Nigeria’s unemployment rate drifts upwards

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Posted Fri, Feb 23, 2024 1:13 PM

Nigeria’s unemployment rate drifts upwards

The unemployment rate jumped to 5 percent in the third quarter of 2023, representing a third consecutive increase since the first quarter of 2023. On the other hand, the underemployment rate rose from 11.8 percent in 2023Q2 to 12.3 percent in 2023Q3. Statistics also showed some disparity across settlement types (urban and rural). This brings Nigeria’s misery index - the sum of unemployment and inflation rates - to 26.5 percent as of 2023Q3. Nigeria has one of the world's highest misery indexes, with many Nigerians leading a miserable life as purchasing power weakens due to high inflation, pushing many people into poverty.

Data: NBS; Chart: NESG Research

 

Moreover, unemployment was rife at the upper strata of educational qualification, indicating a mismatch between labour market entrants (particularly graduates) and the industry labour requirements. Similarly, unemployment was more pervasive among the youth, suggesting that the youth population is less engaged in productive activities than the other age groups (notably, 35-64 years). This indicates the need to tailor youth-targeted empowerment programmes and training to meet industry needs. By so doing, many young people would be productively engaged, thereby reducing the high rates of youth unemployment and underemployment. As a result, the rate of youth restiveness would be reduced to the barest minimum.

 

In addition, the formal sector accounts for only 7.7 percent of employment opportunities. The fact that many Nigerians are gainfully employed in the informal sector remains concerning as this implies an enormous “working poor” population, the proliferation of indecent jobs with many employment opportunities classified as vulnerable (over 70 percent). This is not unprecedented; about 13 percent of employed persons are engaged in paid jobs as of 2023Q3. Thus, efforts should be channelled to transition people from informal to formal employment and from non-paid to paid jobs. Also, businesses should be incentivised to operate within the formal sector.

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