Another look at unemployment figures from NBS

The latest unemployment figures released by the National Bureau of Statistics will not do much good to the government as a tool for national planning. So the government must take a critical look at the result. The worst thing the government would do is to gloat over the rate as reported by the Bureau because […]

The latest unemployment figures released by the National Bureau of Statistics will not do much good to the government as a tool for national planning. So the government must take a critical look at the result. The worst thing the government would do is to gloat over the rate as reported by the Bureau because it will deceive the government and mislead it into thinking all is well.

All is certainly not well with our economy, and unemployment is one of the biggest challenges facing the country. This is why several well-meaning Nigerians are rising to condemn this “innovative” methodology of calculating the unemployment rate.

NBS claimed this result is the product of a new methodology they have just adopted for the calculation of the unemployment rate. What is a methodology? That which we call a way of doing something, along with the assumptions and theories behind it, to paraphrase Shakespeare. The claims or results arising from the research or an enquiry will stand or fall on the strength, relevance and realism of the assumptions on which the exercise was based.

Therefore, a methodology that produces results or claims that are out of sync with the reality on the ground is as good as useless because it cannot solve any problem. Helping the government solve its economic problems is the fundamental reason why we conduct labour market surveys in the first place.

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The last time we got unemployment results from NBS, the result was an unemployment rate of 33 per cent. Suddenly, the rate dropped to 4.1 per cent in the first quarter of this year, after dropping to 5.3 per cent in the fourth quarter of last year. Reducing our unemployment rate is definitely a good policy target, but if this reported drop has a place in reality, what practical use is it?

Even the explanations given so far by NBS officials, from spokesman, Wakili Ibrahim, to the CEO, really cast doubt over the relevance of this new method, which is rooted in the ILO system of calculating labour unemployment. Does it really make sense to adopt a method that clearly fails to solve a problem for which it is put into use? Why would someone assume that if a man works for an hour in Nigeria it is equivalent to earning a day’s income? Ibrahim was quoted by The Punch newspaper as citing an example of a university lecturer going to teach for an hour or two and being paid N200,000, and to him, that becomes a standard for generalisation or assumption on which their methodology rests.

One wonders, in their survey around Nigeria, including in the rural areas, how many farmhands – those workers employed on a daily wage basis- they found that earn that much. Or, do the few cases that NBS came across in the cities provide the basis for their generalisation? In the case of these farm workers, they work for about eight hours per day for about N3,000. Now, if they work for one hour and are given the equivalent of an hour’s remuneration, how does that qualify for a day’s earnings? How does that equate them with others in hi-tech jobs who work for an hour and are paid in hundreds of thousands of naira?

If, as the officials admit, the challenge comes from the fact they must capture the exceptional few who earn so much in an hour, then that is a pointer to the unsuitability of this method to an environment such as Nigeria. Lumping such disparate groups together in order to get this spurious average is a disservice to the discipline of statistics in our unique environment.  

Granted that this is the newest methodology for calculating employment figures in the world, who says Nigeria must apply it, hook line and sinker? Should we sacrifice relevance at the altar of methodology?  Whether NBS and indeed, the ILO, accept it or not, they are building new theories for evaluating or determining unemployment rates in economies around the world. And what is a theory about if not for the explanation and understanding of phenomena in the real world? A theory that fails to adequately provide an explanation or understanding of the phenomenon being investigated is at best irrelevant.  So, they must admit also that the circumstances in world economies vary significantly, making it difficult or in fact unnecessary to apply a particular theory across all climes.

It is only someone with an elastic ruler who will claim that a fellow whose fate allows him to work for only one hour in a day is equal in status to another man who works for nine hours on the same day. It is akin to saying that you have a ruler with a length of meter, but depending on your preference at a given time, you can stretch to 10 meters, and both distances will be regarded as equal because they are measured by the same instrument.

Whose interest is NBS serving with this obnoxious result? Certainly not the current administration, which has already admitted it inherited a battered economy. The government has already acknowledged that it faces an Augean stable that will demand more than a mediocre effort to tackle. This government will be committing a mortal error by believing this report from the statistical agency. The claim of a 4.1 per cent unemployment rate is neither relevant nor operative as an economic indicator.  

Or, is this drop attributable to the work the of former administration?

It must be clear that only a real drop in unemployment that results from practical actions on the ground will count for anything. Nothing that is attributed to a mere alteration in statistical formula, will matter. 

Given the rate at which they want us to believe the unemployment rate is falling, one hopes that the agency will not soon tell Nigerians that the problems of unemployment is over because the new methodology says so.

In a poor country such as Nigeria, this method will succeed in institutionalising low-level equilibrium poverty. This will be a situation where people are made to feel good because they have jobs but such jobs cannot take them out of poverty.