In computing the unemployment rate, the total population is divided into 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 currently available for work, actively seeking for work but were without work.
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.
The category of persons considered not in the labour force include those not between 15‐64(economic active population) as well as those within the economically active population i.e 15‐64, who are unable to work, not actively seeking for work or choose not to work and/or are not available for work, which are the economically inactive.
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 Master’s program or to recover from ill health. Any of these can cause fluctuations in the economically active and labour force population at any given time.
Figure 1: Basic Building Blocks of the Labour Force Population
There is no universal standard definition of unemployment as various countries adopt definitions to suit their local priorities. Virtually 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 theinternational 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 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.
Highlights of Unemployment and Underemployment in Q4 2016
The economically active population or working age population (persons within ages 15 and 64) increased from 108.03 million to 108.59 million, this represents a 0.5% increase over the previous quarter and a 3.4% increase when compared to Q4 2015.
In Q4 2016, the labour force population (i.e. those within the working age population willing, able and actively looking for work) increased to 81.15 million from 80.67 million in Q3 2016, representing an increase of 0.6% in the labour force during the quarter.
This means about 482,689 persons from the economically active population entered the labour force during the quarter, that is individuals that were able, willing and actively looking for work.
The magnitude of this increase between Q3 and Q4 2016 is smaller when compared to Q2 and Q3 2016, which recorded an increase of 782,886 in the Labour force population.
Within the reference period, the total number of persons in full time employment (did any form of work for at least 40hours) decreased by 977,876 or 1.8% when compared to the previous quarter, and decreased by 1.92million or 3.5% when compared to Q4 of 2015, making a total of 52.58million persons in full time employment.
With an economically active or working age population of 108.59 million and labour force population of 81.15 million, it means 27.44million persons within the economically active or working age population decided not to work for one reason or the other in Q4 2016, hence were not part of the labour force and cannot be considered unemployed.
The number of underemployed in the labour force (those working but doing menial jobs not commensurate with their qualifications or those not engaged in fulltime work and merely working for few hours) increased by 1,109,551 or 7.0%, resulting in an increase in the underemployment rate from 19.7% (15.9 million persons) in Q3 2016 to 21.0% (17.03million persons) in Q4 2016.
This is an increase of 1.3 percentage points between quarters 3 and 4 of 2016, and shows a steady rise in the rate since Q3 of 2015.
During the reference period, the number of unemployed in the labour force, increased by 351,015 persons, resulting in an increase in the national unemployment rate to 14.2% in Q4 2016, slightly up from 13.9% in Q3, 13.3% in Q2, 12.1% in Q1 2016, and 10.4% in Q4 2015.
Accordingly, there were a total of 28.58 million persons in the Nigerian labour force in Q4 2016, that were either unemployed or underemployed compared to compared to 27.12million in Q3, 26.06million in Q2 and 24.5 million in Q1 2016.
Figure 2: Unemployment and Underemployment Rates (2010 – Q4, 2016)
Unemployment and Underemployment by Age Group
Keeping with the recent trend in the labour market, unemployment and underemployment continue to be highest for persons aged between 15‐34, which represents the youth population.
Disaggregating into age groups, unemployment rate was highest for those within the ages of 15‐24 (25.2% in Q4 2016, 25.0% in Q3, 24.0% in Q2, 21.5% in Q1, and 19.0% in Q4 2015), while the underemployment rate for the same age group increased to 36.5% in Q4 2016, up from 34.9% in Q3, 34.2% in Q2, 34.6 in Q1, and 34.5% in Q4 2015.
For the 25‐34 age group, the unemployment rate also increased to 15.4% in Q4 2016 from 15.0% in Q3, 14.5% in Q2, 12.9% in Q1, and 11.4% in Q4 2015.
The underemployment rate for the same age group rose to 22.1% in Q4 2016 up from 20.8% in Q3, 20.5% in Q2, 19.9% in Q1, and 19.9% in Q4, 2015.
Figure 3: Unemployment and Under-employment Rate by Age-Group (Q4, 2016)
Consequently, 61.6% of Nigerians in the labour force (not entire population), aged 15‐24 were either unemployed or underemployed in Q4, 2016, compared to 59.9% in Q3, 58.3% in Q2, 56.1% in Q1, and 53.5% in Q4 2015.
Of persons aged between the ages of 25 and 34, 37.5% of that group were either unemployed or underemployed in Q4, 2016 compared to 35.9% in Q3, 35.1% in Q2, 32.8% in Q1, and 31.3% in Q4 2015.
Thus, out of a total youth labour force population of 40.74million (representing 50.2% of total labour force in Nigeria of 81.15 million), a total of 19.3million of them were either unemployed or underemployed in Q4 2016. (Important to note that there is a technical distinction between not working and unemployed. A youth may not be working but may not necessarily be unemployed.
A youth not working will only be termed unemployed if he is willing and able to work and actively looking for work within the review period. It is also important to notedistinction between unemployed and underemployed.
You are unemployed if you do nothing at all and underemployed if you still manage to do something for some money for at least 20 hours a week but is menial and not fully engaging relative to your skills, time and qualifications)
Unemployment and Underemployment by Gender
As was the case in previous quarters, unemployment and underemployment were higher for women than men in Q4 2016.
During the quarter, 16.3% of women in the labour force (those between 15‐65 willing, able and actively working or searching for work) were unemployed in Q4 2016, and a further 24.2% of women in the labour force were underemployed.
On the other hand, 12.3% of males were unemployed in Q4 2016, while a further17.9% of males in the labour force were underemployed during the same period.
Figure 4: Unemployment and Under-employment Rate by Gender (Q4, 2016)
Urban and Rural Unemployment and Underemployment
Underemployment continues to be predominant in rural areas, 25.8% of rural residents were underemployed compared to 10.5% urban of residents. Given that the nature of rural jobs is largely menial and unskilled, such as in agriculture and the likes, unemployment is more of a concern in urban areas where more skilled labour is required.
The unemployment rate in the urban areas was 18.4% compared to 12.3% in the rural areas, as the preference is more for formal white-collar jobs, which are located mostly in urban centres.
Country Comparison of Unemployment
The employment situation in Nigeria largely mirrored recent global trends. At the close of the year (2016) the expansion of the global economy was too weak to close the significant employment gap that have emerged since the beginning of the global economic crisis in 2008.
Over 200 million people were estimated to be unemployed in the world in 2016, and the projections are for a further increase in global unemployment by more than 3 million people over the next two years. The highest unemployment rate in the world is recorded in Djibouti (54%), Congo (46.1%), Bosnia and Herzegovinian (40.1%), Afghanistan (40%) and Kenya (40%) while the lowest are found in Qatar (0.2%), Cambodia (0.5%), Belarus (1%), Benin (1.0%), Thailand (1.2%), Madagascar (1.2%) Laos (1.4%) and Guinea (1.7%).