Thread by @StearsBusiness

The @nigerianstat just released 🇳🇬’s unemployment figures for the second quarter of 2020. The last time we got unemployment data was for the third quarter of 2018.

Unsurprisingly, unemployment is up.

The report has now been deleted, but here is what we found:

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PART I

The good news first: Nigeria’s unemployment rate rose from 23.1% in Q3’2018 to 27.1% in Q2’2020.

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Why is this good news? The unemployment rate has been rising rapidly up till now—from 14% in 2016 to 19% in 2017 and then 23% in 2018. Moving to 27% two years later is not too bad, particularly when you consider the effect of COVID-19.

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In the table, you can see that Nigeria is doing better than the likes of South Africa and Angola, but much worse than Ghana and Egypt.

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That is where the good news ends. The bad news is that looking at unemployment numbers alone will not give us the full picture. We need to look at underemployment too.

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What is underemployment? The @nigerianstat defines the underemployed as people working between 20 and 39 hours each week while an unemployed person works between 0 and 19 hours a week.

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The idea is that if you are not working up to the standard 40 hours, your skills are not being fully utilised, and you aren’t in full employment.

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So, what do we learn when we look at both unemployment and underemployment? Let’s call this the “combined unemployment rate.”

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The first thing we spot is that Nigeria’s combined unemployment rate has jumped from 43.3% in Q3’2018 to 55.7% in Q2’2020.

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This last number is incredible. It means that if you pick out a random person in the labour force, they are more likely to be unemployed in some way than they are to be employed. Your chance of being in full employment is less than 50% in Nigeria!

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Now, let’s see which groups are worse off. The usual suspects come up here.
Nigeria’s youth are worse off than any other age group. The combined unemployment of the youth population has gone from 55% in Q3’2018 to 63% in Q2’2020.

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Let this stick: Only 1 in 3 of Nigeria’s youths are in full employment.

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Next up: women. Women (63%) are much more likely to be unemployed or underemployed than men (49%). Another incredible statistic: for every 2 women in full employment, there are 3 women that are unemployed or underemployed.

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Finally, education level. Nothing captures the insanity of the Nigerian job market than looking at unemployment by education level.

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The combined unemployment rate is higher for people with post-secondary qualifications than those that attended just primary or secondary school.

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What does this mean? If you are a graduate, your odds of being unemployed or underemployed are higher than what they would be if you just had a primary school certificate.

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BSc holders have it the worst. Only 40% of BSc holders in Nigeria are in full-time employment. Again, grab a graduate off the street in Nigeria and there is a higher chance that they don’t have a full-time job.

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Meanwhile, you can see the combined unemployment rate across states. Incredibly, only 1 in 4 people in the Imo State labour force have a full-time job. Most of the state is basically unemployed.

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This is a good place to recap. Here’s what we have learnt so far.

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Nigeria’s unemployment rate is growing at a slower pace. But once you account for underemployment, it is increasing rapidly (the combined unemployment rate).

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If you are a young woman living in Imo State, there is no job for you.
Sorry, we have actually saved the scariest news for the end. Brace yourselves.

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There is a good chance that these unemployment and underemployment figures—as bad as they seem—are significantly underestimated. To show why, we have to explain how the unemployment rate is calculated.

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First, you start from the working age population, essentially those between 15 and 64 years of age. Then, you narrow it down to the labour force—the proportion of the working age population that are willing and able to work.

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Some people like students and housewives/househusbands are in the working age population but not in the labour force.

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To get the unemployment rate, the @nigerianstat compares the number of people unemployed to the number of people in the labour force. For example, a labour force of 100 people with 30 people unemployed would have an unemployment rate of 30%.

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Part II
The same goes for the employment rate. A labour force of 100 people with 60 people employed would have an employment rate of 60%.

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Why does all of this matter? Well, Nigeria’s working age population rose slightly between 2018 and 2020—from 115.5 million to 116.9 million. However, Nigeria’s labour force fell from 90 million to 80 million.

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10 million people have disappeared from the labour force in 2 years! You can see from the graphic below that this is not normal: we are now back at 2016 labour force levels.

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What is going on here? Where did these 10 million people go?
The answer is that these are people that were in full employment in 2018 but are now no longer recorded at all.

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You can see that the number of people in full employment in Nigeria has fallen sharply between 2018 and 2020.

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Only 36 million Nigerians are recorded as being in full-time employment today. In 2010, there were 51 people in full employment. It is fair to say that regardless of what the headline unemployment figures say, Nigeria’s job market has completely collapsed.

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The most likely fate for this missing 10 million is that most of them have lost their jobs but the NBS survey fails to capture them. If this is true, then Nigeria has almost as many people out of work (31 million) as in full employment (36 million). 

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If we use the previous labour force number (90 million), then today’s unemployment rate is 39%, which is worse than all comparison countries.

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Given that this particular survey was carried out through phone interviews and had a smaller sample size due to the COVID-19 pandemic, it is fair to say that there is a much higher margin of error in the results.

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The @nigerianstat should be applauded for releasing these unemployment statistics given the budget constraints, but this example of a missing 10 million is a reminder of the general data gap in Nigeria.

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It is more important than ever to stay informed and dig underneath the headlines to understand what is really going on. Of course, @StearsBusiness is here to help you do that.

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For more insight like this, connect with the Stears Business Newsroom channel on WhatsApp.

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stearsng.com/article/how-to…

The report is back up.