Unemployment Rate Drops Amidst Increasing Inflation, Hardship

The National Bureau of Statistics (NBS) has reported a significant decline in unemployment, with the rate falling to 4.3% in Q2 2024 from 5.3% in Q1 2024.

However, this development contrasts sharply with the economic reality painted by the inflation report released by the same agency last week.

The inflation rate surged to 33.88%, raising questions about the quality of economic growth and its implications for Nigerians.

While the NBS unemployment data suggests improvements in labor market conditions, a closer look reveals that much of this progress is driven by self-employment and informal sector activities.

These sectors now account for 85.6% and 93% of total employment, respectively, underscoring an economy where survival strategies dominate over stable, formal job creation.

Such trends, coupled with the steep inflation rate, indicate that the reported GDP growth may be more about the rising cost of goods and services than genuine economic development.

The inflation report reveals the biting reality faced by Nigerians, as the cost of food, transportation, and housing has soared to unprecedented levels.

This inflationary pressure continues to erode purchasing power, leaving many unable to meet basic needs despite reported employment gains.

In essence, the so-called improvements in the labor market are being overshadowed by the hardships of skyrocketing prices.

For instance, rural areas recorded a lower unemployment rate of 2.8%, compared to 5.2% in urban centers. While this seems promising on the surface, the dominance of subsistence agriculture and informal trading in rural economies makes these figures less reflective of economic stability or prosperity.

Similarly, the drop in youth unemployment from 8.4% to 6.5% is worth noting, but it does little to address the lack of quality jobs and the gender disparities that persist in employment.

Critics argue that the reported drop in unemployment might be a result of a redefinition of labor metrics rather than a genuine improvement in job opportunities.

The NBS itself acknowledged that time-related underemployment, which measures workers seeking additional hours, remains at 9.2%.

Combined with a 33.88% inflation rate, this paints a troubling picture of an economy struggling to balance growth with equitable wealth distribution.

Labour underutilisation rates, which include unemployment and underemployment, have also shown marginal declines. LU2, LU3, and LU4 metrics dropped to 13%, 5.9%, and 14.5%, respectively.

However, these improvements do little to address the widening gap between rising GDP figures and the lived experiences of ordinary Nigerians.

The data suggests that while more people may be working, they are earning less in real terms due to inflationary pressures.

The report read, “The unemployment rate is defined as the share of the labour force not employed but actively searching for and available for work.

“Unemployment is one of the components of labour underutilisation. The unemployment rate for Q2 2024 was 4.3 per cent, showing an increase of 0.1 percentage point compared to the same period last year.

“The unemployment rate among males was 3.4 per cent and 5.1 per cent among females.

“By place of residence, the unemployment rate was 5.2 per cent in urban areas and 2.8 per cent in rural areas. Youth unemployment rate was 6.5 per cent in Q2 2024, showing a decrease from 8.4 per cent in Q1 2024.”

Time-related underemployment, which measures workers seeking additional hours, dropped to 9.2 per cent in Q2 2024 from 10.6 per cent in Q1.

Labour underutilisation metrics also improved, with LU2 (unemployment and time-related underemployment) decreasing to 13.0 per cent from 15.3 per cent in the previous quarter.

LU3 and LU4 metrics, which include potential labour force participation, also recorded declines to 5.9 per cent and 14.5 per cent, respectively.