Africa.
According to a report titled ‘Through the roof: A legacy of high inflation and Unemployment,’ by SBMorgen, “One of the economic legacies of the Buhari administration will be high inflation. Even though he assumed office in May 2015 with inflation at 9 percent, poor economic decisions meant it peaked at 18.7 percent in January 2017, at the same time the country was in the grip of recession. In his five years as president, headline inflation has averaged 13.2 percent, while food inflation has averaged 15 percent.”
Nigeria’s unemployment rate is increasing at a time inflation is ticking northwards towards 13 percent. The NBS revealed on Monday that inflation rose to 12.8 percent. Beyond the fact that every percentage increase in the general price level of goods – without a corresponding increase in income – will see purchasing power of households decline by the same percentage, it deepens the misery of unemployed individuals.
Nigeria, with a misery index of 39.9 percent, is not only reeling from rising unemployment but also a stubbornly high inflation rate. This provides an indication that there is a mismatch between the earning capacity of people and the cost of living in Nigeria.
General price levels in Nigeria have responded sharply over the years to the unending quest of the CBN to defend the value of the naira, which led to banning 41 items from accessing foreign exchange in June 2015.
Several capital controls were also put in place to prevent foreign exchange leaving the country. In addition to this, land borders have been closed since October 2019, further strangling trade, a sector that is the second largest employer of labour in Nigeria.
Also, the outbreak of the COVID-19 pandemic saw a number of businesses collapse, jobs lost and salary cut across sectors of the Nigerian economy.
Rising unemployment and inflation rates are not without effects. This may weigh on the Nigerian government’s ability to generate non-oil revenues. Most importantly, with more people thrown into poverty, Nigeria’s insecurity challenges may intensify.
Gbolahan Ologunro, analyst at CSL Stockbrokers, says, “The consistent increase in inflation driven by food prices and the fact that growth in per capita income has also been declining has put consumers in a more precarious position. Poverty level has increased while standard of living has declined significantly.”
To the average consumer, the economy is not rosy at all. They are contending with high level of inflationary pressures, income has also been declining over the years.
“We need the government to see how it can bridge the supply gap in the economy in the short term that the pressure on prices will reduce. The Federal Government must undertake far-reaching market reforms, which a low hanging fruits to spur the economy on the path of growth,” Ologunro states.