The Nigeria Employers’ Consultative Association has urged the government to address the current high unemployment rate.
In a statement on Tuesday, NECA noted that the National Bureau of Statistics reported a rise in unemployment rate to 5 per cent in the third quarter of 2023 from 4.2 per cent in the second quarter of the year.
It said the figure was a product of the new methodology adopted by the Bureau, which defines unemployment as the ratio of the working-age population to the total labour force.
Retrospectively, using the old methodology for the last time, NBS reported unemployment at 33.3 per cent for the first quarter of 2021.
NECA has reported that based on the analysis carried out by KPMG, using the old methodology, the projected unemployment rate for 2023 is estimated to reach 40.6 per cent, which is a 2.9 percentage point increase from the 37.7 per cent recorded in 2022.
“The rise in the unemployment rate by 80 points during the quarter could be a presage of a looming unemployment crisis in the country, particularly with the current harsh economic condition.
“Therefore, to circumvent such crisis, it is important to question the causes of the current spike in the unemployment rate and decipher solutions to mitigate further degeneration in the index,” the association stated.
The Director-General of NECA, Mr Adewale-Smatt Oyerinde, observed that since the beginning of 2023, the government had been implementing policies that do not support the operations of the private sector, which is the highest employer in the economy.
He pointed out that some of the policies that were inimical to business included the currency redesign policy of the CBN, the removal of fuel subsidies and the floating of the foreign exchange.
Others, according to Oyerinde, are the increase in various taxes, including excise duties and most recently, upward review of the foreign exchange rate for clearing of imports by the Nigeria Customs Service and banning of alcoholic beverages in sachet and pet bottles of less than 200ml.
He claimed those measures were dragging most private businesses to the brink of collapse.
The NECA boss noted that the unfortunate recent exit of multinationals such as GlaxoSmithKline, Procter & Gamble, two companies that had operated in the country for decades.
He said, “As the economy stands, there are many more companies to join the exit train or close shop if the current harsh operating environment persists.”
He declared that the implication of the poor macroeconomic and business environments on employment was grave as many businesses were downsizing as a way of cutting costs to remain afloat.
He explained that the employment index may continue to worsen unless there is deliberate action to review some of the policies that caused the most recent economic dilemma.
The NECA boss argued that to address the challenges of unemployment, the government should deliberately address the operating business environment to support production in the private sector, which engages in productive employment.
Oyerinde advised the government to end the current monetary rationing and ensure that the optimum quantity of money needed to stabilise the economy is in circulation.
Also, he canvassed the review and moderation of the fuel subsidy removal.
Subsidies are tools for socioeconomic stability and growth – fuel subsidies, unemployment allowances, free medicare, social security allowances, old age allowances, and child upkeep allowances are all subsidies.
President Bola Tinubu announced an end to the petrol subsidy regime during his inauguration on May 29, 2023.
The central bank on June 14 floated the naira, causing the local currency to depreciate to over 1,600/$ at the official market.
“No heavily import-dependent nation such as Nigeria allows its currency to swim in the murky waters and vagaries of the invisible hand; it has to be transparently guided,” he noted.
He also charged the government to review its stance on the tax credit for infrastructural, mostly on road constructions carried out by the private sector, and to review its tax projections from the private sector, particularly in the current condition.
According to Oyerinde, the truth is that high taxes do not help anybody, not even the government.
He argued that high taxes tended to crowd out a swathe of businesses in the country.