Labour experts are raising concerns about the alarming rate of informal employment in the country, a situation that could potentially lead to significant losses in tax revenue for the government.

In response to a report from the National Bureau of Statistics (NBS) indicating that 92.6% of individuals employed in Nigeria were engaged in informal work during the first quarter of 2023, labour experts are urging the government to implement policies aimed at transitioning more Nigerians into formal employment.

Chris Onyeka, the National Assistant General Secretary of Nigeria Labour Congress, expressed his dismay at the government’s handling of the situation, saying that having such a high percentage of informal employment is a severe indictment on the government.

He emphasized the need for deliberate policies to formalize the informal sector, including measures such as organizing informal sector workers into unions and providing special investment programs to bring them into the tax system and address issues like pension coverage.

According to Onyeka, the NBS data suggests that only 8% of the workforce in Nigeria is formally employed, implying that the formal sector is virtually non-existent in the country.

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Onyeka also called on the NBS to enhance the credibility of its data, stating that if people do not trust the data being released, it becomes meaningless, emphasizing the importance of due diligence in data collection and reporting.

Mr. Gbenga Komolafe, the General Secretary of the Federation of Informal Workers of Nigeria, echoed the concerns raised by the NBS report, noting that the country had previously relied on World Bank estimates, which indicated that Nigeria’s informal employment rate was around 80-82%.

He highlighted that there has been a lack of authoritative measurements for the share of informal work in the labor market.

Komolafe pointed out that even Lagos State, Nigeria’s most industrialized and commercial metropolis, is estimated to have a 75% informality rate.

He emphasized that the situation is likely even more pronounced in states like Osun, Sokoto, or Ekiti, where there is limited organized private sector activity.

However, Komolafe urged the NBS to provide a breakdown of the parameters and factors used to define unemployment in the country.

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The NBS report, titled “Nigeria Labour Force Survey,” revealed that 92.6% of individuals employed in Nigeria were engaged in informal work, including agriculture.

It also indicated that 89.4% of employed individuals were in informal employment when excluding agriculture.

The report further disclosed that Nigeria’s unemployment rate declined from 5.3% in Q4 2022 to 4.1% in Q1 2023, following a re-evaluation of the methodology used by the statistics agency.

This adjustment significantly differed from the 33.3% unemployment rate reported in 2020.