Data can inform or misinform, depending on who uses it and why.

The UK, for instance, used this slogan: “We send the EU £350 million each week—let’s fund our NHS instead” to gain public support for Brexit in 2016. The contextual value of £350 million didn’t matter. What mattered then and now is how data can sway public opinion.

Bringing this home, it’s easy to point out that Nigeria plays a dangerous game of numbers, often to garner public support and sway public opinion like the UK example. One data point that solidifies this stance is unemployment. Who doesn’t want to have good jobs, and what politician wouldn’t want to be remembered for increasing employment rates? Certainly not Nigeria’s president.

In his last days left in office, President Buhari unveiled a new long-term development plan: National Agenda 2050 (NA 2050), aimed at reducing the unemployment rate to 20% in 2025 and 6.3% by 2050.

This (perhaps unintentionally) coincides with the release of Nigeria’s new methodology for computing unemployment, which will reduce unemployment to the projected levels in the NA 2025 (20%). How so? This is why we’ll unpack the new labour statistics methodology by the National Bureau of Statistics (NBS) in today’s story. We’ll assess the changes, their significance and their potential impact on policy-making.

We do this because understanding how unemployment data is derived helps to make sense of it. It lets us know if plans like the NA 2050 are realistic or just another flashy game of numbers. More importantly, it spotlights the government’s blind spots for better allocating scarce economic resources.

What is the NBS doing differently?

On April 20, 2023, the NBS announced a new methodology for computing Nigeria’s unemployment rate. Put simply; a methodology is the “how” to answer the “what”.

In this case, there are several “whats”, such as: what is the definition of work in Nigeria? What are Nigeria’s labour force (employment + unemployment), working population, and underemployment rates? The methodology is how the NBS answers these questions using weekly data collection (through phone calls and surveys), International Labour Organization (ILO)-structured questionnaires, and data analysis.

Along with the new methodology, one fundamental change is that the NBS has raised its sample size from 33,300 to 35,520 persons. This increases the accuracy of the data, making it a more precise depiction of the employment reality of Nigeria’s population. However, it could mean higher data collection costs, raising doubts about how consistently the data will be released.

Unemployment gets a facelift

Employment in Nigeria is now defined as anyone working at least an hour a week, unlike the old methodology where you had to work at least 20 hours a week to be considered employed. This means anyone who works below an hour a week is unemployed. This is called time-based employment.

It’s worth noting that there is no definite way to measure time-based employment. Is working 40 hours a week the best to capture how an individual’s productivity? Should it be 20 hours or even 1 hour? We know this measure is not an accurate measure of labour productivity. For instance, there is no way to tell if the supermarket owner working 40+ hours weekly  (9 am – 9 pm daily) contributes more than the social media influencer who works 20+ hours weekly (10 am – 2 pm daily).

A positive, though, is that, as I mentioned before, this (one hour a week) increases the working population, that aggregate labour input now corresponds with national output (nominal GDP). With this coherence, estimating the share of labour (an input) to GDP will be easier. For instance, if labour as a share of GDP declines while GDP rises, it tells us that economic improvements do not translate to higher incomes.

But there are glaring limitations.

One is that the methodology change will present significantly lower unemployment numbers for Nigeria than the 33% (34 million unemployed) recorded in Q4’2020.

Nigeria’s unemployment rate compared to other African countries using the NBS’ new methodology is actually the lowest but the question is can an employed nigeran survive the present economy.

The present underemployment rate tells us that more Nigerians are not meaningfully employed. They work in jobs they do not enjoy or match their skill levels. An example is a linguistic graduate (who could be working as a teacher or translator) employed as a sales rep at a supermarket or a doctor working as a bank teller.

More so, when you analyse this one-hour-a-week measure in monetary terms, you realise the actual value of this “employment” status may not equate to a better life for most people. Essentially, labour is not genuinely productive because what you earn is insufficient to supply basic needs like food and shelter.

Let’s assume Ade earns the monthly ₦30,000 minimum wage. This means in a day, he earns ₦1,000 and for an hour ₦125 (using the typical 9-5 hours schedule). If he works only one hour a week, earning just ₦125, the NBS counts him as employed even though he barely earns enough to survive.

Discounting for inflation (22%), Ade only earns ₦98. For context, the average price of an egg in Nigeria (as of March 2023) is ₦88. So after buying one egg, Ade has ₦10 for rent and all his needs. At ₦98, Ade’s real income is 74% below the poverty line of ₦382 daily, so how employed is he?

The other crucial aspect of worsening poverty is that as the unemployment rate declines, the impact may not reflect in the poverty rates as poverty might increase or stay the same.

This is because employment goes beyond having a job; it’s more about your earnings and the buying power of your income. We’ve previously talked about how getting a job is not a ticket out of poverty, and the key takeaway is that poorer Nigerians are likely to be employed even more than wealthier Nigerians. But the type of jobs they do (e.g. farming) and how much they are paid (or not) determines their standard of living.

A lot lays on the present Administration and their choices , with the removal of fuel subsidy the rate of unemployment and underemployment will only high rocket due to inflation. Their decision in the days to come really goes a long way in determining this methodology.