Monday, August 17, 2020 / 7:00 PM / PFI Capital / Header
Image Credit: Greek City Times/Ecographics
Last week, the National Bureau of Statistics (NBS) published the long-awaited Labor Force Statistics, seven quarters since the last official employment data.
Notably, the NBS reported unemployment rate at 27.1% in Q2'20 (versus 22.7% in Q2'18 and 23.1% in Q3'18).
Underemployment rose to 28.6% in Q2'20 from 20.1% in both Q2'18 and Q3'18.
Across age group, unemployment was highest among young Nigerians aged 15-24 years (40.8% in Q2'20 vs 38.0% in Q2'18 and 36.5% in Q3'18) then 25-34 years (30.7% in Q2'20 vs 38% in Q2'18 and 36.5% in Q3'18). Youth unemployment (15-34 years) stood at 34.9% in Q2'20 from 29.72% in Q3'18.
Based on gender, female unemployment was highest in Q2'20 at 31.6% (Male: 22.9%), from 26.1% and 26.6% in Q2'18 and Q3'18 respectively (Male: 20% in Q2'18 and 20.3% in Q3'18). The underemployment rate for female and male in Q2'20 stood at 31% and 26.3% respectively.
Across residence, the rural unemployment rate was 31.5% in Q2'20 (22.3% in Q2'18 and 22.8% in Q3'18) while the urban unemployment rate was 23.2% (15.5% in Q2'18 and 13.7% in Q3'18).
Unemployment for people that either lacked any education at all or had below primary education averaged 34.9% in Q2'20 compared to 21.4% for those with primary school education, an average of 24.5% for those with secondary school education and an average of 29.5 for those with post-secondary school education. Others accounted for 18%.
Across states, Imo (48.69%), Akwa-Ibom (45.15%) and Rivers (43.71%) had the highest unemployment rate while Anambra (13.13%), Kwara (13.80%) and Sokoto (13.89%).
Internationally, Nigeria's unemployment rate stood at 11.7% in Q2'20 (adjusting weekly work rate from 20 hours to one hour in line with the International Labour Organisation standard). This is compared to India (11%) and Brazil (13.3%) in June 2020, and countries like Egypt (7.7%) in March 2020, Indonesia (5%) in March 2020, Ghana (6.8%) in December 2019, and South Africa (30.1%) in March 2020.
The Slowly Shrinking Labour Force
According to the report, Working Population (population aged 15-64 years) grew 1.19% to 116.87 million in Q2'20, from 115,492,969 in Q3'18 and by 2% from 114.31 million in Q2'18. However, Labour Force (working population willing and able to work) shrank by 11.25% to 80.29 million in 2020 Q2, and 10.3% from 90.47 million in Q3'18.
This means 10.18 million people have left the labour force since Q3'18 even though 1.39 million people entered the working-age bracket in the same period. Since Q'18, the labour force has shrunk by 9.23 million people while the working population has expanded 2.56 million.
Our analysis of the report showed that the oldest labour force population fell by the most; The 55-64 age bracket (c.9% of the labour force) declined by 19% since Q2'18 (-23% since Q3'18) followed by 45-54 age bracket (c.16% of the total labour force) which shrank by 14% since Q2'18 or 16% since Q3'18. We note that the population aged 15-24 (c.21% of the total labour force) have declined by 13% since Q2'18 while overall youth population (c.50% of the total labour force) also fell by 9% since that time.
Across residence, the rural left labour force (c.64% of the total labour force) declined by 15%, while the urban labour force (c.36% of the total labour force) fell 1%.
More male (-16%) have opted out of the labour force than female (-4%) since Q2'18, while the biggest decline was noted among labour force with qualification below primary education (-92%), never attended school (-41%), and holders of NCE/OND/Nursing (-19%).
Meanwhile, the number of the labour force with HND, first university degree and higher qualifications combined rose by approximately 19%.
We acknowledge the changes in survey approach by the NBS on the back of mobility challenges due to COVID-19.
As stated in our previous report "Nigeria's Double Whammy - Inflation and Unemployment" published last month, our model suggested that Nigeria's unemployment rate grew to 31.45% as at Q1'20 compared to the level (23.13%) it was in Q3'18.
Thus, given the impact of COVID-19 and associated lockdowns in Q2'20 which disrupted business activities in the country, latest unemployment figure was lower than expected, although we acknowledge that the current figure of 27.1% is a new record-high with devastating implications for poverty levels and output growth in the labour-intensive Nigerian economy.
The rise in the unemployment rate is reflective of the tepid economic growth that followed the 2016 recession combined with the pandemic, leading to a rise in the number of unemployed and a plunge in the labour force - a recipe for disaster.
We, however, view the decline in labour force with caution as it could have been due to the constraints of getting jobs during a pandemic that shut down a significant part of the economy. Perhaps the survey was taken at a time the realities of COVID-19 made people quit job-hunting. Whilst we are unclear as to what might have transpired, we note that the labour force has become more academically qualified than in Q2'18.
We note with concern the rise in underemployment at an alarming rate, and the inability of a significant part of the youth population, half of the labour force, to be gainfully employed.
Overall, we believe unemployment will remain on the rise for FY'20, despite the reopening of the economy, as Nigeria heads for its second recession in five years.
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