December 22, 2017/NBS
- Nigeria’s economic growth has been decelerating since Q2 2014 culminating in an economic recession in Q2 2016. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP).·The economic recession was technically over in Q2 2017. However, several economic activities are still contracting or recovering sub optimally.
· An economic recession is consistent with an increase in unemployment as jobs are lost and new jobs creation is stalled.
· A return to economic growth provides an impetus to employment. However, employment growth may lag, and unemployment rates worsen especially at the end of a recession and for many months after.
· 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 pre- recession trend. This, in the case of Nigeria will be a peak in Q4 2017 which means 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 diving the recovery (labor or capital/technology intensive).
· The economically active or working age population (15 – 64 years of age) increased from 110.3 million in Q2 2017 to 111.1 million in Q3 2017.
· The labor force population increased from 83.9 million in Q2 2017 to 85.1 million in Q3 2017.
· The total number of people in full-time employment (at least 40 hours a week) declined from 52.7 million in Q2 2017 to 51.1 million in Q3 2017 (A loss in full time employed workers may not necessarily be due to job losses. It may also be due to people choosing to work fewer hours hence becoming underemployed or people like intending students or new mothers choosing to leave full time employment entirely or temporarily.
· The unemployment rate increased from 14.2% in Q4 2016 to 16.2% in Q2 2017 and 18.8% in Q3 2017.
· The number of people within the labor force who are unemployed or underemployed increased from 13.6 million and 17.7 million respectively in Q2 2017, to 15.9 million and 18.0 million in Q3 2017.
· Total unemployment and underemployment combined increased from 37.2% in the previous quarter to 40.0% in Q3 2017.
· During the quarter Q3 2017, 21.2% of women within the labor force (aged 15-64 and willing, able, and actively seeking work) were unemployed, compared with 16.5% of men within the same period.
· In Q3 2017, 16.4% of rural and 23.4% of urban dwellers within the labor force were unemployed and unemployment is increasing at a slightly faster rate for urban dwellers than it is for their rural counterparts.
· Underemployment is predominant in the rural areas (26.9% of rural residents within the labor force in Q3 2017), are underemployed (engaged in work for less than 20 hours a week); compared to 9% of urban residents within the same period.
· For the period under review, Q3, 2017, the unemployment rate for young people stood at 33.1% for those aged 15 to 24, and 20.2% for those aged 25 to 34.
· Underemployment within the same quarter rose slightly amongst the 25 to 34 age group from 22.2% in Q2 2017 to 22.3% in Q3 2017; and declined slightly amongst the 15 to 24 age group from 35.1% in Q2 2017 to 34.2% in Q3 2017.
· As of Q3 2017, 67.3% of young people aged 15-24 years were either underemployed (engaged in work for less than 20 hours a week or low skilled work not commensurate with their skills and qualifications) or unemployed (have no work at all but willing and actively seeking to work), compared to 64.6% in the previous quarter.
· The combined underemployment plus unemployment rate for the 25 to 34-year age group stood at 42.5% within the quarter under review, compared with 39.6% in the previous quarter.
· Combined unemployment and underemployment rate for the entire youth labor force (15-35 years) was 52.65% or 22.64 million (10.96 million unemployed and another 11.68 million underemployed), compared to 45.65% in Q3 2016, 47.41% in Q4 2016 and 49.70% in Q3 2017.
· Unemployment tends to be higher for people within the labor 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 the nature of economic activity predominant in the State. States with 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.
· States with higher propensity of women to marry early or be housewives and hence will not be considered part of the labor force also tend to have lower unemployment rates. These States tend to have higher proportion of their economically active populations outside the labor force thereby reducing the number looking for work and hence the number that can be unemployed.
· While inter state unemployment and underemployment rates to determine performance is not advised due to the effect on migration on any States level at any point (people can move from one state t another in search of employment thereby increasing the rate in the destination State and reducing the rate in the State thy left from), nevertheless, in Q3 2017, Rivers state reported the highest unemployment rate (41.82%) followed by Akwa-Ibom (36.58%), Bayelsa state (30.36%), and Imo state (29.47%) while Katsina, Jigawa, Gombe, and Yobe, recorded the highest underemployment rates during the reviewing period, of 46.19%, 43.01%, 38.38%, and respectively.
Definition and Methodology
Labor force and non-labor force
The total population in Nigeria is divided into labor force (currently active) and non‐labor force (not currently active). The labor 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.
The non-labor force includes population below 15 or older than 64 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.
- 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 labor 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.
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 labor 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 Labor 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 labor 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 (labor 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.
Hence, the unemployment rate is calculated by dividing the labor force population by labor force population
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 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.
Relationship Between Economic Recession and Unemployment
The Nigerian economy went to recession in the second quarter of 2016 following a consistent slow-down in the economy which started in 2014. An economic recession is defined worldwide as when the Gross Domestic Product of an economy posts two consecutive quarters of negative growth and is out of recession as soon as it records a positive growth in any subsequent quarter. The economic recession was also compounded by rising inflation and unemployment, declining Capital and Foreign Direct Investment inflows as well as foreign reserves and a negative foreign trade balance.
While the economy recorded negative growth throughout 2016, it was clear that the decline had bottomed out by the end of the third quarter of 2016.
The Nigerian economy which contracted by -0.67% in Q1, 2016, -1.49% in Q2 2016 and -2.34% in Q3 2016 began to recover after then, contracting by -1.73% in Q4 2016 and -0.91% in Q1 2017. By Q2 2017, the economic came out of recession by growing its GDP by 0.72%. Recovery from recession was consolidated in Q3 2017 with a growth of 1.40%.
However, while the economy is out of recession and showing clear signs of recovery, several economic activities are still contracting or growing sub-optimally and the recovery is still fragile and the economy vulnerable to shocks especially external.
The relationships between economic growth, economic recession and unemployment have been well established. The process in which an economy gets into and out of a recession and its relationship with unemployment can be classified into 4 stages. The first stage is economic contraction when an economy as measured by GDP starts to slow down. In the case of Nigeria’s recent recession this started in middle 2014.
During a contraction, output slows, usually due to decreased demand for goods and services, an increase in the cost of raw materials and other increased costs in general or both (as was the case in Nigeria). This means that companies are not making as many products or offering as many services which results in them laying off employees and the unemployment rate begins to rise. Since GDP is a measure of economic output value and during a contraction stage output decreases, the GDP also decreases though still positive, while unemployment starts to rise faster than usual.
The second stage is the economic recession which occurs after the contraction above and this stage is marked by high national unemployment rates and negative economic output. Unlike a contractionary phase in which the GDP decreases but is still positive, during a recession the GDP growth is negative (Q2 2016 in Nigeria). A negative GDP growth means that economic output does not grow at all.
The third stage is the economic recovery or trough when the economy exits economic recession (where Nigeria is currently) following the rock bottom of an economic recession (Q3 2016). If the economy grows for two or more quarters, it indicates that it is beginning its recovery and GDP begins to increase.
The reason that many economists do not consider the economy to be in a recovery and an expansionary phase after only one quarter of growth is because some types of economic growth are temporary, and care must be taken to ensure a positive growth after one quarter is consolidated. The final stage is the economic peak following continuous economic recovery and sustained growth for several quarters.
The effect of each of these stages on unemployment and underemployment are different and it is important to understand the stage an economy is in while trying to analyze employment dynamics. GDP rises and unemployment shrinks during expansion phases, while reversing in periods of recession. One expression of this relationship is Okun’s Law, an equation that holds that every 1% of GDP contraction above trend equates to about a 0.5% increase in unemployment.
While the actual increase in unemployment following a 1% decline in GDP growth varies, it is nevertheless fully established historically, that unemployment always increased 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. At the same time, a return to economic growth provides an impetus to employment.
However, employment growth may lag, and unemployment rates worsen especially at the end of a recession and for many months after. The unemployment rate induced by a recession typically peaks about 15-18 months after the beginning of a recession or 4-7 months after the end of a recession before it returns to its normal trend before the recession.
This in the case of Nigeria will be attaining a peak in Q4 2017 which means we will only expect unemployment to return to its normal trend in 2018, all other things remaining constant. Two factors explain this. Companies wait until they are convinced about the sustainability of an economic recovery before they start hiring again, and many unemployed persons who had given up looking for work – and who were therefore excluded from the unemployment statistics – return to the labour market, which raises the unemployment rate. Economic growth must therefore be sustainable before it starts to have meaningful impact on employment.
What can we learn from all of this? That economic growth has a definite impact on employment, but that it can take time for the impact to be felt. How much time? It 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 (labor or capital/technology intensive).
2017 Q3 Unemployment and Underemployment Statistics
- The economically active or working age population (15 – 64 years of age) increased from 108.03 million in Q3 2016 and 108.5 million in Q4 2016 to 110.3 million in Q2 2017 and 111.1 million in Q3 2017. This represents a 0.8% growth over the previous quarter and a 2.8% growth over the same period in 2016. The labor force population followed a similar growth trend, increasing from 80.66 million in Q3 2016 and 81.15 million in Q4 2016 to 83.9 million in Q2 2017 and 85.1 million in Q3 2017. However, the labor force grew at a slighter faster rate than the working age population, recording a growth of 1.3% from Q2 2017 to Q3 2017, and a growth of 5.2% over Q3 2016.
In absolute terms, 847,000 people joined the working age population in Q3 2017 while 1.2 million people joined the labor force within the same period. The difference between these figures indicate that 301,000 people of working age and previously outside the labor force population (unwilling/unable/not actively seeking to work), decided to join the labor force (i.e. to actively seek work) in Q3 2017.
Consequently, the labor force participation rate grew by 0.5 percentage points between Q2 2017 and Q3 2017, and by 2 percentage points between Q3 2017 and the same period last year. With the working age population at 111.1 million and the labor force at 85.1 million in Q3 2017, 26.4 million people within the working age population were unwilling, unable, or not actively seeking work, and are thus not included in the unemployment rate calculation.
- In the period under review Q3 2017, there were losses in persons in full time employment from the previous quarter and the previous year. The total number of people in full-time employment (at least 40 hours a week) declined from 52.7 million in Q2 2017 to 51.1 million in Q3 2017, representing a quarter to quarter loss of 3.2%; and 4.9% loss over the same period last year. The declining rate of full time employment amongst males (8.8% quarter on quarter in Q3 2017) and rural dwellers (4.9% quarter on quarter in Q3 2017) within the working age population, is a significant contribution to the employment loss recorded in the general labor force.
It is also important to note that the decline in the number of persons in full tie employment may not necessarily imply they are all as a result of job losses as they might also include people who voluntarily opt out of full time employment (preferring to work fewer hours thereby moving into underemployment) or from employment completely and exit the labor force (to pursue further studies or stay home to take care of children etc.). The number of people within the labor force who are unemployed or underemployed increased from 13.6 million and 17.7 million respectively in Q2 2017, to 15.9 million and 18.0 million in Q3 2017. Accordingly, there were 34.02 million persons in the labor force either unemployed or underemployed in Q3 2017, compared to 31.26 million in Q2 2017, 25.57 million in Q4 2016 and 27.11 million in Q3 2016. This increase depicts a general increasing trend in the rate of unemployment and underemployment since 2010 exacerbated by the contraction in economic output that started in 2014 culminating into an economic recession in Q2 2016.
Both figures increased significantly over the same period last year. In Q3 2017, 16.0 million people were unemployed (0 – 19 hours worked per week), an increase of 4.8 million people, or 30.0%, over Q3 2016. Similarly, in the same period, 18.0 million people were recorded as underemployed, an increase of 2.1 million people, or 12% over Q3 2016. A noteworthy factor in the increasing rate of unemployment, is the increased contribution of individuals who work under 20 hours per week. Recording 8.5 million in Q3 2017, these workers grew by 1.2 million, or 14.5% over the previous quarter, and by 3.2 million or 38.2% over the same period last year.
- As of Q3 2017, the calculated unemployment rate is 18.8%, the underemployment rate is 21.2%, and the combined unemployment and underemployment rate is 40.0%, this represents a 2.6, 0.1, and 2.7 percentage point increase respectively over the last quarter. Compared with the same period last year (Q3 2016), the unemployment, underemployment, and combined unemployment and underemployment rates have also increased by 4.9, 1.5, and 6.4 percentage points within the reference time frame. The underemployment rate has the lowest declining percentage point difference (0.1%) between the quarter under review (Q3 2017) and the previous quarter, as well as between Q3 2017 and the same period last year. This trend indicates a lack of mobility, in terms of hours worked, amongst the underemployed members of the labor force.
In the period under review, Q3 2017, the labor force participation stood at 76.6%, a 0.5 percentage point increase over the previous quarter (76.1%), and a 1.9 percentage point increase over the same period last year. Effectively, a higher proportion of the working age population decided to enter the labor force (actively seeking work) within the intervening period.
Employment Statistics by Gender
During the quarter Q3 2017, 21.2% of women within the labor force (aged 16-64 and willing, able, and actively seeking work) were unemployed. This is 4.7 percentage points higher than the unemployment rate for men (16.5%), and 2.4 percentage points higher than the total labor force unemployment rate at 18.8%. For women, this also represents a 2.6 percentage point increase in unemployment from the previous quarter (Q2, 2017), the highest increase in unemployment rates for women over the last eleven quarters.
Additionally, 21.8% of women in the labor force were underemployed, a 0.2 percentage point decrease in underemployment for women from the previous quarter. This represents a fluctuation in the number of women who have moved from underemployment to unemployment.
In the same period, 16.5% of men in the labor force (aged 16-64 and willing, able, and actively seeking work) were unemployed. This figure is 2.3 percentage points lower than the total labor force unemployment rate, and 2.5 percentage points higher than the unemployment rate for men over the previous quarter. Additionally, 20.5% of men in the labor force were underemployed, a 0.1 percentage point increase in underemployment for men over the previous quarter.
- Unemployment and Underemployment by Education
tends to be higher for people within the labor 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. Accordingly, they will tend to stay longer in the unemployed labor force and only very gradually resort reluctantly to underemployment to make ends meet. This group amounted to 6.53 million graduates that were either unemployed (4.14 million) or underemployed (2.38 million) in Q3 2017 compared to 5.85 million in Q2 2017 and 4.97 million in Q3 2016.
On the other hand, persons in the labor force with no education at all accounted for the highest rate of underemployment (24.5%), followed by those with just secondary school education (22.9%).
Combining unemployment and underemployment, graduates accounted for the highest rate of 50.0% or 6.53 million persons, followed by those that never attended school (43.1% or 10.86 million persons) and those with secondary school qualifications (39.1% or 11.58 million persons)
Urban and Rural Employment
The unemployment rate between urban and rural regions within the quarter under review maintained a similar pattern to that of the general labor force unemployment rate. In Q3 2017, 16.4% of rural and 23.4% of urban dwellers within the labor force were unemployed. This represented a 2.0 percentage point increase in unemployment for rural dwellers over the previous quarter, and a 3.2 percentage point increase in unemployment for urban dwellers over the previous quarter. Compared to the same period last year (Q3 2016), the unemployment rate for urban dwellers grew by 5.2 percentage points, while those for rural dwellers grew by 4.6 percentage points. Thus, unemployment is increasing at a slightly faster rate for urban dwellers than it is for their rural counterparts.
- Underemployment however, continues to be predominant in the rural areas – 26.9% of rural residents within the labor force in Q3 2017, are underemployed (engaged in work for less than 20 hours a week); compared to 9% of urban residents within the labor force during the same period. While urban region underemployment has declined slightly by 0.8 percentage points from the same period last year (Q3 2016), this figure rose 2.5 percentage points for rural residents within that same period (Q3 2016 – Q3 2017). Otherwise, underemployment has remained stagnant with rates increasing 0.2 percentage points for urban dwellers from the previous quarter, and 0.5 percentage point for rural dwellers from the previous quarter.
Employment Statistics by Age Group
- For the period under review, Q3, 2017, the unemployment rate for young people stood at 33.1% for those aged 15 to 24, and 20.2% for those aged 25 to 34. These represents a 3.6 percentage point increase from the previous quarter and an 8.1 percentage point increase from the same period last year for the 15 to 24 age group. Comparatively, the Q3 2017 represents a 2.8 percentage point increase from the previous quarter and a 5.2 percentage point increase from the same period last year. While unemployment rates for the 15-24 age group is higher than those for the 25 -34, but figures are trending upwards. Underemployment within the same quarter rose slightly amongst the 25 to 34 age group from 22.2% in Q2 2017 to 22.3% in Q3 2017; and declined slightly amongst the 15 to 24 age group from 35.1% in Q2 2017 to 34.2% in Q3 2017. Otherwise, underemployment rates are relatively stagnant across all age groups when compared with the previous quarter.
In comparison to the same period last year (Q3 2016), underemployment grew at the highest rate amongst the 35 to 44-year age group, increasing by 3.5 percentage points in the intervening period. Underemployment rates for age groups 25 to 34, 45 to 54, and 55 to 64 increased by 1.5, 0.5, 1.6, percentage points respectively from the same period last year, while it declined slightly (0.7 percentage points) for young people aged 15 to 24 within that same period.
- As of Q3 2017, 67.3% of young people in the labor 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 64.6% in the previous quarter. This age group stated above has the highest rate amongst all the age groups, and is 24.8 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 42.5% within the quarter under review, compared with 39.6% in the previous quarter.
These age groups, 15-24 years and 16-34 years combined represent the youth population in Nigeria and have a combined unemployment and underemployment rate of 52.65% or 22.64 million (10.96 million unemployed and another 11.68 million underemployed), compared to 45.65% in Q3 2016, 47.41% in Q4 2016 and 49.70% in Q3 2017. 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. It is important to note that the National Bureau of Statistics classifies individuals as unemployed only if they engage in zero economic activity within the reference week. Accordingly, those performing some form of economic activity for at least more than three hours a day will be classified as underemployed or employed depending on the number of hours worked and the nature of that work relative to their skills and other qualifications.
Unemployment and Underemployment by State
The analysis below presents the baseline for labor force indicators at the State level following a review of methodology by the National Burau of Statistics in 2014. Accordingly, it is not comparable to earlier labor force estimates which used different methodologies for computation. It Is also important to be cautious in comparing performance in tackling unemployment and underemployment rates across States due to the influence of migration.
This means a higher unemployment rate in a State is not necessarily reflective of poor performance by the State. In certain cases, a State might experience an increase in its unemployment rate because it is a performing State which leads to people moving from economically or security challenging States to that State in search of a better living. In this case that State unemployment rate is high and rising because it’s very good performance is attracting more unemployed and poor people which would lead to an increase in its unemployment and poverty rates.
At the same time a low unemployment rate does not necessarily equate to a sign of improving conditions in that State as a poor performing State can reduce its unemployment rate simply because unemployed persons who can’t find work in the State leavimg for another State in search for jobs and a better life. When the situation described above happens, the number of unemployed who have left that State which was doing badly will reduce the size of the labor force population, resulting in a seemingly better-looking unemployment rate. At the same time, it is possible that better unemployment rates of a state might be a sign of better performance by that State just as a State with poorer looking unemployment rates may be a sign of poor performance by the State. Accordingly, cross state comparisons to indicate performance should be treated cautiously.
Unemployment and underemployment rates vary by state in Nigeria. Labor force population is more concentrated in the south and southwest parts of the country, as well as in Kaduna and Kano states in the Northern part of the country.
According to the 2017 Labor Force Survey conducted by NBS, Nigeria has an 85.09 million labor force nationwide, among which Lagos, Rivers, Oyo, Kano and Akwa-Ibom constitute 26.27% of the total labor force. The map below shows the labor force distribution in different states among Nigeria.
Unemployment and Underemployment rates vary according the nature of economic activity predominant in the State. Unemployment tends to be higher in the Southern States while underemployment tends to be higher in the Northern States where majority of the workforce is involved in seasonal agricultural activities. States with 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 on underemployment at other periods.
States with higher propensity of women to marry early or be housewives and hence not part of the labor force also tend to have lower unemployment rates. These States tend to have higher proportion of their economically active populations outside the labor force thereby reducing the number looking for work and hence the number that can be unemployed.
- In 2017 Q3, Rivers state reported 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 population 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 labor forces reported relatively low unemployment rates.
- Similarly, an underemployment map below shows that the North East and some North West states suffered the most from underemployment in the third quarter of 2017. Katsina, Jigawa, Gombe, Yobe, Kano and Niger states recorded the highest underemployment rates during the reviewing period, of 46.19%, 43.01%, 38.38%, 36.70% and 31.55% respectively. South West states reported relatively low underemployment rates while the state with the lowest underemployment rate was Taraba state (6.22%).
- To investigate the unemployment and underemployment pattern across different geographic zones in Nigeria, a cross comparison was conducted. The scatter plot below indicates that all North West states except from Katsina reported above average unemployment rates and most of the North West states reported above average underemployment rates as well. Katsina reported the lowest unemployment rate in the country (3.2%), while it’s underemployment rate was recorded the highest of the country (46.19%). Kaduna was the only states which reported both above both 75% percentiles of unemployment rate and underemployments rate in Q3. All North East except from Taraba reported above average unemployment rates, although only Yobe and Borno had high underemployment rates.
Most of the South West states reported both lower than average unemployment rates and lower than average underemployment rates. South South states reported lower than average underemployment rates, but relatively high unemployment rates.
- By combining unemployment rate and underemployment rate, the bar graph below shows that Rivers, Lagos, Kaduna, Kano and Akwa-Ibom reported highest unemployed and underemployed population in the third quarter, of 2.64 million, 2.33 million, 1.99 million, 1.90 million and 1.81 million respectively. These five states constitute of 31.14% of the total unemployed and underemployed population in Nigeria.
While Rivers, Kaduna, Kano and Akwa-Ibom reported relatively high combined unemployment and underemployment rates, the large unemployment and underemployed population figures in Lagos resulted from the large labor force base.
- Unemployment and Underemployment Over Years
Unemployment rate in Nigeria kept increasing since the economic crisis in 2014. The unemployment rate based on NBS’s revised methodology were calculated to be 18.8% in the third quarter of 2017. Underemployment rates also increased gradually over the past three quarters and the rate in Q3 was reported as 21.2%.
The increasing unemployment and underemployment rates imply that although Nigeria’s economy is officially out of recession, domestic labor market is still fragile and economic growths in the past two quarters in 2017 have not been strong enough to provide employment in Nigeria’s domestic labor market. Notably, after 2014 NBS started using revised methodology to compute unemployment rate. The new method considers people work over 20 hours per week 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.
- *In 2014 NBS revised the methodology for unemployment. Nigeria vs. International Unemployment Statistics
The employment situation in Nigeria largely mirrored recent global trends. While the global economy is slowly recovering from recession, it has been still yet too weak to close the significant employment gap that have emerged since the beginning of the global economic crisis in 2008. According to ILO, global unemployment population is expected to rise by 3.4 million in 2017, brining the global unemployment population to be over 201 million (ILO uses an hour a week to describe persons as employed).
Comparing Nigeria’s third quarter’s unemployment rate with the international rates (recorded in different period), Nigeria ranks the 28th among these international records. The highest unemployment rate in the world is recorded in Djibouti (54%), Congo (46.1%), Bosnia and Herzegovinian (41.7%), Haiti (40.6%), and Afghanistan (40%) while the lowest are found in Qatar (0.2%), Cambodia (0.5%), Belarus (1.0%), Benin (1.0%), and Thailand (1.0%).
It is important to note that reference period and methodology of calculating unemployment rate could differ across the countries. Therefore, a cross comparison of unemployment rate in different countries may not be valid.
- Data source: tradingeconomics.com
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