Informal sector leads job creation in Nigeria

According to the International Labour Organisation (ILO), Africa’s working-age population is estimated to have reached over 490 million in 2012, representing a quantum leap of 259% since 2000 at an annual compound growth rate of 2.8%. Therefore, employment of the continent’s teeming labour population is key to economic development within the region and indeed, globally.

Sub-Saharan Africa’s absorption of its working-age population in employment compares favourably to other regions as contained in the ILO’s 2013 global employment trends report.Subsequently, total estimated number of jobs created in the Nigerian economy for the first quarter of 2013improved by 12% over the previous quarter.

This development, in line with the latest job creation report released by the National Bureau of Statistics (NBS), indicate that 174, 326 new jobs were added to the nation’s economy.  Overall, conducting quarterly labour force surveys is a positive trend for Nigeria considering the paucity of jobs market data across the continent, with the exception of few countries such as South Africa and Mauritius. Comparably, Nigeria’s Q1 2013 new employment data could be described as favourable to South Africa’s economy, which created 44, 000 jobs in the same period, according to the country’s own employment report.

With 53% of new employment, Nigeria’s informal sector, constituted by over 17 million businesses & enterprises,led the growth in total jobs reflecting the significant contribution of that segment to the labour market and the overall economy.This was followed by the formal sector with 41%, while the public sector brought up the rear with 6% of new addition to the jobs market.

Growth in the informal labour market is dominated by sole proprietorships driven by male ownership of businesses and enterprises, which accounted for 90% of establishments while the balance of 10% is owned and managed by the female segment. Despite this, in-depth data capture in the informal economy is a challenge.

Conversely, the female population consistently accounted for a large portion of new jobs in the formal sector with an average of 53% over the two quarters under review.The growth in the female demography of the labour market was largely driven by the Education and Health (and Social work) sectors in Q1 2013, which accounted for 60% of total employment absorption in that demography. In both genders, 64% of new jobs were full-time with the balance of 36% being part-time.

Cumulatively, the education sector contributed on average, 39% of total jobs created across both genders, and has consistently accounted for a large share (though a drop from 50% in Q4 2012) of the growth in the employment sector. Private sector education continues to drive job creation; there are currently 51 private higher institutions in Nigeria according to the National Universities Commission NUC), accounting for almost 40% of total tertiary establishments in the country. Growth in the last three years has been particularly significant with increase in private tertiary institutions averaging 17% between 2011 and 2013.

Financial inter-mediation was a distant second adding 23% of new employees. This was an improvement when compared with 16% in Q4 2012. Furthermore, the sector maintained its position as the second leading contributor to job creation over the last two quarterly periods. This is followed by the health sector with 15% of new addition to the labour market; growth in health sector employment was largely driven by the nursing and midwifery associate professionals.

Even among the youth (15 – 35 years) segment of the population, 32% of new jobs created were absorbed by the education sector followed by 28% in the financial inter-mediation industry. Furthermore, the managerial, professional and work positions accounted for 51% of youth employment in Q1 2012, which was a major shift from the previous quarter, where the leading employee position for youths was in the clerical position with 35% of new jobs.

Overall, an analysis of the distribution of total employed persons in Nigeria highlighted the fact that secondary school leavers represented the bulk of 34% of jobs. Those who never attended school accounted for 33%, while primary school education followed with 21%.  Post-secondary school education brought up the rear at 12%. This was highlighted in a 2012 report published by the Campaign for Democratic and Workers’ Rights in Nigeria, which stated that 45% of the country’s workforce was characterized by “casual” employment, including low-skilled informal and intermittent occupations.

However, there might be a changing tide on the horizon. Occupationally, the managerial, professional and technical workers have been the leading segment of the workforce hired in recent times, representing 53% of staff cadre in the Q1 2013 period. If sustained, this is a good development reflecting the quality of the workforce being absorbed into the employment market. A distributive analysis based on occupation revealed that sales, marketing and public relations professionals took the largest slice of new employment with 17%.

In Q4 2012, two of the key reasons for hiring by employers based on a survey conducted by the statistical agencies comprised the replacement of an exited position (the highest at 30% of total respondents) and resultant business expansion (20% of survey results). Consequently, 56,528 staff exited from various businesses in the 3rd quarter of 2012. The bulk of job exit with 33% was from the clerical staff cadre.

Of the total number of workers who exited -58%were males and 42% were females. The education sector had the most number of exits with 33.6 per cent of all exits. Manufacturing sector with 22.6% ranked second and Health & Social work sector ranked third with16%. Major reasons for employees leaving their jobs were for educational advancement followed by employee incompetence.

However, by Q1 2013, there was a significant change in the cause of new recruitment by employers. The major cause for hiring by 11.3% of respondents was to fill out existing positions as a result of the promotion of former occupants. The second reason by 11.26% was the seasonal growth of businesses. Employment engagement is on the rise across Africa but varies across regions.

Unlike the formal sector, in the public sector, the reverse was the case with the male gender leading significantly at 61% of new job creation. Secondary education teachers led the fray across both population segments representing 16% of total occupations in both the male and female demography. This was followed by the general office clerk position at a distant 9% and managing directors/chief executive cadre with 8%.

In spite of the positive developments in the jobs market, much remains to be done.  Unemployment rate is 24% (youth unemployment accounts for 38% of total unemployment) and the country ranks low, scoring less than one (0.471) in the Human Development Index, placing Nigeria in the 153rd position out of 186 countries in the United Nations 2013 Human Development report.In Africa, the country ranks 23rdout of 52 countries.

Despite this, IMF projections are positive with 7.4% GDP growth on the back of high oil prices and robust domestic demand. Economically, Sub-Saharan Africa is now the second fastest-growing region globally.Growth without development, however, is a challenge.

Employment only plays its intermediate role between growth and development if it is productive.This prompted the President in his 2011 budget speech to declare: “Unemployment among our youth is one of our biggest challenges. The time has come to create jobs (and) lay a new foundation for Nigeria’s economic growth.”Consequently, the government has been promoting policies, programmes and incentives to foster job creation and private sector-led economic growth.

By: OMOSOMI OMOMIA