The Nigerian economy is not growing enough to create jobs for its expanding labour force

I poured myself over the Nigerian employment figure recently and the insights I gleaned was both refreshingly revealing and astonishingly stimulating.

The level of joblessness in Nigeria today is not only staggering but alarming. You could tell from words on the streets and job hunting by friends and loved ones. It’s been more than a year Nigeria published an official unemployment data – the last figure was released in/for Q3 2018. This lay bare our agelong inefficiency in prioritizing key macroeconomic data like employment and our nonchalance in incorporating such metrics in driving crucial investment policy decisions that would in turn stimulate capital inflows and propel robust, sustainable growth.

As at Q3 2018, the unemployment rate was put at 23.1%. In other words, more than 20.9 million Nigerians were unemployed as at that time. There are fears that this number may have spiraled out of control which, perhaps explains why the National Bureau of Statistics (NBS), the nation’s statutory statistical body, is somehow reluctant in updating the figure to its current level presumably due to paucity of fund to carry out the survey or simply humbled by pressure from the ruling political class.

To start with, the number of hours worked is crucial in calculating total employment and unemployment statistics by the NBS. Those who work 40 hours plus per week (8hrs plus everyday) are considered full time employed while those who work less than 40 hours, but more than 20 hours per week are considered underemployed or part-time employed. Conversely, the NBS considers those who work less than 20 hours as unemployed. Having established that fact, lets look at the Nigerian employment data again… this time, the performance over time.

Since Q1 2018 to Q3 2018, the growth rate of the labour force has declined – it merely increased by 1.1% in Q3 2018 but year-on-year (Q3 2017 – Q3 2018), the labour force grew by 6.3% meaning that about 5.4 million people were added to the labour force in just a year. In the same vein, the number of people working full time jobs has been less encouraging, increasing by a minute 0.5% y/y in Q3 2018. Interestingly, part-time jobs doubled that proportion, rising y/y by 1% in Q3 2018.

Theoretically speaking, if the increase/decrease in total employment (those in full time and part time jobs) is an equivalence of the number of jobs created/lost in the economy, then Nigeria is indeed in a big mess as this will mean that only less than half a million jobs were created within a year to accommodate the over 5 million people that entered the labour force that same period.

To make matters worse, the economy is still stuck in the recovery phase having slipped into recession in 2016 due to economic shock arising from the oil price crash. Output expanded by about 2.3% in Q3' 2018 while the number of jobs created in that same period (proxied by the total employment figure) merely increased by 0.7%. Essentially, our output growth is at best a jobless one given that the job metrics is not moving in tandem with output growth. Attempting to establish the exact numbers of employment and output growth to be termed jobless growth is, to me, a mere theoretical exercise.

The key takeaway is that our economy is not growing enough to accommodate the rising number of people entering the labour force every year.

We need a holistic approach backed by strong political will, to crawl out of this mess we have found ourselves. Government needs to open the space for private sector players to come in. That’s what China did after joining the World Trade Organization (WTO) in the early 2000s.

These days, I don’t even know the kind of economic system Nigeria practice anymore. Jobs cannot be created where government controls key sectors capable of creating millions of jobs. Our policies are inimical to growth and suffocates operational processes of private sector players. Incoherent fiscal and monetary policies. Our public sector is clearly inefficient and ineffective and needs proper alignment of responsibilities and overhaul if need be. We need to learn to do things differently in this country to get different and better results.