The Impact of Unemployment on Economic Growth in Nigeria

THE IMPACT OF UNEMPLOYMENT ON ECONOMIC GROWTH IN NIGERIA

Aim and Objectives of the Study: This research is aimed at evaluating the impact of unemployment on economic growth in Nigeria. The precise objectives are to;

1. Investigate the behavioral trend of unemployment and economic growth.
2. Examine the aftermath of unemployment and economic growth in Nigeria.
   CHAPTER ONE: INTRODUCTION

   1.1        Background to the Study

   For many years now, unemployment has dominated economic debate in Nigeria like other Less Developing Countries (LDCs). Nigeria is a country richly endowed with ethological and innate resources yet plagued with high-level inefficiency thus the unabated unemployment growth rate. Cutback has been a major issue confronting the Nigerian economy hence the trend has been on the increment for decades now (Obayomi, 2014).  International Labour Organization (2012) defined “unemployed workers” as individuals who are presently not employed but are prepared and capable to work for compensation, are presently accessible to work, and have been sincerely searching for work. Persons who are earnestly pursuing job placements must make the struggle to be in association with employers, have job meetings, connect with job placement agencies, dispatch resumes, respond to advertisements, or some other channels of effective job searching within the proceeding four weeks.

   The population in the labor pool in Nigeria falls between the bracket of 15-64 years inclusive of students, housekeepers, etc. Within the Nigerian perspective, the unemployment ratio is measured among the crowd of the working-age (15-64 years) eliminating those medically unfit (CBN, 1993). According to Gbosi (2007), unemployment is a condition whereby those who have the environmental and intellectual capacity to engage meaningfully in a workforce but are denied the opportunities to get a job. It suggests that unemployment implied individuals who are not working have no useful time to enlist in rewarding actions thus constituting a constraint on their income. This scenario portends a great danger to Gross Domestic Product (GDP) and the purchasing capability of its citizens. The active use of human assets is a catalyst for the improvement and development of an economy. Unemployment is a condition of excess labor supply over labor demand championing the fall of capacity and valuable man-hours.  The Bureau of Statistics puts the estimate of jobseekers at 19.70 percent, the World Bank statistic. A substantial proportion of the inactive partake in crime and criminality for survival in a society

   Today, the lack of jobs is the greatest challenge militating economic improvement and development. With the massive human and essential assets, Nigeria should have attained speedy and uninterrupted economic growth. But the reverse has stood as the scenario, with the rising unemployment exacerbating poverty and stretch of income inequality. Thus, promoting corruption and other communal vices such as kidnapping, armed robbery, militancy in the Niger Delta, insurgency in the North East, etc.

   The lack of jobs is a multi-dimensional problem facing most Developing Economies. Underemployment is a stage whereby those employed are not used to their full productive potential thus constraining the yield of the state. Voluntary Unemployment is associated with an individual’s decision whereas Involuntary Unemployment exists due to the socio-economic habitat which affects individuals such as the market arrangement, public involvement, and height of accumulative demand.

   Structural unemployment implies a discrepancy between the surplus and shortage of employees. Mismatches can occur because of the demand for a special brand of labor is rising while the appeal for another kind is falling and the surplus do not quickly adjust. The skeletal looks of the economy make it challenging for job seekers to find employment and for employers to hire workers even though jobs are available but require skills that differ from those who are jobless. For example, the establishment of advanced brands, production techniques, and technologies can substantially alter the relative demand for workers with various skills. We often see structural imbalances across occupations or regions as certain sectors grow while others decline.

   Frictional unemployment is because of the constant adjustment in the economy that prevents qualified unemployed workers from being immediately equated up with existing job vacancies. It results from scarcity of knowledge and the search activities coupled with the management and members to advance their employment choices. This unemployment arises due to the incessant movement of individuals between regions and jobs or through diverse phases of the life period.  Even if a nation were at sufficient employment, there would always be certain turnover as students search for jobs when they graduate from school or parents re-enter the labor exchange after having children. Because frictional unemployed workers are constantly moving between jobs or seeking better jobs, it is regularly speculated that they are voluntarily unemployed.

   Cyclical Unemployment is caused by recessionary trade circumstances and inadequate cumulative demand for labor. Unexpected reductions in the general level of application for pieces of equipment and duties are the main cause of unemployment which is cyclical. Unemployment rises during a recession as total spending and output fall. It is frequently attributed to involuntary unemployment as the product of the downward swing in the business period.

   Seasonal Unemployment occurs when multitudes are employed for a specific span of the year as long as they are not needed all year round. For instance, industries, where production, demand, and employment are seasonal, include tourism and leisure, farming, construction, and retailing.

    

   1.2       Statement of the Problem

   Unemployment has stimulated a skyward trend in Nigeria for years now. In 1970, according to the Central Bank of Nigeria statistical bulletin (2018), the quota of unemployment averaged 2.3 % of the operating population. It rose to 3.7 percent in 1975; 5.30 percent in 1980 and 7 percent in 1987. The rate of unemployment between 1990 and 2000 was relatively stable averaging 5.0 percent. However, the unemployment quota flushes to 8.5 percent in 2009 and 9.10 interest in 2014, World Bank (2018). The unemployment estimate escalated to 14.89 % in 2016 outside of 9.18 % in 2015. The unemployment rate was 15.33 units in 2017, representing a regular acceleration in labor market inefficiencies. Similarly, in equivalent duration, a negative GDP expansion of 1.62 units in 2016 from a positive growth estimate of 2.65 % in 2015. Also in 2017, there was a direct expansion rate of 0.81 % from the negative growth of 2016. Several attempts have been made by different regimes to solve the jobless situation through some initiated policies and programs to curb the menace of unemployment yet the advancement quota of unemployment remains unabated in Nigeria.

   The Buhari-led Federal Government launched the Presidential Youth Empowerment (P-YES), YOUWIN and NPOWER targeted at providing solutions to the threat of youth unemployment through the implementation of direct empowerment initiatives toward the reduction of unemployment. Despite government efforts at curtailing the dispute of joblessness, it remains a hydra-headed monster in Nigeria. This obstacle can be traceable to population explosion, low manufacturing output, and inadequate government capital expenditure in every annual budget. This necessitates the obligation to curb the menace of no jobs and other macroeconomic variables to boost the growth of the economy in Nigeria.

   1.3       Aim and Objectives of the Study

   This research aimed at evaluating the impact of unemployment on economic growth in Nigeria. The precise objectives are to;

   1. Investigate the behavioral trend of unemployment and economic growth.
   2. Examine the aftermath of unemployment and economic growth in Nigeria.

   1.4       Research Hypotheses

   The survey is steered by the following hypothesis:

   HO: There is no link between unemployment and economic growth.

   1.5       Significance of the Study

   This work seeks to explore the impact of unemployment on economic growth in Nigeria. The work gives effective information to security agencies, industry, the law on the complication of unemployment, and the means of adopting an appropriate policy for mitigating the unemployment issue in the state. This study will enable the private sector to adopt appropriate policies toward absorbing the squad of a jobless multitude to boost demand and business profitability. The unemployment trend will avail the policymakers of an appropriate policy mix to mitigate the growing unemployment issue in the economy. Furthermore, this work is a useful augmentation to the previous study and a controller for more research on the impact of unemployment on Nigeria’s economic growth.

   1.6       Scope of the Study

   This paper is restricted to idleness among citizens and economic growth in Nigeria. Other determinants of economic growth such as government capital expenditure and manufacturing output were covered by this study to check variables. This work covered 38 years spanning from 1980 to 2018. The period of the research in Nigeria experienced tremendous change in the rate of unemployment, GDP, government capital manufacturing, and expenditure. These periods witnessed changes in government policies that affected the macroeconomic strength of the economy such as the Structural Adjustment Programme (1986). The National Directorate of Employment (NDE) was rooted in 1986 with the sole mandate of job formation for the teeming army of unemployed in Nigeria.

   The Buhari-led Federal Government launched the Presidential Youth Empowerment Scheme (P_YES), YOUWIN, and NPOWER, targeted at providing solutions to the threat of youth unemployment, through the fulfillment of direct empowerment initiatives toward the reduction of inactiveness among Nigerian youths. TraderMoni is another empowerment scheme designed specifically for petty traders and artisans across Nigeria. The chosen period is competent to espouse the achievement of the economy.

   In line with this investigation, limitations such as; time, finance, and scarcity of relevant texts or journals on the topic were encountered.