National Bureau of Statistics (NBS) expects the unemployment rate in Africa’s most populous nation to reduce by 2018, all things being equal.
Although, the unemployment rate in Nigeria went up 18.8 per cent in Q3 2017 from 13.9 per cent recorded in Q3 of 2016, marking the highest jobless rate since 2009, as compiled by BusinessDay.
On yearly basis, the unemployment rate increased by 4.9 percentage points while quarter-on-quarter it increased by 2.6 percentage points, as the unemployment rate was 16.2 per cent in Q2 2017.
Unemployed population in Nigeria, according to the NBS, increased to 15.99 million in Q3 2017 from 11.9 million in Q3 2016, accounting for a 25.6 per cent increase year-on-year and a 15 per cent quarter-on-quarter increase as unemployment population stood at 13.59 million in Q2 2017.
“Unemployment always increase whenever an economy experienced a recession, and in the case of Nigeria where the unemployment rate was already high and rising even when the economy was growing strongly, it implies a recession would lead to an even sharper rise in unemployment than would normally have been expected,” said the state’s funded bureau.
The working-age of citizens in Africa’s largest economy increased from 110.29 million in Q2 2017 to 111.13 million in Q3 of the same year, accounting for a 2.79 per cent increase when compared with 108.030 million recorded in Q3 2016.
Thereby making the labour force to rise from 83.94 million in Q2 2017 to 85.09 million in Q3 of the year under review, a 5.19 per cent increase when compared with 80.67 million in Q3 2016.
The underemployment rate was up slightly from 21.1 per cent in Q2 2017 to 21.2 per cent in Q3 2017. On yearly basis, it increased by 1.5 percentage points, as underemployment rate was at 19.7 per cent in Q3 2016.
The unemployment rate was highest in the urban area as its accounts for a 3.04 percentage points increase from 20.36 per cent in Q2 2017 to 23.4 per cent in Q3 2017.
While underemployed in urban residents rose by 0.2 percentage points from 8.8 per cent in Q2 2017 to 9.0 per cent in Q3 2017. The underemployed rural residents rose to 26.4 per cent in Q3 2017 from 26.4 per cent in the previous quarter.
Total unemployed and underemployed male citizens went up to 15.9 million in Q3 2017 from 14.5 million in Q2 2017, while the female increased to 18.1 million in Q3 2017 from 16.6 million recorded in Q2 of the same year.
“However, employment growth may lag, and unemployment rates worsen especially at the end of a recession and for many months after,” according to the bureau, adding that it expects unemployment to peak in the fourth quarter of 2017.
Africa’s largest exporter of crude oil went into recession for five consecutive quarters from Q1 2016 to Q2 2017 due to troubles stemmed from oil glut which resulted in a global reduction in the price of oil, a major source of the nation’s revenue but emerged when the nation’s GDP grew by 0.55 per cent and further went up to 1.4 per cent, although the economic growth has been seen sluggish, leading to a drought of work opportunities, contributing to a cycle of poverty that drives Nigeria’s yawning wealth inequality as well as social unrest.
“Although the economy has emerged from recession and the recent national accounts by the NBS points towards the growth of 1.6% y/y, the recovery remains fragile and sustained healthy growth elusive. We applaud the authorities for their continuing efforts in improving the country’s business environment. However, structural issues still exist, making it difficult for some businesses to break even.
“Labour cuts are usually a short-term solution to this problem. Unless the real economy feels the direct impact of government interventions geared towards stimulating investments into the economy and by extension boosting business activities, the unemployment rate may maintain its upward trend,” said Chinwe Egwim, macroeconomist and fixed income analyst/FBNQuest Merchant Bank.
The Q3 2017 unemployment/underemployment report saw Rivers state top the highest unemployment rate (41.82%), followed by Akwa-Ibom (36.58%), Bayelsa state (30.36%), Imo state (29.47%) and Kaduna state (28.96%). The unemployment populations are heavily distributed in southern states, northeastern states, Northwest states including Kaduna and Sokoto, and two central states Nasarawa and Plateau. Southwestern states including Oyo, Ogun and Lagos, which have large labour forces reported relatively low unemployment rates.
“The unemployment rate, induced by a recession, typically peaks about 15-18 months after the beginning of a recession or 4-8 months after the end of a recession before it returns to its prerecession trend,” stated the nation’s bureau.
The Economic Reform and Governance Project (ERGP) plan by the federal government expect to achieve the net job creation of 1.5 million in 2017, 3.8million in 2018, 4.3million in 2019 and 5.1million in 2020. The plan also aims to get the unemployment rate to 16.32 per cent in 2017, 14.51 per cent in 2018, 12.90 per cent in 2019 and 11.23 per cent in 2018, as gathered from the ministry of budget & national planning and the National Bureau of statistics.
Meanwhile, the government was able to create 3.9million jobs from 2013 to 2015, as compiled by BusinessDay, 1.1 million jobs were created in 2013, 1.2 million in 2014 and 1.5 million in 2015.
The labour force with post-secondary education had the highest unemployed group with 50%, of which 31.8 per cent were unemployed and underemployed were 18.2 per cent. Underemployment higher for never attended any school and only secondary school qualifications groups.
Unemployment tends to be higher for people within the labour force that have post-secondary school qualifications (31.8% unemployment rate and 50.0% combined unemployment and underemployment in Q3 2017). Graduates tend to prefer fewer in supply white-collar jobs rather than often rural, seasonal and low skilled and lower-paying blue-collar jobs that are more in supply.
Unemployment and Underemployment rates vary according to the nature of economic activity predominant in the State. States with a higher focus on seasonal agriculture tend to have higher rates of underemployment compared to unemployment and may swing from high fulltime employment during periods of planting and harvest when they are fully engaged on their farms to periods of underemployment and even unemployment at other periods in between.
“We will only expect unemployment to return to its normal trend in 2018. The length of the lag depends on how deep and long the recession was. It also depends on how stable and fast the recovery is as well as on the economic sectors driving the recovery (labour or capital/technology intensive),” the NBS adds.
The bureau further notes, “A return to economic growth provides an impetus to employment.”
