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Salient facts in Nigeria’s Q2 2020 unemployment figures

Salient facts in Nigeria’s Q2 2020 unemployment figures

You can predict the reactions that usually follow the release of a major economic indicator especially when the trend in that indicator is not in line with the expectation of the people. Consequently, BusinessDay Research and Intelligence Unit (BRIU) has been following the mixed reactions that have continued to trail the release of unemployment rates for Africa’s biggest economy-Nigeria. From newspapers stands to radio and TV programmes, the opinions expressed by individuals are a matter of which divide they belong to. The reality is that Nigeria is presently enmeshed in social crisis. In spite of the misgivings expressed by some political leaders, it should be noted that the National Bureau of Statistics (NBS) is a renowned institution that puts a lot of rigour in data generation processes. And this explains the international partnerships and supports it enjoys under the present leadership.

The message conveyed by the current unemployment rates is basically that Nigeria’s social crisis is festering and may get out of hand if serious actions are not urgently taken to reverse the trend. The nation’s unemployment rate for Q2 2020 soared to 27.1 percent with a labour force of 80.3 million individuals. In Q3 2018, Nigeria’s labour force was 90.47 million individuals with unemployment rate at 23.1 percent. With the latest statistics, the unemployment rate deteriorated from 23.1 percent in Q3 2018 to 27.1 percent in Q2 2020, and that the nation’s labour force decreased from 90.47 million in Q3 2018 to 80.3 million in Q2 2020. So, in a matter of 21 months, the nation’s labour force fell by 11.2 percent. This decline is quite significant. But what are the salient implications of the latest unemployment situation?
Answering the above question requires us to do a deeper dive into the structure of the labour force and associated analysis between the two periods. In Q3 2018, the labour force comprised the 57 percent fully employed group that worked for 40 hours or more weekly. We also had the 20 percent under-employed group that worked for 20 to 39 hours weekly. 12 percent worked for 1 to 19 hours and thus belonged to the unemployed group. The worst unemployed group, that is, Nigerians who did nothing, constituted 11 percent or 9.75 million individuals.

Source: NBS, BRIU

Few months down the line, the fully employed group within the nation’s labour force reduced to 44 percent in Q2 2020. The resultant effect was that other groups swelled in size. The underemployed group which was 20 percent in 2018 increased to 29 percent while the unemployed group (worked 1 to 19 hours weekly) increased from 12 percent in2018 to 15 percent in Q2 2020. Therefore, the societal movement was from the upper income class to lower income class from Q3 2018 to Q2 2020.

In an economy with these characteristics, you will find highly skilled manpower doing menial jobs in order to survive. It is the reason we hear that PhD holders apply for driving jobs and graduates apply for office assistant jobs. The increasing size of the underemployed is also an indication of the expansion of Nigeria’s gig economy and informal sector.

BRIU also observed that the population of those who “did nothing” reduced during the intervening period. These groups of individuals live on transitory income such as gifts from relatives, friends and handouts. The reduction in their population could be partly because of the declining population of the fully employed group, some of whom might have been the sources of their sustenance. So, with no social investment schemes for the unemployed, and their breadwinners losing their jobs, some of them were forced to do something meaningful for survival.

Nigeria’s labour force is low skilled
The structures of Nigeria’s labour force between Q3 2018 and Q2 2020 are very similar. In Q3 2018, available data shows that 30 percent of Nigerians within the labour force never attended school. 17 percent had primary school certificates while 36 percent had secondary school certificates. Put differently, 83 out of every 100 Nigerian workers in 2018 had senior secondary school certificates or below.

The proportion of workers with post-secondary school educational qualifications was 16 percent in 2018. Within this group, 8.95 percent had NCE/OND. 6.54 percent had first degree (BA/BSc/Bed/HND). Second and doctorate degrees constituted 0.59 percent.

In Q2 2020, the proportion of Nigerian workers who never attended school fell to 20 percent compared with Q3 2018 which was 30 percent, an indication of rising literacy rate. Those who had only primary school leaving certificates were 18 percent while those having senior secondary school certificates were 36 percent of the labour force. This implies that just as it was in 2018, the proportion of the Nigerian workers having senior secondary school certificates and below constituted 80 percent of the labour force. In other words, 80 out of every 100 Nigerian workers as at June 2020 had SSCE and below.

Workers with post-secondary school qualifications constituted 20 percent of the nation’s workforce. 8 percent had NCE/OND; 9 percent had first degrees (BA/BSc/Bed/HND); 1 percent had MSc/MA/MAdmin while 0.1 percent had doctorate degrees, while others who did not belong to any of the aforementioned groups were 2 percent.

Nigeria’s labour force structure is quite similar to other African countries, and this probably explains why per capita income in most African countries is low, and why Africa has very low share of international trade.

For instance, an Egypt Labour Market Report published in 2016 stated, “In 2015, only 15.2 percent of the working age population (WAP) had a high educational level, while 32.7 percent had an intermediate education, and more than half only had compulsory education (or less). With respect to 2010, the situation had not changed notably; only the percentage of people with intermediate education registered a small increase.”

The above holds many implications for Nigeria. With majority of the labour force having SSCE and below, the Nigerian economy is yet to be benefitting from low labour cost. Were Nigeria to be a manufacturing country, the cheap labour would mean that labour input in production will be cheaper resulting in cheaper products that would make Nigerian products competitive at the global market. China used low labour cost to project its economy to the global stage.

Furthermore, if outputs are affordable, the cost of living will be lower and that will translate into higher standard of living for the populace. But the reality is that the inflationary pressures are mounting while the number of the vulnerable people is rising. What’s more, the low proportion of master’s and doctorate’s degree holders within the labour force is partly due to brain drain, or especially because the economy could not create the kind of opportunities that will demand the services of more people with such qualifications and work experience.

Gender composition
55 percent of the nation’s labour force were males in 2018 and 62 percent of them were fully employed. Also, 45 percent of the labour force were females and 38 percent of them were fully employed. Fast forward to Q2 2020, 52 percent of Nigerian workers were males and 59 percent of them were fully employed. On the other hand, 48 percent of the labour force were females while 41 percent of them were fully employed.

Age structure
In both periods, the proportion of Nigerian workers aged 34 years and below, and those who were 35 years and above was evenly split, that is, about 50 percent each.

How does Nigeria fare when compared with other countries?
According to the unemployment data sourced from the World Population Review, Nigeria’s current unemployment rate is nothing to cheer about as it places the country among those economies with social upheavals and economic uncertainties. Yemen, yes, that war-torn Yemen has its unemployment rate at 27 percent whereas Nigeria’s 27.1 percent. Above this level, 16 countries are ranked as economies with the worst inflationary pressures.

These are Burkina Faso with unemployment rate at 77 percent; Syria,50 percent; Senegal, 48 percent; Haiti, 40.6 percent; Djibouti and Kenya, 40 percent each; Marshall Island and Republic of Congo, 36 percent each; Namibia, 34 percent; Kiribati, 30.6 percent; American Samoa, 29.8 percent; Lesotho, 28.1 percent; Gabon and Swaziland,28 percent each, and South Africa, 27.6 percent.

To show how serious the current situation is, Venezuela which has been embroiled in economic crisis has unemployment rate at 26.4 percent while North Korea which has been under different global sanctions has unemployment rate at 25.6 percent. Afghanistan, 23.9 percent; Sudan, 19.6 percent; Iraq, 16 percent and 12.4 percent for Iran, the country that has been slammed with different rounds of economic sanctions, performed better than Nigeria on unemployment metric.

What changed across the 36 statesand FCT?
Eighteen states recorded lower unemployment rates than the national average in 2018. In that period, the top five states were Osun at 10.1 percent; Oyo State at 10.3 percent,Ondo, 14.2 percent, while Katsina and Lagos had 14.3 percent and 14.6 percent unemployment rates respectively.

Also in Q3 2018, the states with the worst unemployment rates were Borno, 31.4 percent; Abia, 31.6 percent; Bayelsa, 32.6 percent; Rivers, 36.4 percent, and Akwa Ibom, 37.7 percent.

However, it is a completely different story in Q2 2020. Why? None of the five states with the least unemployment rates in Q3 2018 was able to maintain its position in Q2 2020.

Consequently, the five states with the least unemployment rates in Q2 2020 are Anambra, 13.1 percent; Kwara, 13.8 percent; Sokoto, 13.9 percent; Zamfara, 14.0 percent, and Ebonyi, 14.6 percent.

On the flip side, Kaduna, 39.8 percent; Delta, 40.3 percent; Rivers, 43.7 percent; Akwa Ibom, 45.2 percent, and Imo, 48.7 percent are the worst hit states with the highest unemployment rates in the country.

By regional analysis:
Northern region’s (19 states plus FCT) unemployment rate is now 25.96%. The southern region’s (17 states) unemployment rate is 26.51%. South West (SW) has the least regional unemployment rate in Nigeria at 17.3%. even at that, it is a deterioration of the living standard of the people of the region because the regional unemployment rate in Q3 2018 was 14.3 percent. Nonetheless, none of the SW states has unemployment rate higher than the national unemployment rate.

North West (NW) at 23.1% has the second least regional unemployment rate in Nigeria.Kaduna is an outlier by having the highest unemployment rate in the region mostly attributed to the perennial problems in Sothern Kaduna, the agricultural belt of the state. The North Central (NC) at 26.8% has the third least unemployment rate in the country.So, SW, NW, and NC have their regional unemployment rates below the national unemployment rate.

South East came 4th with a 27.8% regional unemployment rate. As at Q3 2018, the SE regional unemployment rate was 23.4 percent and Imo and Abia states are responsible for the current rise in SE regional unemployment rate. The North East’s regional unemployment rate is 28.4% while the worst-hit region is South-South with a 34.6% unemployment rate. All the South-South states but Edo have unemployment rates higher than the national unemployment rate.

Source: NBS, BRIU

The way forward

South-South needs a magic wand
Nigeria’s South-South geopolitical zone produces most of the revenue used in financing Nigeria. In the latest unemployment rates for states in the country, only Edo State is below the national average. The high unemployment rates across states in the region should be a cause for concern to political office holders and the people of the region.

An analyst who pleaded anonymity said the high unemployment rate in South-South may not be unconnected with nature of the oil and gas industry as it rarely creates many job opportunities like agriculture and manufacturing.

“The oil and gas industry doesn’t create many job opportunities especially for the kinds of labour who constitute majority of Nigeria’s labour force”, she said.

Even if the oil and gas will create opportunities, the lackadaisical attitude with which the federal government and the National Assembly have handled the Petroleum Industry Bill (PIB) and the Ogoni clean-up is enough to send discouraging signals to investors willing to bet on the region. As a matter of urgency, the federal government and the National Assembly must expedite actions on the two projects meant to inject live in the region.

In the United States for instance, California had the highest unemployment rate of 14.9 percent as at June 2020. Alaska’s unemployment rate was 12.4 percent. All other oil producing states in the US have their latest unemployment rates at single digit. It is 8.6 percent in Texas; 8.3 percent in New Mexico; 6.6 percent in Oklahoma, and 6.1 percent in North Dakota. This is just to show that adequate investment in the Niger Delta should bring down unemployment rates in that region.

Political uncertainties contributed to high unemployment rate in Imo
Imo State’s unemployment rate in Q3 2020 was 28.2 percent but rose to 48.7 percent in Q2 2020. We should not look farther for the causes of the downturn in job creation in the state. In the last one year, the state had had its own share of Nigeria’s political uncertainties. The fuss was no other than the declaration of Emeka Ihedioha, candidate of the People’s Democratic Party (PDP), as the duly elected governor by the Independent National Electoral Commission (INEC) and who was sworn in last year May 2019. But just few months down the line, he was sent packing in January 2020 and was replaced by Hope Uzodinma of the All Progressives Congress (APC). Now that the nation’s highest court has confirmed the current governor as the duly elected, we expect unemployment rate in the state to trend southward.

Southern Kaduna’s killings undermine job creation
Southern Kaduna is the agricultural belt of the state. The region is suitable for growing all kinds of cereals, grains, vegetables, tuber crops, among others. It is a known fact that horrendous crimes have been committed in the region that have seriously affected agricultural production in the state. Little wonders why Kaduna State’s unemployment rate rose from 26.8 percent in Q3 2018 to 39.8 percent in Q2 2020. This is despite the state emerging as one of the most improved states in IGR generation in 2019. The way out of this logjam is for all the dramatis personae to sheath their swords for progress to return to the region. Else, the unemployment crisis in the state will deteriorate further.