Half of Nigerians are poor despite low unemployment-World Bank
Nearly half of Nigerians are poor, despite an unemployment rate of five percent, a new report by the World Bank has said.
The report titled ‘Why do so many Nigerian workers remain poor?’ showed a correlation between the type of employment, whether wage or self-employment and levels of poverty.
“Poor and non-poor Nigerians are about equally likely to work. To escape poverty, it is more important what someone does, rather than whether they work,” the report said.
Using the survey of the latest Nigeria Labour Force Survey (NLFS) by the National Bureau of Statistics (NBS), the Washington lender noted that the type of work Nigerians do is more crucial than just having a job.
It said wage jobs offer a significantly lower poverty rate compared to other types of work, but they are scarce, with only 15 percent of Nigerians holding such positions.
“However, wage jobs are scarce in Nigeria. Only around 15.0 percent of employed Nigerians engage primarily in a paid wage job or an apprenticeship,” the report said.
It added that education, while helpful for obtaining wage work, is not a guaranteed path out of poverty. Less than half of Nigerians with post-secondary education manage to secure a wage job.
Furthermore, most wage jobs lack essential benefits like written contracts, social security contributions, and paid leave. Additionally, most jobs, regardless of wage status, don’t require high skill levels, even for those with higher education.
Only one in 10 workers are managers, (associate) professionals, technicians, or clerical support workers—occupations which use advanced skill levels.
“Moreover, most wage workers do not receive additional job benefits. Less than half of Nigerian wage workers have written contracts, only around one-quarter work for employers that make social security contributions, and just one-fifth have paid leave,” the report said.
The authors of the report stated that the dominance of small businesses employing fewer than five people further limits the demand for high-skilled labour, as complex management and specialization are less prevalent in such settings, highlighting limited access to finance and infrastructure restricts these businesses from growing and creating more high-skill jobs.
Not surprisingly, most of these jobs are held by Nigerians with post-secondary education. However, even among them, more than half are not able to land such a job. Thus, either the skills acquired by post-secondary education do not match the needs of employers, or such jobs are too scarce in Nigeria’s economy.
Underemployment, defined as working less than desired hours, is another significant challenge. Around 13 percent of employed Nigerians fall into this category, highlighting the struggle to find sufficient work hours to meet income needs.
“Not only the nature of the job matters but also how many hours one can find work. Many employed Nigerians cannot get enough hours of work to meet their income needs.
“Around 13.0 percent of employed Nigerians work less than 40 hours per week but are willing and able to work more—they are underemployed. While nearly one-quarter of employed Nigerians take on secondary jobs to supplement their incomes, many others are not able to find a secondary job.
Following the adoption of a new methodology for the country’s labour force, the latest Nigeria Labour Force Survey showed that the unemployment rate rose to 5.0 percent in Q3 last year from 4.2 percent in Q2.
NBS noted that the unemployment rate among persons with post-secondary education was 7.8 percent in Q3.
It said the unemployment rate among youth aged (15-24 years) was 8.6 percent in Q3 from 7.2 percent in Q2 and that the unemployment rate in urban areas was 6.0 percent in Q3, a slight increase of 0.1 from Q2 2023.
The NBS report also revealed that the labour force participation rate among the working-age population declined to 79.5 percent in Q3 compared to 80.4 percent in Q2.
It said about 87.3 percent of workers were self-employed in Q3 and that the proportion of workers in wage employment in Q3 was 12.7 percent.
Authors of the Washington Lender report added that addressing Nigeria’s poverty challenge requires policies that support firm growth, enhance productivity in household enterprises, and align the skills of workers with the demands of the economy.
It added that Nigeria can make strides in poverty reduction by focusing on job quality and productivity rather than just unemployment rates. Fortunately, ongoing investments in labour market data offer hope for informed policy decisions to tackle this pressing issue.
“Rather than just creating more jobs, Nigeria needs policies that can support firm growth to expand wage jobs, build productivity in farm and non-farm household enterprises, and help match the skills of school leavers with those that the economy needs most. Tracking job quality and productivity provides a more lucid policy focus than simply seeing what happens to the unemployment rate,” the report said.
