It is no longer news to active Stears readers that the National Bureau of Statistics (NBS) recently changed its methodology for computing Nigeria’s unemployment figures.
We have shed some light on the new methodology, which broadens Nigeria’s definition of employment to include people working as little as one hour per week (versus 20 hours under the previous methodology).
This has implications for Nigeria’s unemployment rate, as individuals previously classified as unemployed will now be classified as employed. However, as we have spotlighted, this new methodology paints a clearer picture of an even bigger problem—Nigeria’s underemployment crisis.
Nonetheless, the rationale behind the methodology change is to align Nigeria’s unemployment measurement with internationally recognised standards set by the International Labour Organisation (ILO). This alignment with global benchmarks is undeniably positive as it facilitates meaningful cross-country comparisons, lowering investment decision costs.
Today, we will focus on the last phrase in the previous paragraph—lowering investment decision costs.
You see, a country’s unemployment rate is a critical macroeconomic indicator (like GDP growth, inflation, trade balance etc.), foreign investors consider before bringing in their funds.