As the Federal Government battles to stabilise the economy through improved productivity, a renowned labour leader, Comrade Peters Adeyemi, has advocated the need for certain policy reforms to realise the agenda.

Adeyemi, who is the General Secretary of the Non-Academic Staff Union of Nigeria (NASU), said enhancing labour supply and tinkering with policies on retirement and unemployment benefits would help a great deal in boosting productivity.

He called on the Federal Government to consider policies aimed at enhancing labour supply or productivity by “reforming retirement and unemployment benefits, supporting childcare, expanding re-training and re-skilling programmes to boost productivity, and fully leverage AI toward reviving the growth of manufacturing sector in the medium term.”

The labour leader cautioned the Federal Government to prioritise productivity reforms to revive ailing manufacturing sector, for President Bola Tinubu’s administration targeted growth rate of about 3.8 per cent in 2024 and six per cent or more in the coming years to see the light of the day.

He said: “The current trend of persistent low-growth scenario, combined with high interest rates, could put debt sustainability at risk, restricting the Federal Government’s capacity to counter economic slowdowns, boost growth in the manufacturing sector and invest in social welfare or environmental initiatives for Nigerians.

“Moreover, expectations of weak growth could discourage investment in capital and technologies, possibly deepening the slowdown.

All this is exacerbated by strong headwinds from GDP Growth Rate in Nigeria which averaged 0.50 per cent from 2010 until 2024, reaching an all time high of 12.12 per cent in the third quarter of 2020 and a record low of -16.10 per cent in the first quarter of 2024 due to economic fragmentation, and inconsistent industrial policies.”

Recalling the Gross Domestic Product (GDP) growth by 3.46 per cent (year-on-year) in real terms in the fourth quarter of 2023, which is lower than the 3.52 per cent recorded in the fourth quarter of 2022, the labour leader said the current high electricity tariff would inflict more hardship on manufacturers and Nigerians who are already feeling the heat of petrol subsidy removal.

He said: “We call on Federal Government to initiate policies that would improve labour and capital allocation across manufacturing industries to tackling labour shortages caused by inadequate power generation capacity, transmission and distribution bottlenecks, suboptimal pricing, operational inefficiencies of the Distribution Companies (DisCos) as well as regulatory uncertainties and policy inconsistencies, that could collectively rekindle revival and growth of the manufacturing sector.

“The key drivers of economic growth include labour, capital, and how efficiently these two resources are used, a concept known as total factor productivity.

Between these three factors, more than half of the growth decline since the crisis was driven by a deceleration in Total Factor Productivity (TFP) growth.

TFP increases with technological advances and improved resource allocation, allowing labor and capital to move toward more productive firms.”

He said the increasingly inefficient distribution of resources across manufacturing companies had dragged down TFP and, with it, growth rate.

“Much of this rising misallocation stems from persistent barriers, such as policies that favour or penalise some firms irrespective of their productivity, which prevent capital and labour from reaching the most productive companies.

“This limits the growth potential of the manufacturing industries. If resource misallocation hadn’t worened, TFP growth could have been 50 percent higher and the deceleration in growth would have been less severe,” Adeyemi said.

He noted that Federal Government policy shifts that address resource misallocation by improving the flexibility of product and labour markets, trade openness, and financial development would boost the manufacturing sector.

Advising on lifting the nation’s growth by 2030, he suggested that the government should focus on policy actions to enhance market competition, trade openness, financial access, and labor market flexibility.

He noted that economic growth had not been inclusive, and Nigeria’s economy faced key challenges of low er productivity, and the weak expan sion of sectors with high employment elasticity.

He said the consequences of Nigeria having a weak manufacturing base with a large population are evident in its foreign exchange shortages, limited number of jobs created to accommodate workforce entrants, and an import bill that can hardly be met (nor sustained) by current export earnings.

“The weak manufacturing base transcend to 80 per cent of workers being employed in sectors with low levels of productivity in agriculture and non-tradable services.

“This means that the kind of jobs needed to generate income growth and lift many Nigerians out of poverty are not available in large numbers,” he added.