UNEMPLOYMENT AND THE NIGERIA ECONOMY: A CASE STUDY OF OVIA SOUTH WEST LOCAL GOVERNMENT OF EDO STATE

ABSTRACT

This research was conducted to investigate unemployment and the Nigeria economy a case study of Ovia South West Local Government Area of Edo State capital. In the course of carrying out the work, the researcher looked at the type of unemployment, some of which include frictional unemployment, seasonal unemployment, cyclical unemployment and residual unemployment. The researcher also focuses her attention on reviewing related literature. More so, it was revealed that some of the causes of unemployment are too many in the Nigeria economy. Irrelevance of the course studies, the movement of people from rural areas to urban areas. However, some recommendations were made in the closing chapter among which are; Government should restructure our education system to suit the demands of the society, Government should make agriculture more attractive, Good development plan, finally, government should provide necessary infrastructure to prevent the rural-urban migration, if these are provided by the government, it will help to reduce unemployment rate to an extent.

TABLE OF CONTENT

Chapter one      

Introduction

Background of the study

Statement of the problems

Objectives of the study

Research question

Scope of the study

Limitation of the study

Significance of the study

Definition of terms

Chapter two      

Literature review

Types of unemployment

Causes of unemployment

Effect of unemployment on Graduates

Chapter three   

The study area

Population of the study

Sample method

Sample size

Research instrument

Organization of data

Statistical methods of data analysis

Chapter four     

Data analysis

Chapter five      

Summary, conclusion and recommendations

Summary and conclusion

Recommendations

References        

Questionnaire    

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The Nigerian economy since the attainment of political independence in 1960 has undergone fundamental structural changes resulting to structural shifts which have however not resulted in any significant sustainable economic growth and development to ensure adequate employment opportunity for her youths. Recently, available data show that the Nigerian economy grew relatively in the greater parts of the 1970s, with respect to the oil boom of the 1970s whose extreme profits resulted to wasteful expenditures in the public sector leading to dislocation of the employment factors and also distorted the revenue bases for policy planning. This among many other crises resulted in the introduction of the structural adjustment programme (SAP) in 1986 and the recent economic reforms. The core objective of the economic structural reform is a total restructuring of the Nigerian economy in the face of population explosion (Douglason et al, 2006).

However, these economic and financial structural reforms put in place did not yield significant results, hence in recent past; there has been an alarming increase in the rate of unemploymentand its attendant social and economic problems. Unemployment is one of the developmental problems that face every developing economy (Patterson et al, 2006), and Nigeria is not exempted. Its impact has been felt more by the youths. Nigerian youths from all corners of the country rush to Lagos state in search of white-collar jobs, especially, the graduates. This is because of the believe that Lagos state, being the former Federal Capital State and centre of excellence has more (job) opportunities than other states, necessitating the scuttle to Lagos for greener pastures. This rush has led to the profligacy of the rate of unemployment in the state. This is not to say that unemployment is absent in the other states of the federation or even less, hence the general observations from many researchers on Nigerian unemployment such as Alanana (2003), Echebiri (2005) and Awogbenle and Iwuamadi (2010), Okafor (2011). In their research endeavors, they have brought to the fore that unemploymentacross the world has reached a great height and is likely to climb further. Okafor (2011) documented that in Sub-Sahara Africa, youth population was estimated at 138 million people in 2002-2003, with 28.9 million, or 21 percent of them unemployed (ILO, 2004). It has also been reported that unemployment in Africa has a geographical dimension as it is generally higher in the urban areas than in rural ones such as Lagos state and several factors have been adduced to account for higher unemploymentrate in Africa, most notably low economic growth, low economic activity and low investment. These related factors contribute to low job creation and because of sustained (increased in some cases) population growth the small labour market is unable to absorb the resulting army of job seekers in Nigeria.

He further buttressed that for most developing countries like Nigeria, Governments and policy makers are increasingly finding it difficult to grapple successfully with youth unemployment. This high rate of unemployment can be blamed on the lack of adequate provision for job creation in the development plans, the ever expanding educational growth and the desperate desire on the part of youths to acquire University education irrespective of course and course contents. As a result, a number of skills acquired from the University appear dysfunctional and irrelevant (Okafor, 2011). In Nigeria, the federal government in 2008 acknowledged that about 80 percent of Nigeria’s youth are unemployed and 10 percent underemployed (Daily Trust, 2008). In 2011, the Minister of Youth Development, Bolaji Abdullahi reported that 42.2 per cent of Nigeria’s youth population is out of job. Depo Oyedokun, the Chair of the House Committee on Youth and Social Development revealed that of the over 40 million unemployed youths in the country, 23 million are unemployable and therefore susceptible to crime, hence the need to articulate what could be done to salvage the situation. The pace is increasing because most graduates lack relevant marketable skills.

More than half of the Nigerian populations are under the age of 30 (National Population Commission, 2001). Therefore it can be asserted that the economy of Nigeria is a youth economy (Oviawe, 2010). Expectedly, today’s youth will become in a short decade tomorrow’s parents, leaders, labour force and armies. However, the Nigerian youths are said to be confronted with poverty, unemployment, urbanization, lack of capacity and skills needed to move the economy forward. This is because the youth faces unemployment and lack of necessary productive skills to keep body and soul together. Statistically, Okafor (2011) cited a national survey jointly sponsored by NUC and the Education Trust Fund (ETF) in 2004 sought to determine the labour market needs; revealed that 44 percent of the 20 organizations rated Nigerian science graduates as average in competence, 56 percent rated them as average in innovation, 50 percent rated them average in rational judgment, 63 percent as average in leadership skills and 44 percent as average in creativity. On needed skills like literacy, oral communication, information technology, entrepreneurship, analytical, problem solving and decision making, 60 percent rated them as poor. By any standard, the above statistics reflect a poor assessment of Nigerian university graduates and further buttress the argument that Nigerian university graduates are unemployable (Okafor, 2011).

Resultantly, the lack of employment potential makes crime a more attractive option for some Nigerian university graduates. This is because in Nigeria it is common to find some graduates still roaming the streets, five years after graduating in search of jobs that are not thereby lending force to crimes such as armed robbery, car snatching, pipeline vandalization, oil bunkering, and

prostitution among the youths. This situation poses great challenges to the very existence of individuals in Nigeria thereby calling for the training of men and women who can function effectively in the society in which they live in. Available information by National Universities Commission (NUC) (2004) reiterated that the massive unemployment of Nigerian universities graduates in the country is traceable to the disequilibrium between labour market requirements and lack of essential employable skills by the graduates (Diejonah and Orimolade, 1991; Dabalen et al, 2000). This critical skill gaps inhibits the development of youths and the entire development of the nation, as more than half of the Nigerian populations are under the age of 30. This is dependent on the fact that Nigeria’s population is predominantly youth.

Attainment of full employment mostly in the  developing economies, it is agreed can reduce poverty and foster the growth of their economies. The idea is based on the linkage between income and poverty (Boateng, 2004). Unemployment, it is also noted, generates low income or no income and therefore results in low or poor living standard. Unemployment represents wasted resources (Mankiw, 1994). Unemployed labor has the potential to contribute to national income but are not doing so because they are jobless. Reduction of joblessness is a major concern of every responsible government all over the globe. However, given free market economies, zero unemployment cannot be guaranteed. Friction in the labor market will always be there.

The American economy in spite of her level of capitalism still believes that the invisible hand is not feasible enough to solve the unemployment problem in her economy. Basically, the “Employment Act of 1946” which represents the basic charter of the US Federal Economic Policy puts high employment to be the primary goal of government action in the following words: The Congress hereby declares that it is the continuing policy and the responsibility of the Federal Government to use all practical means . . . to promote maximum employment, production and purchasing power(Ackley, 1978).

Because of social and economic hazards that accompany unemployment, it is therefore no surprise that unemployment is a frequent topic of political debate. It is pertinent to note that mere political debate on unemployment cannot solve the problem (s) of unemployment except when the outcomes of the debate are put to implementation backed with resolute political will. Doubtful unemployment rates posted by Central Bank of Nigeria (2002) notwithstanding, it is observable that unemployment rate in Nigeria has reached unacceptable dimension. Indeed, the labor market in Nigeria is dangerously close to saturation. Indeed, Ekpo (2011) supports the fact that Nigeria’s unemployment situation is unacceptable. The essence of this study is to find out what the cause (s) of unemployment in Nigeria is and the possibility of finding solution (s) to it.

The un-conducive economic conditions in Nigeria, namely lack of electricity, poor road network, poor communication system, insecurity, kidnapping, etc., have caused the close down of many companies, throwing many people into labor market. In a certain year over 100 textile factories closed shops across the country and the trend continues. Principal among other reasons for this is lack of electricity. Factories depend on generators to power their factories and this is inefficient and increases unit cost of production and makes their products uncompetitive. Yet the country becomes a dumping ground for all manners of imports. Some other factors that account for unemployment in Nigeria include unconcerned attitude of Local Governments to create employment, non-diversification of the economy, lack of serious emphasis on skill acquisition, no serious attention is given to the informal sector to empower the sector and even outstanding corpers are still thrown to the labor market at the end of their service year.

Another unfortunate development is that our school system produces “quarter” baked graduates, majority of them are unemployable. Most employers prefer Nigerians with foreign certificates. Nigerian universities produce graduates whose skills are suspect, making it difficult for them to be recruited. The reasons for this include admission overload, poor funding of universities and the “sorting” syndrome. Arising from the issue of poor funding followed by incessant strikes in the university system. Between 1993 and 2003, there were 9 strikes (Okebukola, 2006) culminating in a period loss of 32.75 months or approximately an equivalent of 8.2 semesters. Furthermore, Nigerian government also placed an embargo on employment. This had a tall telling effect on unemployment since government is the largest employer of labor in Nigeria. Following this, total disengagement from the Federal Civil Service rose from 2724 in 1980 to 6294 in 1984 and trend has been on the increase. Graduate unemployment accounted for about 32% of the unemployed labor force between 1992 and 1997. Nigeria’s rate of unemployment posted here needs some comments. Between 2000 and 2001, the rate was 28% and in 2002 it suddenly dropped to 0.28, a reduction of 27.72% over the previous two years. One wonders what happened to the economy that so improved the employment situation. Surprisingly again, it reverted to 28% in 2003 and reduced to 2.9 in 2006. The unemployment rate doubled in 2007 from 2.9% in 2006 to 5.8% in 2007. In 2008, it reduced by 0.9% from 5.8% in 2007 to 4.9% and remained same between 2008 and 2009. It is no clear why the rate of unemployment were the same for years 2008 and 2009. Could it have happened that the same number of people that retired from jobs equaled the same people that qualified for the labor market and were so placed? However, unemployment rate in Nigeria has always generated controversy.

STATEMENT OF THE PROBLEMS

The magnitude of the effect of unemployment is difficult to determine because Edo State like Nigeria is plaque with insufficient statistical data and records. The problems of unemployment on economy are growing at an alarming rate.

Graduates come out from the college of education without hope of getting employed in the state. This has led to the study of the causes and effect and possible solution to unemployment problems in Benin City particularly and Nigeria in general.

OBJECTIVES OF THE STUDY

The objectives of the study are to;

1.           Examine the cause and nature of unemployment in the Nigeria economy.

2.           Examine the effects of unemployment on the Nigeria economy.

3.           Recommend possible solutions to the identified problems of unemployment among this group of graduates, which can aid in reducing the effects. 

RESEARCH QUESTIONS

i.             What are the major factors responsible for unemployment?

ii.            What are the problems encountered as a result of being unemployed?

iii.          Does unemployment lead to health problems?

iv.          What are the effects of unemployment to the family?

v.           What is the statistic of the unemployed on Ovia South West L.G.A.?

SIGNIFICANCE OF THE STUDY 

This research was will be useful to the federal government, local government, tertiary institutions, students and general public.

Since the causes and effect of unemployment has been identified and enumerated, it is hoped that the state government will undoubtedly tackle it and accelerate economic development in the state.

SCOPE OF THE STUDY

The scope of this project work embraces the whole nation but for the purpose of being specific, this study also focuses on the causes and effect of unemployment on the Nigeria economy.

DEFINITION OF TERMS

In the course of this study, some terms used in the process are defined as follows;

Unemployment is a condition or situation whereby persons capable and willing to work are unable to get paid employment.

Frictional unemployment: This is the process of moving from one job to another by workers.

Structural unemployment: These are physically, mentally and intellectually healthy people who cannot find them. It is this structural unemployment that the researcher of this thesis is concerned about.

Visible unemployment: This refers to the association of a large number of people who do not have work and who are dearly looking for job.

Unemployables: This is as of physical or mental handicap, which means that although they would like to work, there is no work, which they are able to work.

Normal or transitional unemployment: This occur when people change their jobs, that is, people merely desire to change or move to a different part of the country for better jobs prospect.

Cyclical unemployment: This terms refers to the alternate booms and slumps in the level of industrial activity.