Posted Mon, Sep 30, 2024 11:17 AM

Nigeria’s unemployment rate increased further in 2024Q1

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The unemployment rate stood at 5.3 percent in the first quarter of 2024, representing a third consecutive increase since the second quarter of 2023. However, the underemployment rate fell from 12.3 percent in 2023Q3 to 10.6 percent in 2024Q1. As expected, the unemployment rate was higher in urban centres than in rural settlements. Consequently, Nigeria’s misery index - the sum of unemployment and inflation rates - rose to 36.9 percent in 2024Q1 from 30.5 percent in 2023Q3. Nigeria has one of the world's highest misery indexes, with many Nigerians experiencing a cost of living crisis and weak purchasing power due to rising inflation.

Data: NBS; Chart: NESG Research

Moreover, the unemployment rate was higher amongst the cohorts with post-secondary education (9.0 percent) relative to persons with secondary (6.9 percent) and primary education (4.0 percent). This implies a negative correlation between human capital development and unemployment due to a possible mismatch between labour market entrants and the industry labour requirements. As a result, many unemployed persons finding it difficult to get jobs could be discouraged from further search as reflected in the rate of out-of-labour force which rose to 3.6 percent in 2024Q1 from 3.1 percent in 2023Q3. Also, the rate was the highest among those with post-secondary education. This reiterates the need to revive the technical and vocational education and training scheme to accommodate graduates and school drop-outs. Similarly, unemployment was more pervasive among the youth, suggesting that the majority of them are less engaged in productive activities. This could be responsible for the high rate of Not in Education, Employment or Training (NEET), which rose to 14.4 percent in 2024Q1 from 13.7 percent in 2023Q3. Hence, there is an urgent need to empower youths with productive skills, which could reduce the intensity of social unrest.

In addition, the formal sector accounts for only 7.3 percent of employment opportunities, presupposing that many Nigerians are exposed to vulnerable employment (representing over 70 percent of total employment), non-paid or low-paid jobs, and poor working conditions, characterising the informal sector. Also concerning is the issue of the “working poor”, as 84 percent of the employed are engaged in non-paid jobs. Thus, efforts should be geared to improve the living conditions of informal sector players by subsidising food and non-food household materials and healthcare. This would reduce their level of economic and financial vulnerability. Measures should also be put in place to incentivise the easy transition of informal sector players to the formal sector. There is a need to correct the orientation that such a transition would mean that the informal sector players would be exposed to higher taxes.

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