Good Morning 😃
How are you doing?
Can you believe it?
This news made quite a splash in the headlines on August 24, and understandably so. The drop from a whopping 33.3% unemployment rate to 4.1% seemed almost miraculous, especially given all the challenges the country has been facing.
The NBS previously defined unemployment as the proportion of those in the labour force which presently stands at about 70 million, who were actively looking for work but could not find work for at least 20 hours per week. That means if you are in the labour force, between 15–64 years, and you do not work up to 20 hours per week, then you are considered unemployed. And if you work 20–39 hours a week, you are considered as under-employed. This meant that many teachers, farmers, and even persons involved in professional services who worked less than 20 hours a week were considered unemployed.
However, the recent data released by the NBS shows that the unemployment rate which was formerly 33.3% is now 4.1%. The NBS has adopted the ILO standard methodology. The ILO 19th ICLS published in 2014 provided new guidelines to produce labour market statistics.
Two main points that caught our attention in the new guidelines are:
Working age group: This was defined previously as persons aged 15–64, but is now defined as persons aged 15 and above. That means that even if you are 80 years old and still have the strength to work, you are part of the working age group.
The unemployed: This is the most controversial. An unemployed person is defined as someone who did not work for at least 1 hour within a week. This means if you wake up in the morning, work for less than an hour a day, and up to one hour a week, then you’re employed.
What is really troubling is that 92.6% of Nigerians are working in the informal sector. That means they face difficulties accessing financial services like mortgages and credit. This is a major challenge, as it limits their financial growth opportunities.
Chinwe Egwim, Chief Economist at Coronation Merchant Bank, discussed on Arise TV that although the new methodology doesn’t change the fact that unemployment remains high, it’s concerning that many people are forced to seek jobs in the informal economy due to the alarming unemployment rate. She noted that this isn’t a positive situation since informal sector workers miss out on benefits like healthcare and pensions. She emphasised the need for a comprehensive strategy to address this issue, suggesting improvements in education, skills training, and investments in the informal sector to bring about a better organisation.
So, if you’re looking at these numbers, ask yourself if you’re part of the formal or informal system. Do you have access to the right financial services? Let’s explore five practical ways to make the most of your earnings if you work in the informal sector:
1. Smart Record-Keeping – Your Financial GPS:
Imagine your finances as a journey, and recording your income and expenses is like using a GPS to stay on track. By jotting down what you earn and what you spend, you’re creating a map of your financial landscape. This simple habit can reveal spending patterns, highlight areas where you can cut back, and ultimately give you a better handle on your money.
2. Upscale Your Skills, Upscale Your Earnings:
Imagine your skills as tools in your financial toolbox. The more versatile and refined they are, the more opportunities you can seize. In the informal sector, learning new skills or improving existing ones can directly impact your earning potential. If you’re a craftsman, consider learning new techniques. If you provide a service, explore ways to enhance your expertise. This not only makes you more valuable to clients but also opens doors to higher-paying gigs or customers willing to pay a premium for quality.
By continually investing in your skills, you’re investing in yourself. When you deliver excellent work, word of mouth can become a powerful promoter, leading to a steady stream of customers or clients seeking your expertise.
3. Ride the Waves of Income Variation:
Working in the informal sector often means dealing with fluctuating income. During the good times, when you’re earning more than usual, consider putting extra cash into your savings buckets. This way, when income slows down, you’ve built a buffer that can help you ride out the leaner periods without financial stress.
4. Safeguard Your Hard-Earned Progress with Insurance:
Think of insurance as a shield that protects your finances. Just like you save for the future, having insurance helps you prepare for unexpected events. In the informal sector, where stability can be uncertain, having insurance coverage can be a game-changer. It can offer financial support during emergencies like health issues or damage to your assets.
For instance, health insurance can help cover medical expenses, ensuring that an unforeseen health crisis doesn’t drain your savings. Similarly, property insurance can protect your belongings from theft or damage, providing peace of mind.
5. Partner with the Future You:
When you manage your finances well, you’re essentially becoming a partner to your future self. Every naira you save and invest today is a step toward a more secure and comfortable future. So, whenever you’re tempted to spend unnecessarily, think about the future you’re building and how your present decisions can shape it positively.
Whether you work in the informal sector or the formal sector, it is very important to have an understanding of how money works and how you can organically grow wealth! Join our community today and we’ll show you how!
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