Impact of Nigeria’s New NBS employment Measurement System on Unemployment

Explore Nigeria’s new NBS employment measurement system and its impact on tackling unemployment.

In August 2023, a significant stir was created by the Labour Force Survey released by Nigeria’s National Bureau of Statistics (NBS), unveiling a new approach to unemployment measurement.

The controversial methodology sparked debates on its accuracy in depicting Nigeria’s labor market. We now examine if it addresses Nigeria’s unemployment problem.

Understanding the New employment Measurement System

The Shift in Metrics
The introduction of the new employment measurement system noted a prominent shift where individuals working at least one hour per week are now deemed employed, a stark contrast to the earlier system where individuals working under 19 hours were considered unemployed.

Unveiling the Controversial Figures
According to the latest data, over 73% of Nigerians (aged 15 and above) were employed between Q4 2022 and Q1 2023, painting a rosier picture compared to the past when the unemployment rate hovered above 33%.

Underemployment: A Close Analysis
The new framework, with a 33.4% underemployment rate, shifts the focus from unemployment to underemployment, covering those working less than 40 hours per week.

Implications on the Labor Market

Discrepancies with Previous Findings
Earlier surveys, such as Jobberman Nigeria’s Q4 2022 report, depicted a grimmer picture, with over 50% of the youth either unemployed or underemployed, leading to a discrepancy in unemployment figures.

Minimum Wage and Economic Reality
Current discussions surrounding the National Pay Policy and the push for a six-fold increase in the minimum wage by the Trade Union Congress of Nigeria further complicate the picture, particularly considering the prevailing inflation rate exceeding 24%.

Practical Challenges in the Application
Despite the new methodology aligning with the International Labour Organisation guidelines, its practical implementation poses considerable challenges given the present economic state of Nigeria.

Deeper Scrutiny into Workers’ Income Versus Occupation

The Disparity in Income
The recent methodology lacks a comprehensive view of income across occupations, leaving a gap in our understanding of individuals’ actual earnings in various sectors.

The Issue of Age-Based Discrimination
This new framework, starting from the age of 15, does not address the age-based discrimination prevalent in Nigeria, potentially leading to lower wages for both young and elderly workers.

Addressing the Root Issues
To address unemployment effectively, we should focus on improving working conditions and creating job opportunities that align with Nigerians’ living standards.

Bridging the Gaps in the Informal Sector

The Tax Implications
Crucially, grasping tax implications, especially within the self-employed sector, holds significant importance as it largely constitutes Nigeria’s informal economy.

Emerging Government Initiatives
Recent government discussions emphasize eliminating multiple taxation and focusing on VAT for unregistered self-employed individuals to facilitate a transition into the formal sector.

Optimizing Taxation for Business Growth
To foster business growth without impeding productivity, taxation should focus on Micro, Small, and Medium Enterprises (MSMEs) that employ others, distinguishing them from sole proprietors.

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