How NBS’s controversial unemployment data is dividing experts

On Thursday, August 24, 2023, Nigeria’s National Bureau of Statistics (NBS) released a new unemployment rate, the first update in three years since the last report. The NBS said it employed a new, albeit controversial, methodology to calculate Nigeria’s poverty rates, leading to a significant reduction in the country’s poverty statistics.

This new approach, responsible for reducing the nation’s unemployment rate by 29.23 percent from the previously reported 33.33 percent in 2020 to 4.1 percent for Q1 2023 and 5.3 percent for Q4 2022, has sparked debates among economists, statisticians, policymakers, and social advocates. The NBS had unveiled these alterations in metrics used to gauge poverty levels in June 2023.

Tochukwu Okafor, a senior economic analyst based in Abuja, argues that the former unemployment rate failed to accurately portray the economic conditions in the country. 

He said, “By encompassing a larger population over time, gradual expansion will likely yield figures that better reflect economic realities because the current 33.3 percent does not align with actual economic circumstances.”

Conversely, former Statistician-General of Federation/ Chief Executive Officer of NBS, Dr. Yemi Kale, had expressed disagreement with the NBS’s new methodology, stating that he refused to adopt the new metrics when he was NBS boss. 

“This is why I resisted (the new metrics) for 10 years because it did not make any sense in terms of providing the information that our policymakers need. So the 20 hours was set because the committee that was set up, which included the ILO, presented their findings and they decided that one hour did not make sense because the income you will generate on an average from one hour’s work was not going to work,” he said on Monday, August 28, 2023, when he appeared at Arise TV’s Global Business Report.

“The 20 hours was decided on because it was agreed that if you work for that duration, you might be able to generate enough income that might sort of equate to what working one hour in the US is. Then you have a bit more comparison,” he said.

Despite this criticism, the NBS contends that its new methodology adheres to International Labour Organisation (ILO) guidelines.

Reacting to Kale’s comment, Head of Communications and Public Relations Department of the National Bureau of Statistics, Wakili Ibrahim, said the new methodology was in line with the International Labour Organisation (ILO) guidelines.

“The new methodology is internationally accepted. All our neighbouring countries in Africa are using the new methodology of one hour.”

He continues “The world is changing. In high-tech countries, if you work for one hour, you can earn what somebody in a bank cannot earn in one year because of IT. Look at lecturers; a lecturer can go lecture for one or two hours, and they will pay him about N200,000 or N300,000  in one or two hours. So, what is the basis of ignoring those ones?”

The most significant alteration lies in the redefinition of working and non-working age groups. Previously, individuals below 15 and above 64 were considered non-working age, effectively excluding them from the workforce. The NBS now designates those below 15 as non-working and those aged 15 and above as the working-age population. This shift has broadened the labor pool, influencing calculations related to employment and unemployment rates.

Additionally, the threshold for underemployment has been redefined. Previously, those working 20 to 39 hours weekly were deemed underemployed. The revised approach now classifies those working 1 to 39 hours weekly as underemployed. This broader scope offers a new view of underemployment, acknowledging part-time workers who may have previously been excluded.

Also, the concept of unemployment has undergone transformation. In the past, those working less than 19 hours weekly were categorised as unemployed. The new measure identifies the unemployed as individuals willing and able to work yet unable to secure employment, resulting in zero working hours.

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The revelation of this new methodology has yielded astonishing outcomes.

Here are six things from the new data compared to 2020 when NBS released its last Labour Statistics:

Critics argue that the changes made to the methodology might not accurately reflect the ground reality and could potentially undermine efforts to address Nigeria’s poverty crisis. 

With the new Labour Statistis, Nigeria now has one of the lowest unemployment rates in the world below countries with first-world economies like the UK (4.2), China (5.3%), Canada (5.5%), and Germany (5.6%).