Nigeria’s Unemployment Rate Increases By 4.3% In One Year

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The economically active or working-age population (15 – 64 years of age) increased from 111.1 million in Q3, 2017 to 115.5million in Q3, 2018.

The number of persons in the labour force (i.e. the number of new entrants into the job market looking for jobs) increased from 75.94 million in Q3 2015 to 80.66 million in Q3 2016 to 85.1 million in Q3, 2017 to 90.5million in Q3, 2018.

The total number of people in employment (i.e with jobs) increased from 68.4 million in Q3 2015 to 68.72 million in Q3 2016, to 69.09 million in Q3 2017 and 69.54 million in Q3 2018 

The total number of people in full-time employment (at least 40 hours a week) increased from 51.1 million in Q3 2017 to 51.3 million in Q3, 2018.

The total number of people in part-time employment (or underemployment) decreased from 13.20 million in Q3 2015 to 11.19 million in Q3 2016 but increased to 18.02 million in Q3 2017 and to 18.21 million in Q3.

The total number of people classified as unemployed, which means they did nothing at all or worked too few hours (under 20 hours a week) to be classified as employed increased from 17.6 million in Q4 2017 to 20.9 million in Q3 2018

  • Of the 20.9 million persons classified as unemployed as at Q3 2018 11.1 million did some form of work but for too few hours a week (under 20 hours) to be officially classified as employed while 9.7 million did absolutely nothing.
  • Of the 9.7 million unemployed that did absolutely nothing as at Q3 2018, 90.1% of them or 8.77 million were reported to be unemployed and doing nothing because they were first-time job seekers and have never worked before. On the other hand, 9.9million 0r 0.9% of the 9.7 million that were unemployed and doing nothing at all reported they were unemployed and did nothing at all because they were previously employed but lost their jobs at some point in the past which is why they were unemployed.
  • Of the 9.7 million that were unemployed and did nothing at all, 35.0% or 3.4 million have been unemployed and did nothing at all for less than a year, 17.2% or 1.6 million for a year, 15.7% or 1.5 million had been unemployed and did nothing for 2 years, and the remaining 32.1% or 3.1 million unemployed persons had been unemployed doing nothing for 3 and above years.

The unemployment rate accordingly, increased from 18.8% in Q3 2017 to 23.1% in Q3, 2018.

Important to note:

  1. a)A rise in the unemployment rate is not entirely equivalent to an increase in job losses. Rather, an increase in unemployment can occur as a result of several reasons, of which loss of an existing job is just one. A rise in unemployment generally means the number of people searching for jobs has increased, which can occur because:
  2. people previously outside the labour force (e.g students, housewives etc) have decided to join the labour force and are now in search of jobs; or
  3. people previously working have lost their jobs and are now in search of jobs.

Often, it is a combination of these two.

  1. b)Following from a) (1) above, an increase in labour force size can lead to rising in the unemployment rate. What causes an increase in the labour force? The labour force does not change simply from job losses since those people previously had jobs and were already in the labour market, which does not change as a result of them losing their jobs. Rather, what causes an expansion in the size of the labour force is the increase in the number of persons within the working age population, who were previously not willing or able to work, but who are now available and actively looking for work.

The number of people within the labour force who are unemployed (did not have a job and did nothing at all) or that were in some part-time work or underemployed increased from 15.9 million and 18.0 million in Q3 2017, to 20.9 million and 18.2 million in Q3, 2018 respectively 
Total unemployment and part-time/underemployment rates combined increased from 40.0% in Q3 2017 to 43.3% in Q3, 2018.  

During the quarter Q3 2018, 26.6% of women within the labour force (aged 16-64 and willing, able, and actively seeking work) were unemployed, compared with 20.3% of men within the same period.

In Q3 2018, 23.9% of rural and 21.2% of urban dwellers within the labour force were unemployed, indicating a decline in Urban Unemployment compared with the same period of 2017, and an increase in Rural Unemployment compared to Q3, 2017.

In Q3, 2018, 22.8% of rural residents within the labour force were underemployed (engaged in part-time work for less than 20 hours a week); compared to 13.7% of urban residents within the same period.

For the period under review, Q3, 2018, the unemployment rate for young people (15-35years) increased from 13.7% in Q3 2015 to 19.1% in Q3 2016 to 25.5% in Q3 2017 to 30.50% in Q2 2018 but declined to 29.7% Q3, 2018.

Part-time employment/Underemployment within the youth population (15-35 years) during the same quarter declined from 27.2% in Q3, 2017 to 25.7% in Q3, 2018.

As of Q3 2018, 55.4% of young people (15-34) are either underemployed (engaged in work for less than 20 hours a week) or unemployed (willing and actively seeking to work), compared to 52.6% in the same period of the previous year.

Definitionand Methodology

Labour force and non-labour force

The total population in Nigeria is divided into the labour force (currently active) and non‐labour force (not currently active). The labour force population covers all persons aged 15 to 64 years who are willing and able to work regardless of whether they have a job or not. The definition of unemployment, therefore, covers persons (aged 15–64), who during the reference period were available for work, actively seeking for work but were without work.

The non-labour force includes population below 15 or older than 64, as well as those within the economically active population i.e. 1564, who are unable to work, not actively seeking for work or choose not to work and/or are not available for work.

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Examples of these are voluntary full-time housewives, underage children 14 and below, adults above 65, full-time students, those in active military service, physically challenged and incapacitated persons whose incapacitation prevents them from working. Growth in the labour force therefore fluctuates and depends on the decisions by constituents of the economically activate population on whether to work or not which varies across different cultures, religion, as well as various academic, economic and family considerations.  For example, a housewife might decide to take up employment to supplement the family income due to changes in the husband’s salary or due to added family needs, or a person might decide to take some time off work to either study for Masters program or to recover from ill health.

Employment and Unemployment

A person is regarded as employed if he/she is engaged in the production of goods and services, thereby contributing to the Gross Domestic Product (GDP) in a legitimate manner, which is a component of the national accounts and receives any form or amount of compensation for that activity. Any of these can cause fluctuations in the economically active and labour force population at any given time.

There is no universal standard definition of unemployment as various countries adopt definitions to suit their local priorities. However, all countries, however, use the International Labour Organization (ILO) definition, or a variant of it to compute unemployment. The ILO definition covers persons aged 15–64 who during the reference period (which is usually the week preceding the time the survey is administered) were available for work, actively seeking work, but were unable to find work.

The Nigerian National Bureau of Statistics, like most countries in the world, uses a variant of the ILO definition such that the unemployment is the proportion of those in the labour force (not in the entire economic active population, nor the entire Nigerian population) who were actively looking for work but could not find work for at least 20 hours during the reference period to the total currently active (labour force) population.  Accordingly, you are unemployed if you did absolutely nothing at all or did something but for less than 20 hours during the reference week.

Underemployment, however, occurs if you work less than full-time hours, which is 40 hours, but work at least 20 hours on average a week and /or if you work full time but are engaged in an activity that underutilizes your skills, time and educational qualifications. Consequently, rural farmers only farming seasonally will be considered underemployed if they only work on their farms during the planting and harvests period and do nothing in between. If farmers are however working in dry and wet seasons as is increasingly becoming the case, they will then be involved in full-time employment. This applies to drivers, cooks, cleaners, bankers, teachers etc. who in most case work well over 40 hours and hence are considered full time employed as their working hours and skills meet the adopted methodology.

It is important to note that the international definition of unemployment, underemployment or employment is not a function of the quantity/suitability of wages earned nor it is a function of job satisfaction. Rather employment, underemployment and unemployment are treated strictly as a function of a person’s involvement or otherwise in economic activity even if that activity is performed solely to make ends meet and not for satisfaction or enjoyment. The suitability of wages or job fulfilment is covered under other indices such as the living standard, poverty rate or happiness index, but not in determining whether one is employed, unemployed or underemployed, which is a function of economic engagement.

The economically active or working-age population (15 – 64 years of age) increased from 111.1 million in Q3,2017 to 115.5 million in Q3, 2018.  This represents a 1.0 % growth over the previous quarter (1.18 million persons) and a 3.9% growth over the same period in 2017 (4.35 million persons).  This growth in the economically able population reflects the high population growth rate especially the youth population.

The labor force population, which is all persons in the economically active population that are willing and able to work, followed a similar growth trend, increasing from 85.1 million in Q3 2017 to 90.47million in Q3, 2018.  However, the labour force grew at a faster rate than the working age population, recording a growth of 1.1% from Q2 2018 to Q3 2018 (961,000 persons), and a growth of 6.3% over Q3 2017 (5.38 million persons).

In absolute terms, 1,182,000 people joined the working age population (the age they are now allowed to work) in Q3 2018, out of which 961,391 people joined the labour force (those who are now eligible for work that has now started looking for work) between the second and third quarter of this year. The faster growth rate in the labour force over the working age population indicates that more persons previously outside the labour force (unwilling/unable/not actively seeking to work), decided to join the labour force (i.e. to actively seek work) in Q3 2018.

Consequently, the labour force participation rate increased by 1.77 percentage points over the rate recorded in the 3rd quarter of last year.  With the working-age population at 115.5 million and the labour force at 90.5 million in Q3, 2018, 25.02 million people within the working age population were either unwilling, unable, or not actively seeking work, and are thus not included in the unemployment rate calculations.

In the period under review, Q3 2018, there was an increase in the number of persons in full time employment, both from the previous quarter and the previous year.  The total number of people in full-time employment (working at least 40 hours a week) increased from 51.1 million in Q3 2017 to 51.33 million, representing a quarter to quarter growth of 0.3%; and a 0.5% increase year on year. In absolute terms, there were 265,718 more persons in full-time work this quarter than there was at the same period last year.

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Within the labour force, the numbers of people who are unemployed or underemployed increased from 34.02 million in Q3 2017 to 39.14 million in Q3, 2018.

As of Q3 2018, the calculated unemployment rate was 23.1%, the underemployment rate was 20.1%, and the combined unemployment and underemployment rate was 43.3%, this represents a 4.3 percentage point increase in the unemployment rate, but a 1.1 percentage point decline in the underemployment rate compared to the same period of last year.  While the Q3, 2018 results show a rise in the rate of unemployment, it also depicts a slowing down in the rate of increase in Unemployment, which is usually the first sign of improvement in reducing unemployment.

This is also indicative of a delayed effect of the economy’s emergence out of the recession, which occurred in 2016 until the early part of 2017. A noteworthy factor in the increasing rate of unemployment is the increased contribution of individuals who work under 20 hours per week but are classified as unemployed based on methodology. This category of persons was 11.2 million in Q3 2018, which is a growth of 250,139, or 2.3% over the previous quarter, and 2.7 million or 32.2% over the same period last year.

At the same time, the number of people who were classified as unemployed for doing absolutely nothing increased to 9.7 million in Q3 2018 from 9.4 million in Q3 2018 and from 7.5 million in Q3 2017. Of the 9.7 million unemployed that did absolutely nothing as at Q3 2018, 90.1% of them or 8.77 million were reported to be unemployed and doing nothing because they were first-time job seekers and have never worked before. On the other hand, 9.9 million 0r 0.9% of the 9.7 million that were unemployed and doing nothing at all reported they were unemployed and did nothing at all because they were previously employed but lost their jobs at some point in the past which is why they were unemployed. This indicates that the rise in unemployment has been more from the large influx of new entrants in the market and their inability to find enough jobs to absorb them.

DISTRIBUTION OF UNEMPLOYED ADULTS BY LENGTH OF UNEMPLOYMENT
Length of Unemployment Frequency Per cent
Below 1 year 3,407,379 35.0
1 Year 1,679,500 17.2
2 Years 1,528,503 15.7
3 Years 1,144,830 11.7
4 Years 802,531 8.2
5  Years 903,063 9.3
6 – 10  Years 114,073 1.2
Over 10  Years 165,169 1.7
Total as at Q3 2018 9,745,049 100.0

Of the 9.7 million that were unemployed and did nothing at all, 35.0% or 3.4 million have been unemployed and did nothing at all for less than a year, 17.2% or 1.6 million for a year, 15.7% or1.5 million had been unemployed and did nothing for 2 years, and the remaining 32.1% or 3.1 million unemployed persons had been unemployed doing nothing for 3 and above years.

DISTRIBUTION OF UNEMPLOYED ADULTS WHO LOST PREVIOUS JOBS BY EMPLOYMENT STATUS OF PREVIOUS JOBS
STATUS Frequency Percent
Employer 177,551 18.4
Employee 609,396 63.1
Own Account worker 152,639 15.8
Member of Producer Coop 1,046 0.1
Apprentice Paid 11,358 1.2
Others 14,447 1.5
Total as at Q3 2018 966,436 100.0

In the period under review, Q3 2018, the labour force participation rate stood at 78.3%, a 1.7 percentage point increase over the same period last year.  Effectively, a higher proportion of the working age population decided to enter the labour force (actively seeking work) within the period under review.

Unemployment Statistics by Gender

During the quarter Q3 2018, 26.6% of women within the labour force (aged 16-64 and willing, able, and actively seeking work) were unemployed.  This is 6.3 percentage points higher than the unemployment rate for men (20.3%), and 3.5 percentage points higher than the total labour force unemployment rate, which is 23.1%.  For women, this also represents a 5.4 percentage point increase in the unemployment rate from the same period of last year.  Additionally, 25.9% of women in the labour force were underemployed, a 4.1 percentage point increase in underemployment for women from the previous year.  In the same period, 20.3% of men in the labour force (aged 16-64 and willing, able, and actively seeking work) were unemployed.

This percentage points higher than the same period last year, and 2.8 percentage points lower than the total labour force unemployment rate.  Additionally, 15.4% of men in the labour force were underemployed, a 5.1 percentage point decline in underemployment rate for men over the same period last year.

Unemployment by Dwelling (Urban and Rural)

The unemployment rate between urban and rural regions within the quarter under review maintained a similar pattern to that of the general labour force unemployment rate.  In Q3 2018, 23.9% of rural and 21.2% of urban dwellers within the labour force were unemployed.  This represented a 7.5 percentage point increase in the unemployment rate for rural dwellers over the same period of last year and a 2.2 percentage point decrease in the unemployment rate for urban dwellers over the last year.  Thus, unemployment increased in rural areas, while it decreased among urban dwellers during the review period.

Underemployment, however, decreased for rural areas while urban areas rose in review period – 22.8% of rural residents within the labour force in Q3 2018, were underemployed (engaged in work for less than 20 hours a week); compared to 13.7% of urban residents within the labour force during the same period.  While urban region underemployment has increased 4.7 percentage points over the same period last year (Q3 2017), rural underemployment declined by 4.1 percentage points compared to the same period last year (Q3 2017). 

In Q3, 2018, the unemployment rate for young people aged 15 to 24, stood at 36.5%, and 24.4% for those aged 25 to 34, making the total youth unemployment rate 29.7% for Q3, 2018.  This represents a 4.2 percentage point increase in the youth unemployment rate compared to Q3, 2017.  Comparatively, these results show a decline in the rate of increase in the unemployment rate between Q3 2017 and Q3, 2018, and an actual decline in the Youth unemployment rate between Q2 2018 and Q3 2018.  The unemployment rate for those aged 15-24 and 25-34 declined by 1.5 and 0.4 percentage point respectively in Q3 2018 when compared to the previous quarter.

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Underemployment within the same quarter for those aged 15 to 24 declined from 34.2% in Q3, 2017 to 32.1% in Q3, 2018. Amongst the 25 to 34 age group, underemployment declined from 22.3% in Q3 2017 to 20.7% in Q3 2018; altogether, the youth underemployment rate was 25.7% in Q3, 2018, a decline of 1.5 percentage points from the 27.2% recorded in Q3, 2017.

As of Q3 2018, 68.7% of young people in the labour force, aged 15-24 years were either underemployed (engaged in work for less than 20 hours a week) or unemployed (willing and actively seeking to work), compared to 67.3% in the same period of last year.  This age group stated above has the highest rate amongst all the age groups and is 23.5 percentage points higher than the age group with the second highest combined unemployment and underemployment rates – age group 25 to 34.

The combined rate for the 25 to 34-year age group stood at 45.1% within the quarter under review, compared with 42.4% at the same period of last year.  These age groups, 15-24 years and 25-34 years combined represent the youth population in Nigeria and have a combined unemployment and underemployment rate of 55.4% or 24.5 million (13.1 million unemployed and another 11.3 million underemployed). Young people are more likely to face difficulties securing full time employment and are more likely to be completely idle or take up part-time, leisure, voluntary, or otherwise menial work which is under 20 hours a week and are thus more likely to be considered unemployed and underemployed.

Unemployment Statistics by Educational Group

Period Unemployment Rate (%) Rate of Quarterly Change (%) Post-Secondary or Graduate Unemployment Rate (%) Rate of Quarterly Change (%)
2015q1 7.54   8.60  
q2 8.19 0.66 9.72 1.12
q3 9.90 1.71 11.71 1.99
q4 10.44 0.54 12.37 0.66
2016q1 12.09 1.64 14.18 1.81
q2 13.32 1.24 23.20 9.02
q3 13.88 0.56 23.28 0.09
q4 14.23 0.35 23.67 0.39
2017q1 14.44 0.21 16.66 -7.02
q2 16.18 1.74 27.96 11.30
q3 18.80 2.62 31.78 3.82
q4 20.42 1.62 25.65 -6.13
2108q1 21.83 1.41 30.30 4.65
q2 22.73 0.90 32.45 2.15
q3 23.13 0.40 29.75 -2.70

The unemployment rate by educational grouping was highest for persons with Post-Secondary school certificate or Graduates, recording 29.8% during the reference period. While this category recorded the highest rate among educational groups during the quarter, it was, however, on the decline, declining from 31.8% in Q3, 2017 to the current level of 29.8% in Q3, 2018. This is a reduction of 2 percentage points compared to the same period of last year and 2.7 percentage points compared to the previous quarter. The category with the lowest unemployment rate under educational grouping was persons with Primary School Certificate, with 19.5% in the 3rd quarter of 2018. This is an increase of 4 percentage points from the 13.5% recorded in the same quarter of 2017.

Underemployment was highest for the category of persons that never attended school. This was 27.0% in Q3, 2018, an increase of 2.5% from the rate recorded in Q3, 2017. Underemployment by educational grouping was lowest for those with Post-Secondary school certificate their highest qualification or Graduates, recording 14.3% in the quarter under review, this is a decline of 4%, compared to the same period of last year, and a 0.2% increase over the previous quarter, Q2, 2018.

Unemployment and Underemployment Over Years 

The unemployment rate in Nigeria has been on the incline since the economic crisis in 2014. The unemployment rate based on NBS’s revised methodology was calculated to be 23.1% in the third quarter of 2018. Underemployment, however, has been gradually declining over the past four quarters, with the rate in Q3 was reported as 20.1%. The increasing unemployment and declining underemployment rates imply that the fragile economic recovery is beginning to create employment, however, hours worked within these jobs are not yet enough for full-time employment (40+ hours within the week).  While this is ongoing, the inflow of entrants into the labour market continues to grow steadily, minimizing the effect of any jobs created within the economy on the overall unemployment rate.

It is important to reiterate that the NBS started using the revised methodology to compute the unemployment rate in 2014. This new method classifies people who work over 20 hours per week as Employed, while the old method only considers people who work 40 hours per week employed. The population who work between 20-40 hours per week are considered “underemployed” according to the new method, Consequently, unemployed population under the old equals unemployed population under the new method plus the underemployed population under the new method.

Nigeria vs. International Unemployment Statistics

The employment situation in Nigeria has somewhat followed recent global trends. While global employment rates appear to be stabilizing, there are however some concerns about jobs recovery. The moderate growth rate recorded by the global economy is still too weak to close the significant employment gap that has emerged since the beginning of the global economic crisis in 2008. With concerns such as Brexit and the migrant crisis facing large parts of Europe and the United States, the global economic outlook for the next year is moderate, and this will have its impact on employment levels.

Comparing Nigeria’s third quarter’s unemployment rate with the international rates (recorded in a different period), Nigeria ranks the 173rd among other countries that have published unemployment statistics. The highest unemployment rate in the world is recorded in Congo (46.1%), Bosnia and Herzegovinian (35.3%), Namibia (34.0%), and Palestine (31.7%) while the lowest is found in Qatar (0.1%), Belarus (0.3%), Cambodia (0.3%), and Niger (0.4%). It is important to note that reference period and methodology of calculating the unemployment rate could differ across the countries. Therefore, a cross-comparison of the unemployment rate in different countries may not be valid.

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