New Minimum Wage Poses Risk To Job Growth ~ United Capital
By Olumidagreaton December 20, 2018
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Analysts at Nigeria’s investment banking group, United Capital has said the proposed 30,000 naira minimum wage could pose further risk to job growth in the country if some structural issues are not fixed.
In a note to clients on Thursday, the investment banking group urged the government to set as priority job creation above quest for aggregate economic growth.
“In terms of outlook, we believe a potential implementation of the 30,000 naira national minimum wage poses further risk to job growth in Nigeria, especially if structural issues are left unfixed,” the analysts said in the note.
United Capital in response to the recent data on unemployment and underemployment published by the National Bureau of Statistics (NBS) this said there is a need to prioritize job creation beyond aggregate GDP growth as a measure of economic welfare and overall improvement in the economy.
The NBS report showed that the unemployment rate in Nigeria jumped from 18.8 percent in Q3-17 to 23.1 percent in Q3-18.
This is as the total number of people classified as unemployed in Q3-18 spiked by 30.8 percent y/y, faster than growth in the size of the total labour force which was up 6.3 percent y/y to 90.5 million.
Notably, despite the worsening state of unemployment, Misery Index (inflation rate + unemployment rate) improved 0.5 percent from 34.8 percent in Q3-17 to 34.3 percent in Q3-18, thanks to the inflation rate which moderated from 16.0 percent in Q1-17 to 11.2 percent in Q3-18.
If underemployment is factored in, the misery index would be 54.4 percent as at Q3-18 from 56.0 percent in Q3-17.