Labour, Debt, Inflation… a threesome trouble for a single economy

IN data science, the fact has no other name. It is a raw, undiluted and pure collection of figures presented coldly. They are received with grin and glare but there is no room for disputing the substance and meaning but a lot to debate the process, direction, cause and cost.

Economic units look forward to such stats with much nervousness and a sense of foreboding. Many times, statistics that would cause the hypertensive to drop dead at the sight on television screens come once in a long while. But in Nigeria, upsetting figures have become monthly and quarterly occurrences.

And from the beginning of the week, they have been daily manifestations, churning out the pains, agonies and worries millions of Nigerians nurse in their heart, and they fester like sore wounds as policies and events of national life obfuscate them.

Scary Labour stats

STARTING the week was a report on the worrisome Labour Force Statistics: Unemployment and Underemployment Report for Q4 2020.

According to the survey conducted by the National Bureau of Statistics (NBS), unemployment jumped from 27.1 per cent in Q2 2020 to 33.3 per cent. Added to the 20.6 per cent rate of underemployment, the number of Nigerians that were either jobless or not fully employed in the period stood at 53.9 per cent.

The data place Nigeria as the second country, next to Namibia, with the highest unemployment rate in the world. Still the challenge in the labour market is deeper than the mere number of people without jobs. Beyond the magnitude of the figure, the deadlier devil lies in the pattern and direction of the labour market.

In the second half of last year alone, the size of the labour market shrunk by 13.2 per cent to 69.7 million. The supply of labour declined for several reasons ranging from depopulation, longer years in school, emigration, shrinking youth population to despair.

Only the last two reasons would apply to Nigeria. Emigration, indeed, is a major threat to the country’s labour market; the Chief Economist of PwC Nigeria, Dr. Andrew Nevin, confirmed this a few years ago when he raised the alarm that the Nigerian economy faced an imminent crisis as young professionals had continued to flee the country in search of the proverbial greener pasture.

Yet, emigration is not likely the cause of the recent decline in labour supply as cross-border human movement dropped globally last year following the COVID-19 pandemic. On the contrary, more Nigerians have returned home fear of contracting the diseases. This leaves behind hopelessness as the most plausible trigger of the decline in the number of people who have offered themselves jobs.
Statistics on the number of youths going into fraudulent and outright criminal activities are scarce. However, there is consensus among social researchers that the number has ballooned in recent years, suggesting that crime may have increased in its direct competition with the labour market.

Naija Times, in this report, spoke with a few unemployed individuals and their relatives. Uzor Kalu, a fitness coach, said his wife “has long given up on the possibility of finding a job after about five years of searching” validating the role of despair in the shrinking labour supply.
Ironically, while the labour supply nosedives, the number of persons in the economically-active or working-age population (15 – 64 years of age) during the referenced period increased by 4.3 per cent to 122 million as against 116.9 million reported in the previous survey, implying that more people ought to have joined the labour market in the people.

But that is not the only scare in the recent labour data. A higher rate of those who offered themselves for jobs could not find any. Youth unemployment was about nine per cent higher than the composite figure. “The unemployment rate among young people (15-34years) was 42.5 per cent up from 34.9 per cent,” the report noted.

There was also a wide disparity in the figure posted by a different state, with the range estimated 45 per cent. Imo State posted a 56.6 per cent unemployment rate to top the table as against Osun State’s 11.7 per cent. The disparity speaks to the country’s uneven development and unequal poverty level.

…Sinking deeper in debt

AS the unemployment data pour in on the digital space, so also did the country’s public debt status. In three months, from October to December last year, the debt stocked moved from N32.2 trillion to N32.9 trillion. The moderate 0.7 trillion top-ups on the existing debt is tolerable except that the Federal Government revealed the same period it would convert its overdraft, totaling almost N10 trillion, with the Central Bank of Nigeria (CBN) to a 30-year debt instrument. The decision was like postponing the evil days, and worst still when the future generation is most ill-prepared to shoulder the responsibility.

Inflation on rampage… Food trouble

A DAY after the scary unemployment and debt stats were released, the inflation came with its apprehensive tradition. The headline inflation, which has stoked multiple socio-economic crises, rose to 17.33 per cent, the highest in four years, year-on-year (YoY), showing that Nigeria is fully back to the 2017 crisis.
But like the labour market, the pattern and distribution of inflation is more dreadful. For instance, the food inflation had jumped to 21.79 per cent in the recent data released by the National Bureau of Statistics (NBS). This translates to a month-on-month (MoM) rise of 1.89 per cent.

For the second time back-to-back, YoY food inflation has outgrown the rate of any other period since 2009, the base year of the current Consumer Price Index (CPI). In January, food inflation was 20.57 per cent. The next worse month was September 2017 when the inflation rate was 20.32 per cent.

The food inflation rate is 4.49 per cent and 9.51 per cent mark off the core and composite inflation respectively, a situation which economists, including Prof. Ken Ife, a consultant to the Economic Community of West African States (ECOWAS), the World Bank and other global institution, said not bode well for efforts to close the income inequality.

Also, the differential between urban and rural inflation rates (17.92 per cent as against 16.77 per cent for rural areas) has continued to widen. Ife traced the broadening disparity, which dates back to a few months back, to internal movement logistics failure.

“It means food produced in the villages is finding it difficult to get to cities. In some cases, the cost of transportation is also very high,” the economist said.

There is also concern that food prices have hit the roof when the harvest season is barely over. Harvest of major food items starts around November and continues till February and March. Analysts said the high cost of food in February indicates a more scary future and that the next few months marking planting season may be scarier than expected.

The rising prices of food items have been linked to the escalating insecurity manifesting in banditry and kidnapping northern parts of the country. Last year, food inflation was worse in the north, which is considered the food basket of the country. In some months, the top three states on the food inflation tables were all northern states.