Cheta Nwanze: The new NBS unemployment rate calculation methodology

The National Bureau of Statistics (NBS) of Nigeria underwent a revision of its unemployment rate calculation methodology in 2023. The new approach aligns with the International Labour Organisation’s (ILO) guidelines, recognised as the international standard for unemployment measurement. This substantially decreased the reported unemployment rate, dropping from 33% in Q4 2020 to the current 4.1%.

This change has sparked concerns that the new methodology might have been manipulated to portray a lower unemployment rate for propaganda purposes. Under the previous NBS methodology, unemployment was defined as individuals actively seeking work but unable to find it. In contrast, the new method categorises unemployment as the status of people not employed and available for work, irrespective of active job search.

The revised methodology considers as employed those working for just one hour, given Nigeria’s minimum wage of ?30,000, this equates to ?1,000 per day and ?125 per hour. However, queries arose regarding the legitimacy of considering someone employed who works for merely one hour, earning ?125, despite their willingness to work more.

The NBS defended the shift by saying it was inspired by the need to conform to international standards. There are valid concerns about the suitability of these guidelines for Nigeria and Africa due to:

1. Inadequate consideration of the extensive informal sector prevalent in African economies, potentially leading to underestimation of unemployment.
2. Exclusion of “underemployment,” which neglects those working fewer hours or earning less than desired.
3. Challenges in conducting accurate household surveys in remote rural areas.

Although measuring unemployment is crucial, these challenges persist and must be addressed.

The NBS’s former head, Dr Yemi Kale, questioned the drastic drop in the unemployment rate, emphasising the importance of evidence-based policy and data accuracy.

He criticised the new methodology’s allowance of just one hour for employment and advocated for a more sensible threshold. He also noted the limitations of the ILO guidelines and their potential mismatch with Nigeria’s context, citing concerns about data integrity and policy effectiveness.

Rather than addressing the cogent points made by Dr Kale, Wakili Ibrahim from the NBS’s Communication and Public Relations Department made personal attacks against him and implied that there were allegations of corruption and mismanagement under Dr Kale’s leadership that needed to be looked at.

Thankfully the NBS’s management disclaimed Wakili Ibrahim’s remarks, asserting they were his personal views and not representative of the Bureau.

I welcome the intervention by the NBS in distancing themselves from Mr Ibrahim’s remarks, but I have to point out that the attitude of Wakili Ibrahim is an all too common feature of Nigerian public officials when they have to contend with criticism.

Unfortunately, Nigeria’s historical patrimonialism has fostered a political culture where officials treat the state as personal property, leading to opacity, unaccountability, and resistance to constructive criticism.

Such a system prioritises loyalty over merit, potentially suppressing valid criticism and hindering open discourse.

This inclination toward patrimonialism also exists in Nigeria’s private sector but is more pronounced in the public sphere due to limited private ownership and accountability.

For Nigeria to progress, it must overcome these challenges and move beyond the constraints of patrimonialism.

A proper public service culture places the office above the individual involved. This means that public officials should put the interests of the public first, even when it means making personal sacrifices.

It also means that public officials should be accountable for their actions and should be willing to step down if they are found to be abusing their power.

A proper public service culture is important for several reasons. First, it helps to ensure that public officials are motivated by a desire to serve the public rather than by a desire for personal gain.

Second, it helps to prevent corruption and abuse of power. Third, it helps to build public trust in government. Even after leaving office, ex-public officials should still be treated with respect.

They have dedicated their time and expertise to serving the public and deserve to be heard. Additionally, ex-public officials may still be able to offer valuable insights, and it is important to be open to their contributions.

There are several reasons why it is important to respond to ex-public officials civilly. First, it shows that we value their service to the public. Second, it encourages others to serve in public office.

When responding to ex-public officials, it is important to be respectful and open to their ideas.

The conflict between the NBS and Dr Yemi Kale could be costly. The possibility of an erosion of public trust in the NBS after it became a respected body during Dr Kale’s tenure is a concerning outcome.

The perception that its work is tainted by political manipulation and data inaccuracy should not be allowed to settle in the minds of observers as a loss of trust in the accuracy of Nigeria’s official data could lead to reduced investor confidence.

Compromised Policy Quality is also another concern. The NBS is pivotal in informing decisions across government, business, and individual sectors. Loss of trust could undermine the institution’s mission and impede Nigeria’s progress.

Addressing this situation requires a comprehensive strategy:

• Objective Evaluation: A neutral party should review the NBS’s data collection and reporting methods to allay manipulation concerns.
• Protection for Whistleblowers: A mechanism to report concerns about data manipulation should be established to empower employees to voice their apprehensions.
• Enhanced Oversight: Strengthening internal controls is crucial to prevent undue political influence on data representation.

Furthermore, acknowledging public feedback and promptly addressing concerns fosters a healthier relationship between the NBS and the public. By undertaking these concerted efforts, the NBS can restore public trust and continue to play a crucial role in propelling Nigeria’s developmental trajectory.

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Nwanze is a partner at SBM Intelligence.

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