Why unemployment data are not just numbers on a spreadsheet

Why unemployment data are not just numbers on a spreadsheet

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The National Bureau of Statistics released disaggregated state-level unemployment data two weeks ago for the period covering the third quarter of 2017 to the third quarter in 2018. We had already seen the nationwide numbers before, and we knew that for the economy as a whole the unemployment rate increased from 20.4 to 23.1 percent. Still it was interesting to see how unemployment varied across the country. To say there were some very bad performers would be putting it lightly.

 

Ten states saw a ten percentage point increase in unemployment and all of them were in the North. Gombe state was the worst of the bunch with unemployment increasing from just over 10 percent to 27 percent in one year. Bauchi and Adamawa were not far behind while Kano which now has an unemployment rate of 31 percent currently ranks as the state with the fifth highest rate of unemployment and the fifth largest increase over the period. A very worrying statistic given that Kano is supposed to be one of the states with the largest population in Nigeria.

 

Part of the unemployment story in the north relates to the dominance of agriculture which is the major employer of labour. Employment in agriculture depends on the seasons of course. People might switch between unemployed and underemployed depending on the farming season. It is therefore useful to look at the trend in both the unemployed and underemployed, that captures people who were completely unemployed but also people who were fully employed and became underemployed.

 

The numbers paint the same picture. The states with the largest increases in unemployment are also the states with the largest drop in underemployment. In essence a lot of people who were managing to eke out an existence have moved out of that survival status into the completely unemployed group.

 

The story of the Adamawa-Taraba-Benue axis sheds some more light on what is behind the unemployment numbers. We know that those states have a significant share of the population employed in agriculture. We also know that they have suffered the brunt of the farmer-herdsmen crisis with lots of people displaced from their land and unable to farm. That displacement shows up in the numbers as well with the largest increase in people who went from doing something to doing nothing concentrated in those three states, with Kwara sandwiched in between.

 

Other parts of the country have their own sets of problems. Boko Haram is still a menace in the north east. Even though the urban areas are mostly secure the rural areas, where much of the farming takes place is still not very safe for farmers. Violence, banditry and kidnapping is also now a major problem in large parts of the north west. All these problems are directly related to the unemployment crisis in those areas and are self-perpetuating. Can we call it a crisis yet? The violence displaces people and leads to more unemployment, but the unemployment also disenfranchises people and leads to more violence. And around we go. These are not just data points on a spreadsheet in the NBS office but real people whose lives are on the brink.

So, what is the way forward? Perhaps the states that have led the way in job creation can shed some light on what other states need to do and how the federal government can enable this. On this front, Lagos is the clear outlier. Lagos had the highest reduction in both unemployment and the combination of unemployment and underemployment. An even more remarkable feat when you consider that Lagos is probably the most populous state in the country.

 

What did Lagos do? Part of the story is that Lagos is Lagos and has a concentration of infrastructure, human capital, very close proximity to a large market (it is the large market), and better access to the rest of the world. The Lagos economy is also not agriculture based. There are agro-processing businesses of course, and some agriculture that is not crop production related, but by and large the share of agriculture and employment in agriculture in the Lagos economy is very small. Finally, they have a government that made job creation a major objective with the Lagos State Employment Trust Fund Scheme. The combination of all these factors meant that whatever meagre growth happened in Nigeria during the period, Lagos captured most of it.

 

The lessons for other states is this; first when the chips are down, the places with the most educated people and more likely to survive or at least do better. Secondly, the infrastructure problems are bad, but they are worse the further you get from a port. Thirdly, governance really does matter. Regardless of what the federal government or the central bank does, state governments still have a lot of room to improve their states. Finally, employment in agriculture may not be the future of job creation. No other sector is more vulnerable to instability and that is before we get to the climate change problem. Governors are going to have to think strategically about how to create non-farm jobs.

 

Nonso Obikili

Dr. Obikili is chief economist at BusinessDay



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