Nigeria’s unemployment rate rose for the first time in the second quarter of this year since the National Bureau of Statistics (NBS) adopted a new methodology for the country’s labour force.
The latest Nigeria Labour Force Survey shows that the unemployment rate rose to 4.2 percent from 4.1 percent in Q1. It stood at 5.3 percent in the Q4 of last year.
The statistical agency defined the unemployment rate as the share of the labour force (the combination of unemployed and employed people) who are not employed but who are actively searching and are available for work.
“Unemployment rate by sex among men was 3.5 percent and among women was 5.9 percent in Q2 and that unemployment rate was 5.9 percent in urban areas and 2.5 percent in rural areas,” the report said.
It added that focusing on young people, the unemployment rate for 15-24-year-olds was 7.2 percent in Q2 compared to 6.9 percent in Q1.
“The reforms are impacting negatively on the micro, small and medium enterprises (MSMEs) and manufacturing sectors, leading to an increase in unemployment,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria (ASBON), said.
He said the tough business environment has eroded the confidence of investors in the country, making some of them leave Africa’s biggest economy. “Those who are expected to come as new investors are scared of coming, which is affecting the ability to new employment opportunities.”
“A lot of businesses especially the small and medium scale ones are not doing well making them either layoff their staff or not hire people, pushing more into the unemployment market,” Gabriel Idahosa, president and chairman of the council of Lagos Chamber of Commerce and Industry, said.
The NBS report revealed that in terms of educational attainment, the unemployment rate was 8.0 percent for those with post-secondary education, 5.4 percent for those with upper secondary education, 3.7 percent for those with lower secondary education, 3.0 percent for those with primary education and 2.5 percent for those with no formal education.
“The labour force participation rate among the working-age population remained high at 80.4 percent in Q2. Employment-to-population ratio was 77.1 percent in Q2,” it said.
Authors of the report noted that the combined rate of unemployment and time-related underemployment as a share of the labour force population was 15.5 percent in Q2.
“Most workers (around 88.0 percent) were in self-employment in Q2. The proportion of workers in wage employment in Q2 was 12 percent. The unemployment rate in urban areas was 5.9 percent in Q2, an increase from 5.4 percent in Q1.”
The Tinubu administration’s reforms including the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, pushed the inflation rate to the highest level in 18 years.
The removal of the petrol subsidy tripled the pump price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise fares.
The naira has plunged to record lows across markets since the central bank allowed it to weaken by as much as 40 percent against the dollar in June.
According to the NBS, the country’s inflation rate, a measure of the general price level, rose to 28.20 percent in November from 27.33 percent in the previous month.
The latest monthly Purchasing Managers’ Index by Stanbic IBTC Bank showed the headline index dropped to the lowest in eight months of 48.0 in November 2023 from 49.1 in the previous month, marking the second straight month of contraction.
Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.
Data from the Manufacturers Association of Nigeria (MAN) showed that the number of jobs lost in the manufacturing sector rose by 108.7 percent to 3,567 in the first half of this year, the highest in three years from 1,709 in the same period of 2022.
The number of jobs created in the sector declined by 32.8 percent to 6,428 from 9,559 in H1 2022.
“The decline underscores the persistent harsh operating business environment for manufacturers which was occasioned by escalating energy cost as well as necessary but poorly coordinated subsidy and exchange rate reforms,” MAN said.
The association projected that employment conditions for Q3 deteriorated below the 50 benchmark points to 46.6 points from 47.8 points in the previous quarter.
A further analysis shows that the employment conditions, which declined for the fourth straight quarter, fell to the lowest level compared to other indicators such as current business condition (48.9), current employment condition (50.2), business condition for the next three months (58) and production level for the next three months (59.8).
About 10 percent of the 40 million MSMEs in the country have shut down since the subsidy removal, according to Abdulrasid Yarima, president/chairman of the governing council of the Nigerian Association of Small and Medium Enterprises.
“It’s been very tough for our members as we are managing to survive. Some of them are closing shops while others are looking for new business opportunities,” he said.
Rising inflation in Africa’s most populous nation has pushed an additional 14 million Nigerians into poverty in 2023, according to the latest Nigeria Development Update report by World Bank.
This means that the number of poor people rose to 104 million from 89.8 million at the start of the year.
