Abstract
This research work tries to investigate the impact of labour market crisis in
developing economics using Nigeria as a case study .Using Nigeria as a case study.
Using ordinary least square the study shows that there is a negative relationship
between labour market crisis and economic growth; Also inflation was found to
reduce production output and economic growth. Based on these findings this
study recommends that government should apply reconciliation technique with
labour unions so that production output would not be affected also policies such
as unemployment benefit and reduction in wage inequality should be applied.
1.1 BACKGROUND OF THE STUDY
The Nigeria labour market in recent years has experienced problems
such as strikes, unemployment and reduction in productivity.
Labour conflict is a phenomenon that most often takes the form of
strikes [where they are permitted] or, as in the public sector in the united
states the arbitration procedures. In the United states arbitration is
frequently used in the public sector when strikes are forbidden. The
arbitrators are generally experts picked by the employers and unions
following a procedure setout by the government.
Unemployment is one of the developmental problems that face
developed and mostly developing economics of which Nigeria constitute
2/3 [two third] of the population of developing countries. During the last
30 years, the industrialized countries have evolved in different directions
with respect to unemployment.
The minimum wage legislation exists in 22 [OECD] organization for
economic cooperation and development. Such legislation has generally
been framed with the intent to compress wage inequality. But the
2
effectiveness of the minimum wage as an income redistribution tool is
often criticized, since by raising the cost of labour it can have negative
effects on out put and employment .Economic analysis suggests that the
effects of the minimum wage on employment actually depend on the initial
level of minimum wage.
The minimum wage can be set on an hourly, daily or monthly basis
.Everywhere thepublic authorities govern the mode of its calculation but it
can also be bargained over between employers and employees.
The effect of the minimum wage depend on the characteristics of the
labour market to which it applies . However , other theoretical framework s
like the monopsony model or the matching model with endogenous labour
market participation or job search effort highlight situations which arises in
the minimum wage and leads to an increase in hiring.
An active and functioning labour market is important for economic
stability .The Nigeria labour market has been experiencing a lot of crisis
over the years .Loss of manpower which policy makers fear will adversely
affect the national output .
3
The impact of labour market crisis in developing economies using
Nigeria as a case study generates welfare loss in terms of lower output
thereby leading to lower GDP, lower income.
1.2 STATEMENT OF THE PROBLEM.
The voluminous literature on the source s of economic growth
identified awide range of natural and government imposed stimulants and
impediments to growth.
In particular, a huge level of educational attainment, an open –
trading regime , a low level of government consumption and political
stability are generally seen as having a significant on internal growth is its
interest in the effect of institutions on economic growth and the vital role
played by the labour market institution s in economic growth . The high
rate of labour unionization has been a notable characteristic of a number of
economic s with different growth performance s, though probable link
between labour unionization and growth has been frequently noted.
This paper attempts to look at the effects of labour market crisis on
developing economics using Nigeria as a case study .Strike volume has
been studied from a number of viewpoints. One view point attribute strike
4
propensity to such economic factors as unemployment, inflation and real
wage change [faber 1978]. The other view point is the organizational
perspective which states that strikes are related to such structural factor as
the extent of unionization and the degree of centralization and
institutionalization in collective bargaining [BRITTE AND GALLE 1972;
SYNDER 1975 ].
Most of the developing economics are faced with numerous labour
market crisis and the Nigeria economy is not an exception especially after
the [SAP] Structural Adjustment Program. The Nigeria labour market
problem could be seen as one of the chronic labour crisis with high wage
inequality and unemployment. Since independence there has been series of
distortions in the labour market. The market is highly distorted and
characterized by insignificant imbalances and industrial actions embarked
upon by the Nigeria labour congress [NLC] pressing for improved working
conditions for workers .These actions are in the form of strikes .
The academic and non- academic union of the Nigerian tertiary
institution are not left out as they embark on several actions to either
pressfor improved working condition, redressing the wage inequality
problem and in some cases to register their disagreements with
5
government development program. All these lead to loss of man-hour
which policymakers fear will adversely affect the national output.
During the military era, it was not news for workers to embark on
strike as it was a potent weapon at the disposal of the workers to drive
home their demands.
What then have been the effect of these myriad of the labour crisis
on the productivity and the growth of the Nigeria economy? The above
questions have not adequately received attention empirically.
Hence, this research work tends to investigate the effect of these
labour market crisis on Nigeria economy growth and productivity using
Man-hour lost will be proxy to the labour market crisis.
1.3 RESEARCH QUESTIONS
1. What is the effect of labour market crisis on Nigeria economic growth.
1.4 OBJECTIVE OF THE STUDY.
The broad objective of these research is to investigate the effect of
labour market crisis on developing economic s using Nigeria as a case
6
study .Specifically this research work is set out to achieve the following
objectives.
1. To investigate the effect of labour market crisis on economic
growth of Nigeria.
1.5RESEARCH HYPOTHESIS
The following hypothesis was formulated in line with objective of the study.
1. There is no relationship between labour market crisis and economic
growth.
1.6 SCOPE OF THE STUDY
This research is designed to investigate labour market crisis on
developing economics using Nigeria as a case study.
This research work covers the period 1980-2010 at which Nigeria
economy witnessed liberalization and globalization. This time period
witnessed labour unions resistance to new global world thereby leading to
series of industrial actions.
7
1.7 SIGNIFICANCE OF THE STUDY
The crisis that has for a long time beclouded the Nigeria labour
market has been a source of worry to policy makers. This worry comes
from the fact that industrial actions does not affect only the sector
concerned but also affect the general economy because of its multiplier
effect .
The study , which is aimed at assessing to what extent the labour
market crisis affect s the economy , will be of tremendous importance not
only to the Nigerian economy , but also to the global economy since
globalization and liberalization have brought global systems together. The
findings of this research will also help to improve the current economic
reforms that have to do with labour market institutions.
Finally, this research will serve as material for researchers carrying
out studies on related area.