World Bank, in its latest report, disclosed that half of Nigerians are poor despite the country’s low unemployment rate.
The financial institution made this disclosure in the report titled ‘Why do so many Nigerian workers remain poor?’.
World Bank 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.
In Nigeria, the availability of wage jobs remains limited, with only approximately 15.0 percent of employed individuals primarily engaged in paid wage jobs or apprenticeships, the report read.
Despite the perceived correlation between education and wage employment, the report highlights that obtaining an education does not guarantee an escape from poverty. Less than half of Nigerians with post-secondary education secure wage jobs.
Majority of wage jobs lack crucial benefits such as written contracts, social security contributions, and paid leave. Even for those with higher education, most jobs, irrespective of wage status, do not demand high skill levels. Only one in ten workers hold managerial, professional, technical, or clerical positions, which typically require advanced skill levels.
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Also, the prevalence of small businesses, predominantly employing fewer than five people, limits the demand for high-skilled labor. Limited access to finance and infrastructure inhibits these businesses from expanding and generating more high-skill jobs.
Most jobs, particularly those requiring high skill levels, are held by individuals with post-secondary education. However, more than half of them struggle to secure such positions, suggesting a mismatch between acquired skills and employer needs or scarcity of suitable jobs in Nigeria’s economy.
Underemployment is another significant issue, with approximately 13% of employed Nigerians working fewer hours than desired. Despite nearly a quarter of employed individuals seeking secondary jobs to supplement their income, many struggle to find additional employment opportunities.
Nigeria’s unemployment rate
After implementing a new methodology for assessing the country’s labor industry, the latest Nigeria Labour Force Survey revealed that there’s a rise in the unemployment rate, soaring to 5.0% in Q3 of the preceding year from 4.2% recorded in Q2.
NBS highlighted that individuals with post-secondary education encountered an unemployment rate of 7.8% during Q3.
Youth, aged 15-24 years, faced an unemployment rate of 8.6% in Q3, marking an increase from 7.2% in Q2. Urban areas witnessed a marginal uptick in the unemployment rate, reaching 6.0% in Q3, compared to 5.9% in Q2 2023.
The NBS report also disclosed a decline in the labor force participation rate among the working-age population, dropping to 79.5% in Q3, down from 80.4% in Q2.
Furthermore, the report highlighted that approximately 87.3% of workers were self-employed during Q3, while the proportion of workers engaged in wage employment stood at 12.7%.
World Bank’s solution
The World Bank underscored that effectively addressing Nigeria’s poverty challenge requires implementing policies that promote firm growth, elevate productivity within household enterprises, and align the skills of workers with the evolving demands of the economy.
Also, the World Bank emphasized that Nigeria’s journey towards poverty reduction hinges on prioritizing job quality and enhancing productivity, rather than solely focusing on unemployment rates.
The financial institution maintained that Investments in labor market data represent hope in addressing this pressing issue. By providing comprehensive insights into employment trends, skills gaps, and labor market dynamics, such investments empower policymakers to formulate targeted strategies for poverty alleviation and economic growth.
World Bank explained that access to accurate and up-to-date labor market data enables policymakers to identify key areas of intervention, optimize resource allocation, and design effective programs to enhance job quality and productivity. With a nuanced understanding of evolving labor market dynamics, policymakers can implement measures to foster entrepreneurship, stimulate firm growth, and improve workforce skills alignment.
