UNEMPLOYMENT refers to a “situation when a person who is actively searching for employment is unable to find work” – Investopedia. It is a term “referring to individuals who are employable and actively seeking a job but are unable to find a job”. In other words, unemployment is when able-bodied persons, who are willing to work, can’t find jobs, thereby do not have a source of income nor a means to put food on their tables. It is a state of joblessness and when an economy is performing below capacity.
The National Bureau of Statistics (NBS) put unemployment rate in Nigeria at 33.3%
More than half of Nigeria’s labor force are unemployed or underemployed.
A third of the 69.7 million-strong labor force in Africa’s most-populous nation, Nigeria either did nothing or worked for less than 20 hours a week, making them unemployed, according to the Nigerian definition. Another 15.9 million worked less than 40 hours a week, making them underemployed – Source: Bloomberg.
Less than 50% of Nigeria’s labor force are fully employed – Source: National Bureau of Statistics
“Nigeria’s jobless rate has more than quadrupled over the last five years as the economy went through two recessions, casting a shadow over the efforts to implement policies to drive growth and create jobs by President Muhammadu Buhari’s administration”.
The number of people searching for jobs will keep increasing as the population growth continues to outpace output expansion. Nigeria is expected to be the world’s third most-populous country by 2050, with over 300 million people, according to the United Nations.
Jobs Crisis:
With a declining output, firms are constrained to employ fewer workers as they produce fewer goods. This is sometimes not the fault of the unemployed but the resultant effect of an under-performing economy – a situation leveled against the masses by the economy.
Although there could be some exceptions where some persons or individuals have chosen not to work because they are from rich backgrounds. It must be noted that our society does not promise its teeming publics, including youths, jobs on graduation from tertiary institutions.
Types of Unemployment:
Unemployment can be grouped into broad categories: voluntary and involuntary unemployment.
Unemployment is referred to as voluntary when the person leaves his/ her job willingly in search of another job and it is involuntary when a person is relieved of his or her job and constrained to go in search of another job.
Unemployment is a key economic indicator which signifies the ability or inability of workers to easily gain employment to contribute to the productive output of the economy.
The word “unemployment” is sometimes misunderstood. It does not include people who stopped job search due to different reasons e.g. leaving work to pursue higher education, disability, retirement or the likes but able-bodied men and women who are willing and waiting to return to their jobs after a break occasioned by discharge etc. People who want to work but are actively not searching for job can’t be classified as unemployed.
Here is formula for calculating unemployment rate = Unemployed people x 100
Total Employed
The Unemployment Rate is calculated by dividing the number of unemployed people by the total number of the labor force, and then multiplying it by 100%.
Some causes of Unemployment:
The following are some causes of unemployment:
- Corruption: Corruption may find it difficult to leave Nigeria because it has eaten deep into the fabrics of the people and it has become entrenched in the society. We may live longer with this virus, periscoping the current situation, from the local to federal government level, the situation remains the same – corruption.
Government officials who are expected to supervise/ implement and oversee projects thereby create jobs, connive to embezzle the funds meant for capital projects; they resort to providing reports and pictures of non-existent and “unexecuted’ projects. Infact, they engage in varied nefarious activities to deny the masses the dividends of good governance. They also go to the extent of fixing funds meant for civil servants’ salaries and arrears into bank accounts and collecting the accruable interests upfront thereby again, making civil service jobs uninteresting and demotivating.
This has made it difficult to maintain the current workforce talk less of employing new hands. The effect also, is that current employees are over-worked and no fresh ideas are injected into the system and this is one reason why the Nigerian civil service has remained unproductive.
2. Unemployability and Lack of Useful Skills: This is another cause of unemployment. It is a fact that most of our Nigerian graduates lack useful skills at graduation – they do not possess skills that could make them employable. Nigerian Universities are partly to blame as they have contributed adversely to this by failing to flow with the trend. They have continued to use syllabuses designed in the 1970s when the universities were founded and have failed to upgrade and the effect of this has been monumentally devastating!
Again, the current educational system as inherited from our colonial masters, Britain and it does not support our plans for self-reliance and growth. The system has only taught us how to read, write and solve Arithmetic; it has built us to be job seekers and not creators – always dependent and not independent.
The graduates are not impacted with far-reaching skills and life-changing modern thoughts and ideologies that could transform the Nigerian societies and make them compete favorably with their peers from other climes. They have failed to empower graduates with salable skills that could stand them out after school and their minds are fixated to the extent of seeking employment for the same general jobs. In this wise, only government parastatals and agencies can employ and absorb them as they may not require any particular skills unlike the private sector which looks at available skills and contributions that would be made by the job candidates.
This poses a great challenge for Nigeria. I have experienced this as Human Resource Consultant whilst trying to recruit graduate trainees for a client in the Engineering sector. It was difficult to fill the vacancies as I could hardly get suitably qualified candidates for the position and the client was not willing to hire and train as this was expensive in terms of finance and time.
In otherwise, some courses in the Nigerian Universities don’t empower graduates with skills which could impact their lives after school and such should be reviewed.
3. Mismanagement of the Economy: Utter mismanagement of the economy through the misuse of the country’s resources has crippled the national economy and this has had negative effects on employment. It is a fact that the country’s wealth is the people’s wealth, because when the country’s economy booms, the citizens feel the impacts. When the industries are doing well, demand for labour goes up and vis versa. With Nigeria’s dwindling economy, unemployment is growing at a geometrical pace.
4. Poor Investment Climate: Poor investment climate is another factor that has impeded employment. Government everywhere in the world are expected to create an enabling environment for sustainable growth. An environment where the private sector is highly inhibited by poor infrastructure, anti-investment laws, multiple taxation etc job creation would remain a mirage. Nigeria as a case study, has discouraged investment through multiple taxation system etc. Running a business in Nigeria is expensive!
5. Unfavourable Entrepreneurship Environment: The current Nigerian environment does not favour entrepreneurship. Individuals who intend to engage in entrepreneurship are not encouraged. I have seen intending entrepreneurs with good business plans yet the banks would not support same with funds. E.g. getting funds from the banks by SMEs in the form of finance is near impossible and when possible at all, interest rate is in double digits and this could be suffocating and suicidal!
6. Poor Development Plans: Nigeria’s development plan is faulty. We are very busy establishing Universities, Polytechnics etc without commensurate plans on where to employ or absorb them when they graduate.
7. Inadequate/ Poor Infrastructure: Nigeria is a victim of this, where there is near absence of infrastructure or put mildly underdevelopment and it has affected business growth. Electricity, motorable roads etc as the few manufacturing companies don’t produce at optimum capacity and at a very high cost as they struggle to remain afloat. This in turn has limited the number of employees and has had negative effects on employment.
8. Population Explosion: Population explosion is one other factor that has adversely affected employment as the government of the day has got no plans on how to expand the infrastructure to accommodate the ever expanding population growth.
The current Nigeria’s population is put at 213,425,147 (as of Tuesday, December 7, 2021, based on Worldometer elaboration of the latest United Nations data) does not match the existing infrastructure as neither industries, good roads are springing up and universities keep churning out graduates daily.
Infact, Nigeria’s population increase does not have proportionate increase in employment opportunities created and this leaves a great part of the population unemployed.
9. Uneven Distribution of Social Amenities: the uneven distribution of social amenities has made unemployment worse, leading to rural-urban migration. Graduates and youths who would have naturally preferred to live in the rural areas, now migrate to cities and towns where there are social amenities, thereby swelling the population of the area and the unemployed.
10. Lack of Continuity in Government Policy: Government is supposed to be seen as a continuum – they come and go everywhere in the world and policies are expected to remain. But in Nigeria different governments come with different policies on employment only to be discontinued by incumbents. E.g at one point, Nigeria had National Directorate of Employment (NDE) which had great and lofty objectives. Years later, all it had done were jettisoned and the infrastructure and investments went down the drain. This is how it has continued to be!
11. Economic Recession and Pandemic: the world over, countries have been hit by economic recession at different times and the recent COVID19 pandemic worsened the situation as many organisations folded up and many lost their jobs.
12. Nepotism, Religious & Ethnic Sentiments: Rather than have competence as its yardstick, governments in Nigeria have given employment to their relations, cronies, their ethnic and religious stocks who might not be qualified for such jobs. This is a major reason why incompetence pervades all sectors of the Nigerian public sector and productivity is at its low.
13. Politicization of Appointments: This is the common practice in Nigeria where the party in power distributes job positions amongst her own ruling party not based on competence, leaving the best and most qualified hands unemployed.
14. Negligence of Certain Sectors: Certain sectors of the economy are highly ignored and neglected and this has precipitated the high unemployment rate e.g the agricultural sector. The Nigerian government has not truly encouraged participation in the agricultural sector as a sector that can generate employment. The sector has not been made attractive and it remains untapped.
15. Retirement Policies: The retirement policy in Nigeria’s public sector stipulates that the statutory retirement age is either 60 years or 35 years of service, whichever comes first and in the private sector, retirement age varies between 55 and 60 years and the factor of 35 years of service is not applicable.
The Pension Reform Act (2004) abolished the right to a gratuity and retirees no longer receive single lump sum payment as gratuity in addition to pension, a periodic payment, normally on monthly basis, for the remainder of the pensioner’s life. This is seen as unfavourable to employees and discriminatory against poorer paid employees in the civil service.
In this wise, employees in both the public and private sectors device all means possible to remain in service as long as they can as they are afraid of life after retirement. This act has kept fresh graduates away from the work environment whilst we have to cope with old and incompetent employees.
Recommendations:
The Nigerian government can address the challenges of unemployment by:
- truly and consciously fighting the hydra called corruption wherever it is, not by lip service;
- reviewing the current educational syllabuses of our tertiary institutions to reflect and address our current challenges;
- engage technocrats who are professionals in economic matters,
- provide enabling and favourable business environment for businesses to grow and thrive;
- create feasible road-map for economic development and growth;
- population explosion should be effectively managed and optimally utilized to our advantage
- social amenities should be evenly distributed to mitigate the incidence of rural-urban migration,
- continuity in government should be encouraged;
- merit and competence should be a yardstick for employment
- nepotism, religious and ethnic sentiments and politicization of appointments should be discouraged;
- agriculture should be well focused upon where many jobs could be created and
- current retirement policies look into with a view to improving it.
- digital options too can be exploited
With these recommendations, if strictly adhered to, unemployment will be reduced to a manageable level.
This is written by Agolo Uzorka, Lead Consultant, Eugene + George Consulting Limited
