Wednesday, August 31, 2016 12:21pm /NBS
In computing the unemployment rate, the total population is divided into labour force (currently active) and non‐labour force (not currently active). The labour 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. 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 15‐64(economic active population) 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, which are the economically inactive.
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 labour 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. Any of these can cause fluctuations in the economically active and labour force population at any given time.
There is no universal 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 (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 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 for less than 20 hours during the reference week. 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 considered to 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.
Highlights of Unemployment and Underemployment in Q2 2016
The economically active population or working age population (persons within ages 15 and 64) increased from 106.00 million in Q1 2016 to 106.69 million in Q2 2016, this represents a 0.65% increase over the previous quarter and a 3.02% increase when compared to Q2 2014.
In Q2 2016, the labour force population (i.e those within the working age population willing, able and actively looking for work) increased to 79.9 million from 78.5 million in Q1 2016, representing an increase of 1.78% in the labour force during the quarter. This means 1.39 million persons from the economically active population entered the labour force, that is individuals that were able, willing and actively looking for work.
This magnitude of this increase between Q1 and Q2 2016 is smaller when compared to Q4 2015 and Q12016, which was an increase of 1.59m in the Labour force population. Within the reference period, the total number of person in full time employment (did any form of work for at least 40hours) decreased by 351,350 or 0.65% when compared to the previous quarter, and also decreased by 749,414 or 1.38% when compared to Q2 of 2015.
With an economically active or working age population of 106.69 million and labour force population of 79.9million, it means 26.8million persons within the economically active or working age population decided not to work for one reason or the other in Q2 2016, hence were not part of the labour force and cannot be considered unemployed. A cursory look at these number over the last year, from Q2 2015 to Q2 2016 indicates a steady decline: 29.6 million, 28.4 million, 28.1 million, 27.5 million and 26.8 million.
This indicates that more people who previously were not economically engaged are now deciding to look for work. This may be connected to the decline in economic activity which is forcing previous housewives, retirees and students to enter the job market to make ends meet. A single income may no longer be enough for a family prompting previously out of work housewives to look for work to support strained household income.
Also students may be choosing to drop out of school or postpone further studies in order to enter the job market to make ends meet or to raise fees for further education.
The number of underemployed in the labour force (those working but doing menial jobs not commensurate with their qualifications or those not engaged in fulltime work and merely working for few hours) increased by 392,390 or 2.61%, resulting in an increase in the underemployment rate to 19.3 % (15.4million persons) in Q2 2016 from 19.1% (15,02 million persons) in Q1 2016, 18.7% (14.42 million persons) in Q4 2015, from 17.4% (13.2 million persons) in Q3 2015 and 18.3% (13.5 million persons) in Q2 2015.
During the reference period, the number of unemployed in the labour force, increased by 1,158,700 persons, resulting in an increase in the national unemployment rate to 13.3% in Q2 2016 from 12.1 in Q1 2016, 10.4% in Q4 2015 from 9.9% in Q3 2015 and from 8.2% in Q2 2015. In view of this, there were a total of 26.06 million persons in the Nigerian labour force in Q2 2016, that were either unemployed or underemployed compared to compared to 24.5 million in Q1 2016 and 22.6 million in Q4 2015.
Unemployment and Underemployment by Age Group
As has been the case, unemployment and underemployment was highest for persons in the labour force between the ages of 15‐24 and 25‐34, which represents the youth population in the labour force. The unemployment rate was highest for those within the ages of 15‐24 (24.0% in Q2 2016, 21.5% in Q1 2016, 19.0% in Q4 2015 and 17.8% in Q3 2015), while the underemployment rate for the same age group declined slightly to 34.2% in Q2 2016 from 34.6 in Q1 2016, 34.5% in Q4 2015 and 31.8% in Q3 2015. For the 25‐34 age group, the unemployment rate also increased from 19.9% in Q1 2016 to 20.5% in Q2 2016, up from 11.4% in Q4 from 10.8% in Q3 2015 from 8.9% in Q2 2015 and 8.2% in Q1 2015, while underemployment rose to 19.9% in Q4 from 18.5% in Q3 2015, 19.5% in Q2 and 17.7% in Q1 2015.
Accordingly, 58.3% of Nigerians in the labour force (not entire population), aged 15‐24 were either unemployed or underemployed in Q2 2016 compared to 56.1% in Q1 2016, 53.5% in Q4 2015, 49.6% in Q3 2015 and 48.7% in Q2 2015. Of persons aged between the ages of 25 and 34, 35.1% of that group were either unemployed or underemployed compared32.8% in Q1 2016, 31.3% in Q4 2015 to 29.3% in Q3, 28.4% and 25.9% in Q2 2015.
Consequently, out of a total youth labour force population of 39.6million (representing 49.5% of total labour force in Nigeria of 79.9mn), a total of 17.6million of them were either unemployed or underemployed in Q2 2016. (Important to note that there is a technical distinction between not working and unemployed. A youth may not be working but may not necessarily be unemployed.
A youth not working will only be termed unemployed if he is willing and able to work and actively looking for work within the review period. It is also important to note distinction between unemployed and underemployed. You are unemployed if you do nothing at all and underemployed if you still manage to do something for some money for at least 20 hours a week but is menial and not fully engaging relative to your skills, time and qualifications)
Unemployment and Underemployment by Gender
As was the case in previous quarters, unemployment and underemployment was higher for women than men in Q4 2015. While 15.3% of women in the labour force (those between 15‐65 willing, able and actively working or searching for work) were unemployed in Q2 2016, another 22.4% of women in the labour force were underemployed in Q4 2015. On the other hand, 11.5% of males were unemployed in Q2 2016, while another 16.4% of males in the labour force were underemployed during the same period.
Urban and Rural Unemployment and Underemployment
Underemployment continues to be predominant in rural areas, 23.8% of rural dwellers were underemployed compared to 9.6% urban of dwellers. Given that the nature of rural jobs is largely in agriculture, which is seasonal in nature, unemployment is more of a concern in urban areas with 17.8% unemployment in urban area compared to 11.3% in the rural areas, as the preference is more for formal white collar jobs, which are located mostly in urban centres.
Country Comparison of Unemployment
Despite falling unemployment levels in some developed economies, new ILO analysis - World Employment and Social Outlook (WESO) - shows the global job crisis is not likely to end, especially in emerging economies. Persistent high rates of unemployment worldwide and the lingering weak employment in many emerging and developing economies are still deeply affecting the world of work.
“The significant slowdown in emerging economies coupled with a sharp decline in commodity prices is having a dramatic effect on the world of work,” says ILO Director-General Guy Ryder. Hence the employment outlook has now weakened in emerging and developing economies, notably in Brazil, China and most oil-producing countries.
The highest unemployment rate in the world is recorded in Djibouti (54%), Congo (46.1%), Bosnia and Herzegovinian (41.7%), Haiti (40.6%), Afghanistan (40%) and Kenya (40%) while the lowest are found in Qatar (0.2%), Cambodia (0.5%), Belarus (1%), Benin (1.0%), Thailand (1.04%), Madagascar (1.2%) Laos (1.4%) and Guinea (1.7%).
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7. NBS Unemployment Committee Report Review – May 14, 2015