FREE

Q3’16 Labour Market Review - Stagflation bites deeper as unemployment reaches 13.9%

• Nigeria’s stagflation intensified in the third quarter of 2016 as the unemployment rate rose to 13.9% (Q2’16: 13.3%) even as inflation reached 17.9% at the end of the quarter. Unemployment rate has now risen for eight consecutive quarters though the pace of quarter-on-quarter (q/q) growth in actual unemployment slowed to 5.2% (Q2’16: 12.2%). This unemployment rate compares favorably to South Africa (27.1%) but lags behind other regional peers such as Egypt (12.6%). Similarly, underemployment rate rose further to 19.7% (Q2’16: 19.3%), amidst a faster pace of q/q growth in underemployment (3.3% in Q3’16 compared to 2.6% in Q2’16). Meanwhile, the data revealed that the number of Nigerians in full-time employment shrunk for a fourth straight month, this time by 72,000 workers. Compounding this, a cursory look at underemployment figures shows that 23% of employed workers are actually underemployed, up from 19% in the corresponding period of 2015. As the National Bureau of Statistics classifies underemployment as working between 20 and 39 hours a month, this points to a stronger presence of part-time unemployment and unstable work. It could also be a reflection of firms cutting down worker hours as they grapple with the recession. All this puts combined unemployment and underemployment rate at 33.6%, a percentage point above the level in Q2’16.
• The wider economic pattern indicates further labour market struggles. Indeed, Purchasing Managers’ Index values over the course of the year point to a steady deterioration in the labour market across both manufacturing and non-manufacturing sectors of the economy. Meanwhile, the CBN business confidence index has remained negative throughout 2016. There looks to be no soft landing for the labour market as the population and labour force are projected to expand further. With a weak private sector, onus lies on fiscal authorities to drive job creation. Nigeria’s Misery Index now stands at a remarkable 44.2, up from 33.1 at the end of 2015.