Reactions continue to trail the National Bureau of Statistics’ report on Monday which shows the unemployment rate declined to 4.3 per cent in the second quarter of 2024.
Gabriel Idahosa, the president of the Lagos Chamber of Commerce and Industry (LCCI), said in a chat with the Punch that NBS report was a “technical improvement” and not reflective of economic realities.
Idahosa took exception to the NBS’ unemployment rate methodology, saying,
“The technical improvement in the employment rate is more of a way that employment is now calculated; but the reality is that the economy is not looking like an economy where unemployment is significantly reducing.”
Nodding in agreement with Idahosa, Dr Muda Yusuf, the director of the Centre for Promotion of Private Enterprise, rejected the unemployment data as “not a true reflection of the reality of the job situation.”
Yusuf said he found it difficult to agree with the NBS data and called for a new methodology that reflects the country’s situation.
“I think we need a methodology that will reflect the reality of this environment much better than what we currently have. We need to review the methodology or have a parallel methodology that will reflect more on the reality that is on the ground.
“Employment is about making a living. You have an engagement that cannot guarantee a source of livelihood, no matter how minimal. I’m not sure we can regard that as employment. If you look at the challenges facing the economy and the complaints by those who are supposed to be employers of labour, then you will agree with me that not many of them are actually engaging people,” he said.
The economist argued that many forms of self-employment hardly count as meaningful employment as ongoing reforms have worsened their performance as he cited the real sector’s third-quarter Gross Domestic Product figures.
“Many micro and small enterprises are struggling; that is if they are still in business,” Yusuf retorted. “And if you also look at the GDP data – well the GDP data ideally should reflect the health of the economy – the big sectors that normally generate jobs are slowing down.
“Agriculture just recorded 1.14 per cent GDP growth, manufacturing recorded less than 1 per cent (a 0.92 per cent GDP growth), trade where we have a lot of informal sector players recorded 0.65 per cent GDP growth. That’s less than 1 per cent.
“Real estate, which is another major source of employment, recorded 0.68 per cent. So generally, we are looking at key sectors that create jobs that are slowing down compared to last quarter. So, where are the jobs coming from?”
However, Yusuf urged the Federal Government and the private sector to consider how to create more jobs and a sustaining environment for job retention.
He remarked, “I think there’s a lot that we need to do to create the environment for more jobs to be created and retained by the entrepreneurs.
“For some of these workers, they can’t even afford transportation costs to go to their places of work. Many SMEs are struggling with the exchange rate issue, cost of transportation issues, energy issues, regulatory issues and challenges with the clearing of cargo. All of these things are depleting the amount of jobs.”
While speaking on the country’s unemployment rate, Dr Femi Egbesola, the national president of the Association of Small Business Owners of Nigeria, said the reported reduction in Nigeria’s unemployment rate, despite harsh economic conditions, can result from several factors.
He said, “These factors include changes in growth in the informal sector. Economic pressures have pushed more people into informal or subsistence work, such as trading, farming, or gig-based roles, which are now classified as metrics for employment.
“Another reason is shifts in economic dynamics, or deliberate efforts to reclassify employment statistics. For instance, the threshold for what constitutes employment (e.g., working just one hour per week) could lower unemployment figures without reflecting significant improvements in job quality or income levels.
“Recent government Initiatives could be another factor. Government funding interventions, employment programs, or skill acquisition initiatives may create temporary or part-time jobs that count towards employment figures. However, while unemployment rates are a critical economic indicator, they don’t always capture the nuances of economic well-being, especially in a country like Nigeria with a large informal sector. A more comprehensive picture would include metrics like income distribution, poverty levels, and labour force participation rates.”
Meanwhile, he asserted that the rise in Nigeria’s GDP despite widespread economic hardship could be attributed to a variety of structural, methodological, and sector-specific factors.
He added,
“GDP measures the total economic output and does not necessarily reflect the distribution of wealth or the living standards of citizens. One factor for the recent GDP increase is the growth in specific sectors. Certain sectors may contribute disproportionately to GDP growth, even if their benefits don’t trickle down to the general population: Examples are Oil and Gas, Agriculture, Trade, and Exports, which may inflate GDP figures.
“Another factor is inflation’s role in nominal GDP. Rising prices (inflation) lead to an increase in nominal GDP, as the value of goods and services appears higher. Increased spending on essentials like food, housing, and transportation contributes to GDP growth, even if many people are living in poverty. Also, government spending on infrastructure, social programs, or debt servicing can artificially inflate GDP without improving economic conditions for most citizens.”
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