THE EFFECT OF UNEMPLOYMENT ON NIGERIA ECONOMIC GROWTH 2008-2017

Abstract

The rate of unemployment has risen in the last decade in most of the sub-Saharan African countries. The situation in Nigeria is rapid population growth with low level of employment rate. The theoretical proposition of the Okun’s law is that a negative relationship exists between unemployment rate and economic growth. This study intends to investigate the effect of unemployment on Nigeria’s economic growth; the problem of unemployment in Nigeria is a national issue that should be handled with care. The rate of unemployment in Nigeria since 2008 has been growing in a geometric progression. Its source could be traced to the diversification of Nigeria economy into oil sector that only provides less than 10% employment opportunity to its labor force.

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

2.0   LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

CHAPTER ONE

INTRODUCTION

• Background of the study

As history would have it, Nigeria as a nation has experienced several forms of economic, political and social unrest. In recent times, unemployment which is caused by individuals and government forces had joined the list of the social evils we experience Nigeria today. The issue of unemployment has become a world-wide phenomenon demanding for increased attention, though the impact is more devastating in developing nation (Wamukonya, 2003). According to the National Bureau of Statistics (2012), Nigeria rate of unemployment stand at 19.7%. In fact, Feridum and Akindele (2006); George and Oseni (2012); Ezie (2012) and Ede, Ndubisi, and Nwankwo (2013), identifies unemployment as one of the major challenges confronting the Nigeria-economic development. The menace of unemployment in Nigeria both now and in the recent past has been an issue of great concern to the economists, policy makers, economic managers, individuals, government and many others (Bello, 2003). This earliest thinking on economic issues did not fail to give a central point of reflection on the undesirability of unemployment (Njoku and Ihugba, 2011). Unemployment has been defined as a situation where people who are willing and capable of working are unable to find suitable paid employment (Fajana, 2000). The same writer went further to say that, the higher the rate of unemployment in an economy, the higher the level of poverty and associated welfare challenges. However, the number of people in any country is divided into two groups; the economically active and the economically inactive. According to Njoku and Ihugba (2011), the economically active group (Labour force) are the group that are willing and able to work, including those actively engaged in the production of goods and services (employed) and those who are not employed. On the other hand, the economically inactive group refers to neither people who are not looking for jobs nor those who are not capable enough as a result of health related issues. To further buttress this, International Labour Organisation (ILO) defined the unemployed as numbers of the economically active population who are without work but available and seeking for work, including people who have lost their job and those who have voluntarily left work (World Bank, 2008). The menace of unemployment is geometrically increasing and the effects falls heavily on the economic development of this nation (Nigeria). To address this situation, this study is poised to evaluate the causes, effects and possibly, proffer the way forward in tackling the problems of unemployment in Nigeria. Nigeria has maintained remarkable growth over the last decade, recording an average growth rate of 6.8 per cent from a large economic base and the potential for further growth is reasonably high. Real gross domestic product (GDP) growth was estimated at 6.23 per cent in 2014 compared to 5.49 per cent in 2013. The rebasing of its GDP in April 2014 by the National Bureau of Statistics to better reflect the size and structure of the economy, saw it surge past South Africa to become Africa’s largest economy with a rebased GDP estimate of USD454 billion in 2012 and USD510 billion in 2013. The rebased GDP, using updated prices and improved methodology, also reveals a more diversified economy than previously thought. The Nigerian economy now appears to be more diversified, with rising contributions of previously undocumented services (including the entertainment industry) to GDP. In addition, as a result of banking sector reforms, especially the bank consolidation exercise of 2004, an increasing number of private Nigerian banks are present in many African countries. However, given the country’s high population, per capita GDP was only USD2,980 in 2013, ranking 131st in the world compared to South Africa which had a per capita GDP of USD6,886 at 88th, according to the World Development Indicators (World Bank 2015). The rebasing also indicated that the Nigerian economy is transforming from an agrarian economy to a tertiary service economy, without going through the intermediate stage of industrialization. This atypical transition, the so-called ‘tertiarization’ that has so far failed to deliver quality jobs poses challenges for the sustainability and inclusiveness of economic growth in Nigeria.

Nor has recent growth translated into significant social and human development contrary to the postulates in the development literature that associate faster economic growth with poverty reduction. The 2010 Nigeria Poverty Profile Report by the Nigeria National Bureau of Statistics (NBS 2010a) estimated the poverty incidence at 69 per cent in 2010, up from 54.4 per cent in 2004, using the Harmonized National Living Standard Survey (HNLSS) of 2009/10. The country’s performance is at odds with the general international trend of poverty reduction, in particular in other countries experiencing rapid economic growth (Ajakaiye et al. 2014). Nigeria’s socioeconomic indicators are also poor. The level of unemployment increased from 23.9 per cent in 2011 to 25 per cent in 2014, while the country’s human development index (HDI) value increased by only 8.1 per cent in the last decade from 0.466 in 2005 to 0.504 in 2013, positioning the country at 152 out of 187 countries. Albeit marginal, Nigeria has made some progress in other development indicators. According to the UNDP (2014) HDI, which takes into account life expectancy and literacy as well as per capita GDP, life expectancy at birth increased by 6.9 years between 1980 and 2013, mean years of schooling increased by 0.2 years, and expected years of schooling increased by 2.3 years. Gross national income per capita also increased by about 25.7 per cent between 1980 and 2013. The country remains highly dependent on the oil sector as this sector accounts for about 70 per cent of government revenues and 85 per cent of exports. While oil revenues have helped support the country during times of boom, the oil sector also presents a major challenge during periods of burst. For example, crude oil prices lost over 50 per cent in the last quarter of 2014 and traded close to $50pb at the end of the year. Consequently, the IMF, in its Article IV Consultation, had downgraded Nigeria’s growth forecast from 5 per cent for 2015 to 4.8 per cent. The country’s vulnerabilities rose in the build up to general elections in 2015 and fiscal buffers reduced substantially. As a result of rising uncertainties prior to the elections, the Nigerian economy suffered some setbacks against the backdrop of weakening macroeconomic variables.

• STATEMENT OF THE PROBLEM

The level of unemployment in Nigeria has grown large that it cannot be addressed by mere campaign or words of mouth. It required the combined efforts of both individuals and the government of the country in particular and the world at large to formulate a lasting solution to it. Unemployment in Nigeria has affected the youth and the economic development of the country from a broad spectrum of socio-economic perspective. It is obvious that unemployment especially that of graduates impedes Nigeria’s progress in several ways. Apart from the economic waste it brought to the nation, it also constitutes political unrest for the country (Ipaye, 2008). According to Ezie (2012), the unemployment situation in Nigeria is disturbing and even more disheartening that the country’s economic condition cannot absorb an optimal proportion of its labour force. This situation has contributed to the increase in crimes and other social vices experienced in our society in recent time, because an idle mind is always the devils workshop. Another problem facing the employment situation in Nigeria centered on power generation. The poor power generation in Nigeria has contributed to the level of unemployed people. Despite all the efforts made by both the past and present administration to salvage the problem of epileptic power supply, the country has experienced little or no change. Since the problem of power cannot be tackled, the industries, institutions and agencies which are expected to provide the much needed employment flaw out of the country for some better opportunities, thus leaving our work force unemployed. This study is determined to address some of these challenges.

• OBJECTIVE OF THE STUDY

The main objective of the study is to ascertain the effect of unemployment on Nigeria’s economic growth; but to aid the successful completion of the study; the researcher intends to achieve the following specific objectives;

1. To ascertain the effect of unemployment on Nigeria’s economic growth
2. To examine the relationship between unemployment and economic growth

• To ascertain the role of unemployment in hindering economic growth in Nigeria

1. To examine the impact of unemployment on the GDP of Nigeria
   • RESEARCH HYPOTHESES

The following research hypotheses were formulated by the researcher to aid the completion of the study;

H₀: unemployment does not have any effect on Nigeria’s economic growth between 2008-2017

H₁: unemployment does have an effect on Nigeria’s economic growth between 2008-2017

H₀: there is no significant relationship between unemployment and economic growth

H₂: there is a significant relationship between unemployment and economic growth

• RESEARCH QUESTIONS

The following research questions were formulated by the researcher;

1. Is there any relationship between unemployment and economic growth?
2. Does unemployment have any impact on the GDP of Nigeria?

• Is there any effect of unemployment on Nigeria’s economic growth?
  • SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great importance to the management of ministry of labor and employment as the study seek to explore the effect of unemployment on Nigeria economic growth as the literature reviewed and data analyzed in the study will help in policy formulation and implementation as this will help in curbing the menace of unemployment in Nigeria.

The study will also be of importance to researchers who intend to embark on a study in a similar topic as the study will serve as a pathfinder to further research, finally, the study will be of importance to students, teachers, academia’s and the general public as the study will contribute to the pool of existing literature on the subject matter.

• SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the effect of unemployment in Nigeria economic growth from 2008-2017. But in the cause of the study there are several factors that limited the scope of the study;

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study.
2. b) TIME: The time frame allocated to the study does not enhance wider     coverage as the researcher has to combine other academic activities        and examinations with the study.
3. c) FINANCE: The finance available for the research work does not allow for wider coverage as resources are very limited as the        researcher has other academic bills to cover.

1.7 OPERATIONAL DEFINITION OF TERMS

Unemployment

Unemployment or joblessness is the situation of actively looking for employment but not being currently employed. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force

Economic growth

Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP

GDP

Gross Domestic Product is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows. Chapter one is concern with the introduction, which consist of the (background of the study), statement of the problem, objectives of the study, research questions, research hypotheses, significance of the study, scope of the study etc. Chapter two being the review of the related literature presents the theoretical framework, conceptual framework and other areas concerning the subject matter.     Chapter three is a research methodology covers deals on the research design and methods adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

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