Unemployment/ Under‐Employment Watch Q3 2015

Proshare

Sunday, November 22, 2015 4:23 PM / NBS

 

BRIEF METODOLOGY
In computing the unemployment rate, the total population is divided into labour force (currently active) and nonlabour force (not currently active). The labour force population covers all persons aged 15 to 64 years. 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 1564(economic active population) as well as those within the economically active population i.e 1564, 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 incapitation prevents them from working. Growth in the labour force therefore fluctuates and depends on the decisions by members 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.

 




There is no 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 (usually the week preceding the survey period for at least one hour), were available for work, actively seeking for work, but were unable to find work.

The Nigerian National Bureau of Statistics like most countries in the world now 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 not for up to 20 hours in a week. Underemployment however occurs if you work less than full time 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. Accordingly 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 season as is the case recently they will be considered involved in full employment.

This applies to drivers, cook, bankers, teachers etc who in most case work well over 40 hours and hence are considered fully employed as their working hours and often skills meet the adopted methodology. It is important to note that the pervasive international definition of unemployment, underemployment or employment is not a function of the quantity/suitability of wages earned, nor on whether the person involved in a particular job or economic activity is looking for another job or unhappy with his current job.

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 aimed at making ends meet. The suitability of wages is covered under other quality of living standards indicators such as poverty etc and not in determining whether one is employed, unemployed or underemployed which is a function of economic engagement.
 

Highlights of Unemployment and Underemployment in Q3 2015
The economically active population or working age population (persons within ages 1564) increased from 102.8 million in Q1 2015 to 103.5million in Q2 2015 and 104.3milion in Q3 2015.

In Q3 2015, the labour force population (i.e those within the working age population willing, able and actively looking for work) increased to 75.9 million from 74.0million in Q2 2015, representing in an increase in the labour force by 2.60%. This means 1,929,800 economically active persons within 1564 entered the labour force i.e. were able and willing and actively looking for work between July 1 and September 30 2015. This consisted of newly qualified graduates, new entrants into the economically active population (became 15 in Q3 2015) actively seeking work and previous members of the economically active population that choose not to work for whatever reasons in earlier periods (number of those not willing to work in the economically active population declined to 28.3 million in Q3 2015 from 29.5million in Q2 2015 meaning about 1.3 mn people in the working age population that choose not to work in Q3 decided to work in Q3 2015 thereby adding to the labour force).

 

Within the same period, the total number in full time employment (did any form of work for at least 40hours) increased by 840,773 or 1.52%. The sharp growth in the labour force and especially in the number of those in full time employment is largely as a result of the beginning of the planting season resulting in a huge amount of rural farmers’ previously underemployed suddenly working longer hours. For example the survey revealed that about 60% of the new entrants into the labour force and over 70 percent of the increase in full time employment was in the rural areas which are predominantly subsistent farmers engaged in agriculture and agriculture related rural activities. This is observed in the strong growth in employment creation in Q3 with informal sector activities such as agriculture creating over 428,000 jobs in Q3 2015 compared to just 83,000 in Q2 2015.

With an economically active or working age population of 104.3 mn and labour force population of 75.9mn, this means 28.37mn persons within the economically active or working age population decided not to work for various reasons in Q3 and consequently are not part of the labour force and cannot be technically considered unemployed even though they are not working. (You have to want to be willing to work and actively seeking work before you can be considered unemployed)

The number of underemployed in the labour force (those working but doing largely menial work or jobs not commensurate with their qualifications or not fully engaged and merely working for few hours) during the review quarter however, decreased slightly by 365,593 resulting in a decrease in the underemployment rate to 17.4% in Q3 2015(13.2mn) from 18.3% (13.5mn) in Q2 2015, from 16.6% (12.2mn) in Q1 2015. This drop is partly due to previous idle or not fully engaged rural farmers who have become fully employed on their farms due to the beginning of the planting season.

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