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DETERMINANTS OF UNEMPLOYMENT IN NIGERIA

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Abstract

The research work investigated the Determinants of Unemployment in Nigeria. The main objective of the study was to examine the determinants of unemployment in Nigeria. The data collected was analyzed using OLS. The empirical findings provide evidence that there exist a negative and significant relationship between Unemployment and GDP in Nigeria. The result also revealed that high population increases unemployment in Nigeria and also a positive and significant relationship between inflation and unemployment exist in Nigeria. Thus the study recommends that government policies aimed at achieving and stimulating economic growth should be vigorously pursued as high economic growth reduces unemployment in Nigeria.

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Unemployment is a macroeconomic problem and also a social problem. It is one of the greatest challenges facing the Nigerian economy. Unemployment arises as a result of insufficient and non availability of jobs to correspond with the growing population, even those who are employed sometimes live with the fear of being unemployed due to job insecurity and retrenchment of workers. Unemployment could be used in relation to any of the factors of production which is idle and not being utilized properly for production. However, with reference to labour, there is unemployment if it is not possible to find jobs for all those who are eligible and able to work.

Balami (2006) unemployment is conceptualized as a situation where a worker or workers are involuntarily out of work.. Unemployment arises when the demand for labour of the factors of production fall short of supply. Unemployment could be voluntary or involuntary. Voluntary in the sense that one chooses not to work because he or she has means of support other than employment. On the other hand, involuntary unemployment exists when persons who are eligible and willing to work at the prevailing rate of pay are unable to find work.

Unemployment rate in Nigeria averaged 15.97 percent from 2006 until 23.90 percent in the fourth quarter of 2011. Unemployment increased to 24.20 percent in the first quarter of 2015 (National Bureau of Statistics 2006-2015).

In Nigeria, the causes of unemployment are traceable to many factors among which are: poor quality education, lack of skills, negligence of agriculture and other natural resources, corruption, epileptic electric power supply and many others, have brought socio-economic effect such as, fall in national output, waste of human resources, poverty, all sorts of immoral acts and criminal behavior, for example prostitution, armed robbery etc, increase in rural urban migration. Every year, many graduates come out from the universities and colleges of education with little or nothing to contribute to the society.

Based on the socio economic effect and other ills associated with unemployment, there is the need to proffer possible solutions to the problem of unemployment in order to salvage our nation Nigeria.

 

1.2     Statement of Problem

In the 1960s and 1970s, the Nigerian economy provided jobs for the teeming population. There was relative industrial peace in most industries and some groups. Following the oil boom of the 1970s, there was rapid migration especially the youth to the urban areas in search of wage employment. But following the down turn in the economy in the 1980s, the problem of unemployment started to manifest. The introduction of IMF-World Bank Structural Adjustment Programme (SAP) led to depreciation of the naira exchange rate and the inability of most industries to import the raw material required to support their output level. There was sharp rise in the general price levels and also a significant decline in real wages which in turn resulted in weakening purchasing power of wage earners and declining aggregated demand. With the simultaneous rapid expansion in the educational sector, new entrants into the labour market increased beyond absorptive capacity of the economy. (Central Bank of Nigeria 2003).

The causes of unemployment in Nigeria can be traced to many factors among which are: poor quality education, lack of skills, negligence of agriculture and other natural resources, corruption, epileptic power supply and many others. These have brought socio-economic effect such as, fall in national output, waste of human resources, poverty, all sorts of immoral acts and criminal behavior, for example, prostitution, armed robbery etc and increase in rural urban migration.

It is based on the increasing problems posed by unemployment on individuals and the nation at large that government has embarked on various policies to control and reduce unemployment. Some of these policies include: National Directorate of Employment (NDE) an agency of government established in 1986 to create jobs for the teeming army of the unemployed by designing and implementing appropriate programmes to combat mass unemployment. Akintoye (2008). National Economic Employment and Development Strategy (NEEDS) was introduced in march 2004 in order to confront the various macroeconomic imbalances, social changes and structural problems in Nigeria. (Adebayo and Ogunrinola (2006). Others include: The Small and Medium Scale Enterprise Development Agency of Nigeria (SMEDAN). The National Poverty Eradication Programme (NAPEP). The National Economic Emancipation and Development Strategy (NNEDS). Inspite of these policies, not much improvement has been recorded in the unemployment rate.

In the light of the foregoing, this work studies the determinants of unemployment in Nigeria.

 

1.3     Research Questions

1. what are the determinants of unemployment in Nigeria­?
2. what is the relationship between unemployment and GDP, population and inflation.

 

1.4     Objectives of the Study

The broad objective of the study is to examine the determinants of unemployment in Nigeria.

Specifically the poised:

To determine the relationship between unemployment and GDP, population and inflation.

 

1.5     Research Hypotheses

Ho: there is no significant relationship between unemployment and GDP, population and inflation.

 

1.6     Significance of the Study

The significance of the study is

To provide the government with useful information needed to fight unemployment and help create jobs in Nigeria. It is desirable to create a new forum in which the government plays a dominant role and actively promotes private enterprises with a centrally directed mobilization of resources towards the definite objective of solving the problem of unemployment.

To policy makers, this study will equip them with knowledge and skills needed to tackle the pressing issue of unemployment in Nigeria. The policy maker with the knowledge of the state of unemployment in the system stands the best chance of controlling it through appropriate initiative like poverty eradication programmes and creation of employment opportunities that touches the lives of the population.

This study will act as a guide to other researchers who intend to carry out a research work on this topic.

 

1.7     Organization of the Study

The paper is organized in five chapters. Chapter one deals with the introduction of the study. Chapter two is concerned with the review of related literature on the study. Chapter three deals with the methodology of the study. Chapter four focuses on presentation of result and discussion of findings. Chapter five deals with conclusion and policy recommendations.