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NigeriaEconomicAlert
AboutPwCAtPwC,ourpurposeistobuildtrustinsocietyandsolveimportantproblems.We’reanetworkoffirmsin157countrieswithmorethan276,000peoplewhoarecommittedtodeliveringqualityinassurance,advisoryandtaxservices.Findoutmorebyvisitingusatwww.pwc.com/ng
Unemploymentrateexpectedtohit30%amidtheeffectofCOVID19ontheeconomy...
AccordingtotheNationalBureauofStatistics'(NBS)LabourForceSurvey,Nigeria'sunemploymentratewas27%inQ22020fourpercentagepointshigherthanthe23%reportedinQ32018.Thisisthefirsttimeinsixquartersthatthecountry'sunemploymentdatahasbeenpublished.AccordingtotheSurvey,theunderemploymentratewas29%,whichwashigherthanthe20%recordedinQ32018.Whencombined,52%ofthelabourforceiseitherwithoutjobsorworkingbelowtheirpotential.Someofthefactorsthataccountfortheriseintheunemploymentandunderemploymentratesincludethelowlevelofindustrialisationinthecountry,sloweconomicgrowth,lowemployabilityandqualityofthelabourforce,slowimplementationofthenationallabourpolicy,inadditiontolackofcoordinatinglabourpoliciesatthesubnationallevel.PwCestimatesthatunemploymentcouldreach28%inQ32020and30%byQ42020,basedonourinternalmodels.
Introduction
NB:Analysisisonyearly(y/y)exceptotherwisestated
September2020
PleasenotethatintheseBulletinsweusetheofficialstatisticsissuedbytheNationalBureauofStatistics.Theseareissuedto3orinsomecases4(e.g.inflation)significantdigits.Inaneconomywheremorethan50%oftheeconomicactivityisintheinformalsector,itisdifficulttoestimatetothisnumberofsignificantdigits.However,atPwCNigeriawehavetakenthepositiontousetheofficialnumbersforourreports,albeittoasingledecimalpointorthenearestwholenumber.Youthunemploymentishigherthanforolderworkers,asshowninfigure1–the15to24agegrouphadunemploymentof41%,andagegroup25to34withanunemploymentrateof31%.Nigeriahasoneofthelargestyouthcohortsintheworldwithover35%ofthecountry'spopulationfallingwithintheagegroupof15to34.Withunemploymenthighestamongthisdemography,therisksofsocialvices,depressionandapathyareespeciallyhigh.Anexaminationoftheunemploymentratebylevelofeducationshowsthat41%ofthelabourpopulationwithabachelor'sdegreearewithoutemployment.Theunemploymentrateamongbachelor'sdegreeholdersishigherthanthe18%forpeoplewithvocationalskills.Theunemploymentrateforpeoplewithvocationalskillsisalsolowerthanpeoplewithmaster's(23%)anddoctoratedegrees(23%).WhatthismeansisthattherecouldbemorevocationalorbluecollarjobopportunitiesthanwhitecollarjobsinNigeriapointingtothelargesizeoftheinformaleconomy,wheremostbluecollarjobsoperate.Butitalsomeansthatauniversitydegreeisnotanassuredroutetogainfulemploymentandpolicymakersshouldbethinkingaboutstrengtheningthecountry'svocationaltrainingtoprepareyoungpeopleforworthwhileandproductivebluecollarcareers.
www.pwc.com/ng
Figure1:UnemploymentbyAgeGroup
Source:NationalBureauofStatistics0%5%10%15%20%25%30%35%40%45%
1524 2534 3544 4554 5564Proportionoflabourforce Unemploymentrate Underemployment
DecompositionbyAgeandEducation
Figure2:UnemploymentbyLevelofEducation
Source:NationalBureauofStatistics
0%5%10%15%20%25%30%35%40%45%50%
Unemploymentrate Proportionoflabourforce
Onagenderbasis,23%ofmalesinthelabourforceareunemployed,while32%ofthefemalesareunemployed.Femaleunemploymentishighereventhoughtherearemoremalesthanfemalesinthelabourforce(male:42million;female:39million).Evenamongwomenthatareemployed,theyarelikelytobeparttime.While19millionfemaleemployeesareinparttimeemployment,only16millionmaleemployeesareparttime.Overall,theratiooffulltimetoparttimeemployeesis1.3formalesand0.8forfemales,averylargedifference.Ofcourse,morefemaleemployeescouldpreferparttimejobsbecauseoftheadditionalresponsibilitiesofprovidingcareservicestotheirfamilyorhouseholds,butthislargediscrepancyneedstobeunderstood.Ifmorewomenareworkingparttimewhentheywanttoworkfulltime,Nigeriaislosingasignificantpartofitslabourforcecapacity.Beyondthis,itraisesissuesofgenderparityinNigeriansociety.AccordingtotheUnitedNations(UN),theworkofcaregivingmustbevaluedbysociety,financiallysupportedbygovernmentsandsharedmoreequallybetweenmenandwomen.TheUNResearchInstituteforSocialDevelopment(UNRISD)statesthatcaregivingwasnotonlyessentialformaintainingthesocialfabricandbuildinghumancapital,itwasalsoamuchbetterindicatorof.1asociety'squalityoflifethanitsgrossdomesticproduct
DecompositionbyGenderandLocation
Figure3:UnemploymentratesbyGender
Source:NationalBureauofStatistics
32%23%MaleFemale
Ruralunemploymentwasestimatedat25%whileurbanunemploymentwas28%.Thismeansthatunemploymentisequallysevereinboththeruralandurbanareas,asjobopportunitiesremainrelativelyscarcedespitethegrowingruralurbanmigrationrateinthecountry.UnemploymentdataacrossstatesandregionsinNigeriashowthattheSouthWest(average:17%)regionhadthelowestunemploymentrateinQ22020.TheSouthWestwasfollowedbytheNorthWest(23%)zone.SouthSouth(35%)andtheNorthEast(28%)geopoliticalzonesrecordedhigherunemploymentrates.Growingindustrialisation,commercialactivitiesandbusinessopportunitiesarereasonsforthelowerunemploymentrateintheSouthWestrelativetotheothergeopoliticalzones.Acrossstates,Imostate(labourforce2.5m)hadthehighestunemploymentrate(49%)whileKwara(1.4m)hadthelowestunemploymentrate(14%).ThelargediscrepanciesbetweenStateshighlightthesignificantdifferencesindevelopmentbetweenStates.InthecaseofUnderemployment,thereisanimportanttwist.TheNorthEastandNorthWesthadthelowestratesbecausemostoftheactivepopulationintheregionsarefarmers,whichisaseasonaloccupation.Thisseasonalitycoupledwiththesecuritychallengeswhichhasimpactedcommercialandagriculturalactivities..ThehighestunderemploymentrateinQ22020wasfromtheSouthSouthzone.
Decompositionbystatesandregions
1.https://www.un.org/press/en/2009/wom1715.doc.htm
Figure4:Unemploymentrateacrossstatesandregions
Source:NationalBureauofStatistics
PwCestimatesthatunemploymentcouldreach28%inQ32020and30%byQ42020.Thisestimateisbasedonthefollowingassumptions: AnestimatedrealGDPofaboutNGN280,000isrequiredtoabsorbasingleemployedpersonfromQ22020toQ42020duetotheeconomiceffectsofCOVID19. WeassumethattheGDPwillshrinkby5.4%(IMF). Thelabourforcecouldgrowtoover80millionbyQ42020.
PwCestimates–acknowledgingtheeffectofCOVID19TheobviousconsequencesofthehighunemploymentrateinNigeriainclude: Fallinaggregatedemandandsupply Continueddependenceonimportsduetolowerdomesticproductivityandoutput Fallinhouseholdincome;likelytofurtherwidentheincomeinequalitygap Increaseincrimerate Disincentivetogetaformaleducation,whichincreasestheproportionofunskilledandsemiskilledlabour,andexpandstheinformaleconomy
EffectsofunemploymentinNigeria
Q22020(Actual) Q32020(Estimate) Q42020(Estimate)Labour force 80,291,894 80,500,000 81,000,000Real GDP** (Millions of Naira) 1,640,000 1,610,000 1,580,000Employed 59,235,383 58,160,000 57,100,000Unemployed 21,764,617 22,340,000 23,900,000Unemployment rate (%) 27% 28% 30%
©2020PricewaterhouseCoopersLimited.Allrightsreserved.Inthisdocument,PwCreferstoPricewaterhouseCoopersLimited(aNigerianlimitedliabilitycompany),whichisamemberfirmofPricewaterhouseCoopersInternationalLimited,eachmemberfirmofwhichisaseparatelegalentity.
ContactsAndrewS.NevinPh.DPartner,WestAfricaFinancialServicesLeaderandChiefEconomistandrew.x.nevin@pwc.com OmomiaOmosomiManager/[email protected] [email protected]
AccordingtotheVicePresidency,thegovernmentanticipates239.4millionjoblossesbyDecemberduetothepandemic.ThehighrateofunemploymentinNigeriaisnoteasytosolve,butPwCbelievesthereisapathforward.Forastart,theremustbeacommitmenttolabourprogrammesenshrinedintheNESPandtheNationalEmploymentPolicy.However,labourprogrammesarenotsolelyenoughtoabsorbthecurrentstockofunemployedNigerians,letalonenewpopulationthatwilljointhelabourforceinafewyears.Thisiswhereeconomicreformscometoplay.
Recommendations FiscallabourinitiativescanonlycomplementeconomicreformsthatpromoteindustrialisationandthegrowthofMSMEsinreducingunemployment.IndustrialisationandtheentrepreneurialdrivearecrucialtosolvingtheunemploymentcrisisinNigeria;andagain,bothfactorsarepreconditionedontheperformanceoftheeconomyandgovernment'swillingnesstoeasetheprocessofdoingbusiness.Finally,asarecommendation,improvingtheskillsoftheNigerialabourforcecanreducetheunemploymentrate.ThisalsodependsontheeducationalinstitutionsinNigeria,andthequalityofthecurriculum,especiallyinthelightofSTEMandthefourthindustrialrevolution.2.https://www.theafricareport.com/33300/pandemictopovertynigeriainthepostcovidfuture/
CurrentpoliciesaimedatreducingtheunemploymentrateThetablebelowshowsasummaryofsomeofthetargetsandstrategiesencapsulatedinselectedpoliciesoftheFederalgovernment,whichareaimedatreducingtheunemploymentrateinthecountryandgrowingtheeconomy.