On the realities of spurring employment via technology – Part II

There are potentially many areas to explore in solving the country’s biting unemployment problem; but it is the potential impact of technology-related solutions that is addressed in this article. First of all, let us try to better understand the problem that we want to solve; that is, the extent of unemployment in Nigeria. According to […]

There are potentially many areas to explore in solving the country’s biting unemployment problem; but it is the potential impact of technology-related solutions that is addressed in this article. First of all, let us try to better understand the problem that we want to solve; that is, the extent of unemployment in Nigeria.

According to the website “<https://tradingeconomics.com/nigeria/>unemployment-rate,” the unemployment rate in Nigeria in early March 2019 is 23.10%. This is the number of people who are actively looking for a job as a percentage of the labor force. The rate among the youth is a depressing 36.50%. For comparison purposes, the unemployment rates in a few other countries are as follows (in percentages): South Africa (27.10), Brazil (12), Italy (10.50), France (8), Euro Area (7.8), India (6.10), Saudi Arabia (6.0), Canada (5.8), United Kingdom (4.0), China (3.8), USA (3.8), South Korea (3.7), Germany (3.2), Japan (2.5), and Singapore (2.2). Where should Nigeria look for a solution to the problem?

Incidentally, and as mentioned in last week’s article, the government (federal, state, and local) cannot provide employment for everyone. As an example, from the US labor statistics for February 2019, of the 150,606,000 US people employed that month, only a total of 22,483,000 people were employed by the US Government (State, Federal, Local), with the remaining 128,123,000 people (or 85%) employed by the private sector. Another bit of data might interest you: In the US, in February 2019, active job seekers (156,555,094) represents approximately 47.58% of the total population of the US in 2019 (329,093,110 people). Of the job seekers, the US was able to provide employment for 150,606,000, which represents an employment rate of 96.2%. The corresponding numbers for Nigeria according to the website above are 90,431,730, 47.60%, and 190,000,000, respectively; but Nigeria can only provide jobs for 69,542,000 people (out of the 90,431,730 job seekers), or a 76.91% employment rate. (In terms of the active job seekers, the rates for Nigeria and the US are (unbelievably) quite close.)

To begin to understand the realities of spurring employment via technology, let us examine a typical distribution of employment between the major sectors of an economy. The US is probably an excellent model for several reasons, though the Nigerian situation may vary in some aspects. The employment data below is shown for February 2019 and the source is the US Bureau of Economic Analysis. The numbers are in thousands of people; meaning that, for example, 156,606 should be read as 150,606,000 people.

The data is as follows: Total non-farm (150,606), Total private (128,123), Mining and logging (754), Construction (7,422), Manufacturing (12,834), Wholesale trade (5,922.20), Retail trade (15,828.60), Transportation and warehousing (5,537.60), Utilities (555.4), Information (2,815), Financial activities (8,630), Professional and business services (21,311), Education and health services (23,980), Leisure and hospitality (16,643), Other services (5,890), Government (22,483), Federal government (2,799.00), State government (5,176.00), Local government (14,508.00). Note that 142,000 businesses and government agencies, representing approximately 689,000 individual worksites are surveyed for this data.

Related to the notion of technology is the classification often referred to as the knowledge- and technology-intensive (KTI) industries. The categories included are:  (a) Public knowledge-intensive (KI) services (Education, Primary education, Secondary education, Higher education, Adult education, Health care, Counseling, Hospitals, Medical and dental practices, Veterinary); (b) Commercial knowledge-intensive services (Business, Advertising, Architectural, engineering, and other technical activities, Building maintenance and support, Data processing, Leasing, Legal, accounting, and auditing activities, Market research and public opinion polling, R&D services, Financial, Banking and finance, Pension, Insurance, Commodity, securities, and stock markets, Information, Broadband transmission, Cable broadcasting, Cellular transmission, Computer programming, consultancy and related activities, Film and video, Internet, Software, Telephone (landline), TV broadcasting; (c) High-technology manufacturing (Aircraft and spacecraft, Communications and semiconductors, Computers and office machinery, Pharmaceuticals, Measuring, medical, navigation, optical, and testing equipment), and (d) Medium-high-technology manufacturing (Motor vehicles and parts, Chemicals excluding pharmaceuticals, Electrical machinery and appliances, Machinery and equipment, Railroad and other transportation equipment). The data above was taken from “United Nations Statistics Division, International Standard Industrial Classification (ISIC) of All Economic Activities, Rev.3.”

Obviously, we would have to include, not just category (c) above, but also a larger component of the KTI industries, in order to significantly impact unemployment. To see this, U.S. employment in high tech manufacturing industries for the period 2006-16 in Computer and peripheral equipment, Communications equipment, Semiconductors, Electronic instruments, Aerospace, Pharmaceuticals and medicine, amount to an average of only 1,800,000 employees. (The source of this data is the US Bureau of Labor Statistics, Current Employment Statistics (2016), <https://www.bls.gov/ces/>.)

However, category (c) can spur the capitalization of businesses that engage in them, and potentially lead to other kinds of employment. For example, the output of high-tech manufacturing industries for the period 2003-16 for selected countries are (in billions of US dollars): US (500), EU (270), Japan (100), China (380),  Taiwan (80), Rest of the World (320). This data is taken from National Science Board, Science & Engineering Indicators 2018.

Next week’s article will discuss how Nigeria could begin to ramp up the development of the KTI industries and provide employment for her people in due course of time.