The Nasarawa State Unemployment Rate of 0.5%, and Correlation Between Poverty and Unemployment

Original Post

“Nasarawa State unemployment rate is 0.5% “ – National Bureau of Statistics (NBS) – Nigeria.  Nasarawa State has a poverty rate of 57.3%, according to NBS.

Who can help me reconcile what is going on here? Is NBS really serving Nigeria well with these useless reports and numbers?

Sure, let me congratulate Nasarawa State for recording 0.5% unemployment rate, one of the best in the world, and better than the US, UK, Japan and indeed anywhere in the world. An unemployment rate of 0.5% is actually a bad thing because it will destroy any economy.

Some Comments on LinkedIn

Comment 1: The biggest challenge with Nigerian economy is DATA. I am not sure why. Is it that the data is not available or No proper method of collecting the data? Or out of laziness or deliberate intent to create a monster out of it, those saddled with responsibility to collect the data, failed and are falling in their role.
That has always been my problem with the kind of ratios and numbers thrown around by NBS and which other government agencies rely on to make pronouncements.

And I am not surprised at this, when as basic as our population figure is based on conjectures.

We have a BIG PROBLEM if NBS indeed put out these figures about Nasarawa.

Comment 2: I’m not here to take sides, but rather to explain what many people don’t know about research data. I see many people with various titles commenting, but they don’t understand how this is done. About 3 years ago, NBS changed their methodology for calculating the unemployment rate in Nigeria. The simplest way to explain it is that if you are working, regardless of the number of hours you put into the work, you are considered employed as long as you are not doing anything at all. However, the other countries you’re comparing with are using hours of work as a criterion. That’s the key difference. Before now, NBS also uses the same methodology but it doesn’t fit in to the system because Nigeria is not structured in hourly work. What NBS discovered is that there are people who only work a few hours but make enough money to support their families. For example, would you say a food seller who only sells from 6 pm to 10 pm is unemployed? The dynamics are different, and we need to understand that. Lastly, before commenting on any data, let’s learn to check the methodology so that we don’t appear uninformed.

My Response: “There’s no correlation between poverty and unemployment as a yardstick. ” – If you have no unemployment (0.5% here), you should be in a position to boost earning and wages.  If you boost wages, poverty will go. You cannot tell me that everyone has a job and everyone is poor. I challenge the thesis of your comment because low unemployment should improve wages, and that will reduce poverty.

Follow up after comments

On my question on how we can reconcile National Bureau of Statistics (NBS) data where a state in Nigeria (Nassarawa) has 0.5% unemployment rate, and still have poverty rate of 57%, I have received some responses:

Comment 1: “There’s no correlation between poverty and unemployment as a yardstick. ” 

Comment 2: “ Prof; the fact that you are employed does not translate to riches.“

My Response: The construct that unemployment rate does not correlate with poverty rate is not factual.   If you have no unemployment (0.5% here) in a place, you should be in a position to boost wages of workers because wages will rise due to competition which happens during full employment.  If you boost wages, poverty will reduce since people will have money in their pockets. You cannot tell me that everyone has a job in a place and people are still that poor. 

Low employment MUST increase labour cost, and that will reduce poverty in the land due to market forces. In summary, there is a positive correlation between unemployment and poverty because under FULL employment in Nasarawa State, we cannot expect a 57% poverty rate if market forces are working!

Good People, I am not saying that NBS is wrong, I just want someone to explain in a logical way why a place with FULL employment can have a high poverty rate. Otherwise, NBS may need to revisit its methodology, and then define what is really an “employment”. Get me right, at 0.5%, everyone should be japa’ing to Nasarawa as it has the lowest unemployment rate in the world.

Under Yemi Kale’s tenure, I used NBS’ data in my Harvard Business Review works. I am not saying that NBS is wrong, I just want someone to explain in a logical way.

Comment on Feed

Comment 1: Dear Prof. Anyone arguing that there is no correlation between unemployment rate and poverty really need to step back and go and understand basic economics. A 2019 study in Nigeria found 0.85% correlation coefficient between unemployment and poverty rates.( Journal of Economic and Financial Studies).
Same NBS in 2022 before this their new methodology published Unemployment as 23.1% and Poverty Rate @ 40.1%.
In fact Research also shows that a 1% increase in unemployment rate is associated with 0.5-15% increase in poverty rate( World Bank).

Comment 2: “If majority are employed, say they still earn minimum wage which cannot even buy 30 litters of fuel …it’s possible to have both unemployment rate of 0.5% and still have poverty rate of 57%.”

My Response: That state is not possible unless there is no productivity in that place. If you have FULL employment where everyone earns N70k, to leave that job for another new opening, you need to pay more than N70k. So, for you to keep all at 70k, it means nothing new is happening in that place. Should that be, the state has to bring workers who would like to earn N70k from other states for new projects and positions. I am not aware that people are japa’ing to Nasarawa to earn min wage which will keep the equilibrium of FULL employment at min wage. 

You can be employed and still be poor. It is common in the US fast food sector. However, a state cannot have FULL employment at 0.5% and still keep min wage since that state is still active economically. The  very fact that it is on FULL employment will push employers to improve wages, and that will reduce poverty. So, at a population level, your position does not work. 

Poverty, no matter the multidimensional level you may posit, connects back to “money” which is income. If you have money, education, healthcare, etc poverty will disappear. So, I do not accept the thesis that he is fully employed with good income, but his poverty is coming from healthcare or education poverty as that is not typical.

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