Nigeria, Employment And Computation of Unemployment Rate (Part 2)

While one would agree to some extent that sentiments ought to be set aside but the issues of ideology, science and international best practices must be challenged in the interest of knowledge in general and the Nigerian economy in particular. In measuring unemployment, countries have adapted the concept to their peculiarities. For example, the International Labour Organisation, ILO, considers that a person who works for an hour a week is employed and often adduces reasons to support its position. The same organisation also calculates the rate of vulnerable unemployment. The United States’ Labour Agency assumes that if you registered as unemployed and did not show up after a week or so, you must be employed. The same country considers the frequency, duration and incidence of unemployment in measuring the overall unemployment rate in the country. The American economy also pays unemployment compensation to workers who have lost their jobs among other welfare programmes.

For the most part, the outcome of administered surveys in any economy depends on the coverage; the content (questions asked) in the questionnaire is crucial. In the Nigerian case, the number of Enumeration Areas is relevant. The NBS states that the working age goes from 15-65 years; one would ask why stop at 65? Why not 60 or 70? How many Enumeration Areas are covered by the NBS? About 28. Is that adequate? How is rural employment/unemployment captured? Nonetheless, whatever the assumptions, one should be guided by economic theory and principle. Economics may be an inexact science but it uses scientific method. The other social sciences do the same. For example, in analyzing the population structure within the context of the labour force, one may need a demographer, among other experts.

In epistemology or the theory of knowledge, the distinction between the natural sciences and social sciences is a false distinction. Every scientist/science deals with matter in motion. It is interesting to note that certain laws in economics were based on casual observation. Hence, one would have expected that the wide variation of the unemployment rates between the old and the new methodology as well as the concern of all Nigerians would have alerted the experts in the NBS to re-examine their data, coverage, sampling techniques, among other variables. Not all variables observed in statistical sampling are based on objectivity. The experience of the policymaker and the reality on ground are also crucial. In addition, there are no unemployment benefits in the Nigerian economy.

There are tendencies and different schools of thought in economics. The matter of full employment is and has always been ideological in terms of conceptualisation, formulation and implementation. Within a market-based economy, there exist debates as to whether full employment should be an objective as well as to what should be the role of government during high rates of unemployment. The debate becomes intense if the economy is in recession or depression. It is worthy of note that even in Nigeria, economists have different tendencies. The tendencies may not be perceived to be sharp because of the underdevelopment of the economy and of the economics profession itself.

Regarding international best practices, the unemployment rates from the ILO suggest that the Nigerian economy has been at full employment [at an average of 4.2 per cent] in the last five years. No active observer of the Nigerian economy would take those ILO figures seriously. Who determines the so-called international best practices? In the same vein, the NBS ‘new’ unemployment rates indicate that unemployment is not a serious challenge in the economy; hence no need for urgent government policy to tackle unemployment. Is that really the case?

One is not inferring that the NBS cannot fine-tune any of its methodologies, including that of employment/unemployment. The worry is that not too long ago, the NBS informed Nigerians that the incidence of poverty stood at almost 70 per cent in 2012 and projected future increase. The government challenged the figure of the NBS and invited the World Bank to calculate the incidence of poverty for the country. The Bank arrived at a rate of 33 per cent, indicating that the poverty incidence declined sharply over the years. What the World Bank should have done was to use the formula and data of the NBS and see whether the result would be different. It is hoped that the rates of unemployment have not suffered the same panel-beating like the incidence of poverty measure. The NBS needs proper funding by government so that labour survey exercise would be extensive while the questionnaire design, testing and execution would be rigorous, reflecting the Nigerian reality. The state governments should also make efforts in computing employment/unemployment statistics in their jurisdictions.

Notwithstanding the low unemployment rates published by the NBS, the new Muhammadu Buhari administration should see job creation (not seasonal employment) as a priority. The reserved army of the unemployed in the economy is too large. It remains a time-bomb, and it is in our collective interest not to allow it to explode.

*Ekpo, a professor of Economics, is Director-General, West African Institute for Financial and Economic Management (WAIFEM), Lagos.  

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