The expected recovery of the Nigerian economy may increase labour demand this year, analysts at Meristem Securities Limited have said.
In its latest outlook report for 2024, the company said the anticipation of increasing business activities might increase labour demand, potentially leading to a marginal decline in the unemployment rate.
“The substantial emigration from the country could also create additional job opportunities for skilled workers,” the report said.
It added that the overall impact of the economic downturn will likely continue to influence the Nigerian labour market dynamics in the near term.
Jennifer Oyelade, director of Transquisite Consulting, said companies would be hiring more this year compared to 2023 but the hires would be more strategic as employers would put money into getting the best people for the work roles that they need.
“You might see organisations regrouping, realigning and restrategising, just to ensure that they focus their resources on what they need, not as supposed to hiring for hiring sake,” she added.
Earlier in the month, the United Nations (UN) projected a slight improvement in Nigeria’s Gross Domestic Product (GDP) growth to 3.1 percent in 2024 from an estimate of 3.0 percent in 2023 on the back of its policy reforms.
“Policy reforms enacted by the Government of Nigeria in 2023, especially in the hydrocarbon sector, have contributed to a moderate improvement in the country’s growth prospects for 2024, with GDP growth forecast at 3.1 percent,” the UN said in its latest 2024 World Economic Situation and Prospects report.
It said, however, ballooning public debt, persistent inflation and a rising cost of living, together with a weak business environment, will pose a downward risk to growth prospects.
Last year saw a rise in job losses as the surge in petrol prices occasioned by the Federal government reforms such as the removal of subsidy and the devaluation of the naira affected many business operations.
Data from the National Bureau of Statistics (NBS) show that the country’s unemployment rate rose in the second quarter of 2023 for the first time since the statistical agency adopted a new methodology for the country’s labour force. It increased to 4.2 percent from 4.1 percent in Q1.
“The reforms are impacting negatively on the micro, small and medium enterprises and manufacturing sectors, leading to an increase in unemployment,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria, said.
He said the tough business environment has eroded the confidence of investors in the country, making some of them leave Africa’s biggest economy. “Those who are expected to come as new investors are scared of coming, which is affecting the ability to new employment opportunities.”
Over the past seven months, the Tinubu administration’s reforms has pushed the inflation rate to the highest level in 18 years.
The removal of the petrol subsidy tripled the pump price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise fares.
The naira has plunged to record lows across markets since the central bank allowed it to weaken by as much as 40 percent against the dollar in June.
According to the NBS, the country’s inflation rate, a measure of the general price level, rose to 28.20 percent in November from 27.33 percent in the previous month.
Data from the Manufacturers Association of Nigeria (MAN) showed that the number of jobs lost in the manufacturing sector rose by 108.7 percent to 3,567 in the first half of this year, the highest in three years from 1,709 in the same period of 2022.
The number of jobs created in the sector declined by 32.8 percent to 6,428 from 9,559 in H1 2022.
“The decline underscores the persistent harsh operating business environment for manufacturers which was occasioned by escalating energy cost as well as necessary but poorly coordinated subsidy and exchange rate reforms,” MAN said.
Rising inflation in Africa’s most populous nation has pushed an additional 14 million Nigerians into poverty in 2023, according to the latest Nigeria Development Update report by the World Bank.
This means that the number of poor people rose to 104 million from 89.8 million at the start of the year.
