Debunking the doubts: Bridging perception and reality in employment statistics

BY IKAGBEMI MODUPE

The relationship between the government and the governed in Nigeria is fraught with a trust deficit that undermines critical engagements with institutional outputs. This tension is most visible when statistical data—painstakingly derived through globally accepted methodologies—clashes with entrenched public perceptions. Such is the case with the National Bureau of Statistics (NBS) report on Nigeria’s Q2 2024 unemployment rate, which records a decline from 5.3% in Q1 to 4.3%, representing 940,000 newly employed Nigerians.

While this outcome appears optimistic, it has been met with widespread scepticism, rooted in lived realities and anecdotal evidence suggesting that unemployment is worsening.

This scepticism, while understandable, raises important questions about the nature of public discourse on labour market data. Can the credibility of research findings, grounded in rigorous methods, be discarded wholesale because they do not align with popular perceptions? Overgeneralisations and sweeping rejections of statistical outcomes risk obfuscating critical nuances essential for evidence-based policymaking.

Therefore, the need for a more informed engagement with unemployment statistics, their methodologies, and their broader implications for Nigeria’s socio-economic landscape has never been more urgent.

Public discontent with employment statistics often stems from a limited understanding of how unemployment is defined and measured. In the case of Nigeria, the NBS adheres to globally recognised standards, adjusting its methodologies to fit the country’s unique socio-economic context. However, these metrics challenge conventional assumptions about employment, particularly in an economy where informality dominates.

Employment does not solely equate to formal, high-paying jobs. It encompasses a wide array of economic activities, many of which occur in informal sectors that contribute significantly to Nigeria’s GDP yet are undervalued in public discourse.

This distinction underscores a broader issue: the conflation of unemployment with working poverty. A significant portion of Nigeria’s employed population remains trapped in low-income, precarious jobs that fail to meet basic living standards. This “working poor” phenomenon, exacerbated by a lack of social safety nets and economic volatility, demands a more nuanced approach to interpreting employment data.

The Nigerian labour market is shaped by structural characteristics, including a predominantly agrarian economy, high informality, and significant seasonality in employment patterns. For instance, the Q2 decline in unemployment corresponds with increased agricultural activity during planting and harvesting seasons. Similarly, the dominance of self-employment and family-owned enterprises—employing over 85% of Nigeria’s workforce—highlights the volatile and precarious nature of most jobs in the country.

Furthermore, the challenges facing Nigeria’s labour market extend beyond unemployment. The slight decline in wage employment during Q2 reflects systemic pressures on formal enterprises, including inflation and operational cost burdens that force many businesses to downsize or close.

These structural issues underscore the importance of addressing broader labour market inefficiencies, including the high rate of informality (over 90%), inadequate social protections, and limited access to decent work opportunities.

While the reported 1% drop in unemployment is a statistical reality, its implications are far from straightforward. Public scepticism highlights the need for greater transparency and education on how employment statistics are derived and interpreted. At the same time, policymakers must prioritise tackling structural challenges such as informality, underemployment, and working poverty.

Doing so will ensure that statistical improvements translate into tangible benefits for the average Nigerian, bridging the gap between perception and reality. In acknowledging the complexities of Nigeria’s labour market, I plan to move beyond dismissive scepticism or uncritical acceptance of data. Instead, it advocates for a balanced, evidence-based understanding of employment trends, grounded in a commitment to improving livelihoods and fostering sustainable economic growth.

Earlier this week, the National Bureau of Statistics (NBS) released the Nigerian Labour Force Survey Results for Q2 2024, reporting a 1% decline in the national unemployment rate—from 5.3% in Q1 2024 to 4.3% in Q2 2024. This decline translates to an estimated 940,000 Nigerians gaining employment. While these numbers seem promising, they have sparked widespread scepticism in the media and among the public, where the prevailing perception is that unemployment in Nigeria is both pervasive and worsening. This disconnect between public sentiment and statistical data begs the question: How realistic are these figures, and what do they truly represent?

To address these concerns, it is essential to clarify the methodology used by the NBS. This methodology adheres to internationally accepted standards and is tailored to Nigeria’s socioeconomic context. It aligns with practices employed by neighbouring countries in West and Sub-Saharan Africa. Calls for a return to outdated methodologies fail to recognise the importance of generating data that can inform effective policies, rather than just satisfying public expectations rooted in misconceptions or emotions.

Unemployment, as defined in this context, refers to whether an individual engaged in any economic activity for pay (wage/salary) or profit (self-employment) during the reference period. A common fallacy is equating employment exclusively with formal jobs. However, Nigeria’s economy is heavily reliant on an informal sector whose contributions to the country’s GDP cannot be ignored. Those engaged in informal activities are indeed employed, even if their earnings are meagre or insufficient to meet basic living standards.

It is crucial to distinguish between unemployment and working poverty, a phenomenon where individuals are employed yet live below the poverty line due to insufficient earnings. This issue is not unique to the informal sector; it extends to formal employment. For example, the average monthly salary of a federal civil servant in Abuja is approximately ₦100,000, which is grossly inadequate for individuals with dependents. This condition reflects a broader challenge across Africa and the developing world, where 56% of employed persons live in poverty, according to the International Labour Organisation (ILO).

Nigeria’s economy is predominantly agrarian and informal, and these characteristics heavily influence employment patterns. Over 90% of Nigerian households engage in agricultural activities, with 71% involved in crop production, whether for subsistence or commercial purposes. Agricultural employment is inherently seasonal, with labour demand peaking during planting and harvest periods.

This seasonality explains fluctuations in employment figures. The 13% increase in agricultural employment between Q1 and Q2 2024 supports this pattern, as does the decline in rural unemployment from 4.3% to 2.8% over the same period. In addition, informality dominates Nigeria’s labour market, with over 90% of employed individuals working in informal jobs. Approximately 85% of the employed are either self-employed or engaged in family-owned businesses.

This high level of informality leads to significant volatility in employment figures, as job stability and protection are virtually non-existent. The data also reveals a slight decline in wage employment, reflecting reports of business closures caused by rising operational costs. This decline underscores the economic strain faced by formal enterprises, which struggle to remain afloat amidst inflation and other economic pressures.

Unlike many developed economies, Nigeria lacks an adequate social safety net to support its unemployed population. This absence compels individuals to engage in any available income-generating activity, no matter how meagre the earnings or precarious the conditions. For many, survival hinges on participation in informal work, highlighting the resilience of Nigerians in the face of economic adversity.

While the decline in unemployment is notable, policymakers must focus on broader issues of labour underutilisation. The high rate of informality (93%) poses significant challenges, as many informal workers operate under substandard conditions, with limited access to resources or support. Addressing these challenges requires concerted efforts to formalise the economy and provide better opportunities for Nigerians.

The 1% drop in unemployment reflects seasonal and structural dynamics within Nigeria’s economy rather than a sweeping improvement. However, the more pressing concern lies in the prevalence of working poverty, informality, and job instability. To foster meaningful progress, policymakers must prioritise reducing informality, improving working conditions, and creating sustainable employment opportunities. By addressing these structural challenges, Nigeria can achieve not just a lower unemployment rate but also improved livelihoods for its citizens.

The reported decline in Nigeria’s unemployment rate, while met with scepticism, is a reflection of the complex dynamics within the country’s labour market. The agrarian and informal nature of the Nigerian economy inherently contributes to seasonal fluctuations in employment, particularly during peak agricultural activities such as planting and harvest periods. These seasonal patterns, coupled with the high rate of informality, provide a plausible explanation for the observed employment trends rather than outright dismissal of the data.

The methodology employed by the National Bureau of Statistics is consistent with global standards and appropriately tailored to Nigeria’s unique socioeconomic structure, ensuring that the data remains both credible and policy-relevant. Critics who focus solely on formal wage employment miss the broader reality of Nigeria’s labour market, where informal and self-employed individuals constitute a significant portion of the workforce and drive much of the nation’s economic activity.

However, the data also underscores more profound structural issues that demand immediate policy attention. The prevalence of working poverty, as evidenced by inadequate earnings across both formal and informal sectors, highlights the urgent need for initiatives aimed at improving the quality of employment.

While reducing the unemployment rate is an important goal, policymakers must prioritise strategies to transition the labour force from informality to formality, enhance job stability, and increase wages to ensure meaningful and sustainable livelihoods.

Addressing these issues will not only validate the employment figures but also bridge the gap between statistical realities and public perception, paving the way for a labour market that supports inclusive growth and equitable development in Nigeria.

Modupe, a public policy analyst, sent this piece from Abuja