CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Unemployment is regarded as a serious problem faced by most developed and developing countries and resulting to socio-economic problems. Unemployment arises as a result of insufficient and non-availability of jobs to correspond with the growing population, even those who are employed sometimes lives with the fear of being unemployed due to job insecurity and retrenchment of workers. There is employment of factors of production if they are engaged in production. The term 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. Labour is said to be underemployed if it is working below capacity or not fully utilized in production (Anyawuocha, 2013). Unemployment can either 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. Example is an idle rich man. 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 (Anyanwa 2015). According to the central bank of Nigeria (2004), unemployment rose to 30% during 2004 statistics on unemployment rate. Unemployment has been seen as a world-wide economic problem and has been categorized as one of the serious impediments to social progress .Apart from representing a huge waste of a country’s manpower resources, it generates welfare loss in terms of lower output thereby leading to lower income and well being of the people (Akinboyo, 2017, and Raheem 2013). Unemployment is a very serious issue in Africa (Vandemortele, 2011, and Rama 2018), and particularly in Nigeria (Oladeyi, 2014 and Umo, 2016). The need to avert the negative effect of unemployment has made the tackling of unemployment problems to feature very prominently in the development objectives of many developing countries. In the study of unemployment in Africa Okonkwo (2005) identified three (3) cause of unemployment, the educational system, the choice of technology which can either be labour intensive or capital intensive and inadequate attention to agriculture. The use of machines to replace work done by labour and computerization has contributed to these social problems in the sense that what for example forty (40) men can do manually a machine will only need like five (5) men. Therefore, the remaining thirty five (35) are unemployed. More so, lack of enough education and skill to have access to credit and capital. One particular feature of unemployment in Nigeria is that it was more endemic in the early 1980‟s than any other period. According to Udabah (2019:62), the major factor contributing to low standard of living in underdeveloped countries in their relative inadequate or inefficient utilization of labour in comparism with advanced nations. Unemployment rate is measured by the proportion of the labour force that is unemployed divided by the total number of the labour force. The total labour force was projected at 61,249,485 in 2007 indicating an increase of 3.9%. Total employment in 2007 stood at 52,326,923 compared with 50,886,836 in 2006. This represents an annual increase of 2.8%. The labour force consists of the number of people ageing 18 and over who are employed (that is, those who currently have jobs) and unemployed (those who do not have jobs but who are actively looking for work).Individuals who do not fall into either of these group such as retired people and discouraged workers are not included in the calculation of the labour force. The international labour force organization (ILO) defines unemployment as the proportion of the labour force which was available for but did not work for at least one hour in the week preceding the survey period. National Bureau of statistics (N.B.S). Nigeria defines unemployment as the proportion of the labour force that is available for work but did not work for at least thirty nine (39) hours in the week preceding survey period.

Unemployment according to Lipsey (2013:456) brings about economic waste and cause human suffering. According to Fadayomi, 2012, Osinubi, 2006, unemployment is as a result of the inability to develop and utilize the nations manpower resources effectively especially in the rural sector. The socio-economic effect of unemployment includes: fall in national output, increase in rural-urban migration, waste of human resources, high rate of dependency ratio, poverty, depression, frustration, all sorts of immoral acts and criminal behaviour e.g prostitution, armed robbery e.t.c. The social effect of unemployment brings to light the need to proffer possible solution to salvage our nation Nigeria

1.2 STATEMENT OF THE PROBLEM

Nigeria has now taken over as the nation with the highest number of extremely poor people (report by Brookings Institution, 2018). According to Brooking report, Nigerians in extreme poverty increases by six people per minute. The report revealed that at end of May 2018, Nigeria had about 87 million people living in extreme poverty while India that used to be the nation with highest number of people living with poverty number has 73 million people living in extreme poverty (Vanguard News June 25th, 2018).

Working with the data from the national bureau of statistics, it indicates that the national unemployment rate in the first quarter of 2007 was 14.6%, compared with 13.7% in 2006. The urban and rural rates were 14.4% and 15.0% respectively compared with 10.2% and 14.8% in 2006. Further analysis showed that the distribution of unemployment ranged from 14.1%vfor the age group of 25-44 to 23.5% for the age group of 65-70. Desegregation according to geopolitical zones showed a very uneven distribution with the south-south zone having the highest unemployment rate of 29.5% and southwest at the rear with 8.5%. Between these extremes were the north-east with 18.5%, south-east 18.1%, north central 15.8% and north-west 14.2%.

Nigeria depends so much on revenue from oil and gas and pays little attention to other sector that any crisis in the oil sector does cause major damage to the nation’s economy. According to the Minister for state Petroleum Resources, Ibe Kachikwu (2017) 350,000 Nigerians lost their jobs due to oil crisis in 2016. Creating employment opportunities is crucial for economic development and poverty alleviation. Most developing countries struggle with high unemployment or underemployment. In the light of these problems, this work set to access the impact of unemployment on Nigeria economic.

It is based on the increasing problem posed by unemployment on individuals and the nation at large that government has been embarking on various policies to control and reduce unemployment but yet has not yielded any positive result, rather it seems to be escalating. Drastic measures must be taken by government to curtail this problem of unemployment. The statement of problem is based on the economic, social and political effects of unemployment.

1.3 OBJECTIVE OF THE STUDY

The major objective of this study is to examine effect of unemployment on Nigerian Economy. Other general objectives of the study are:

1.  To examine the causes of unemployment in Nigeria and its effects on the economy of the country.

2.  To examine the effect of unemployment on the nation’s economy. 

3.  To determine the relationship between unemployment and economic growth in Nigeria

4.  To determine the role of unemployment in the production of the GDP.

5.  To suggest way forward in reducing the problem of unemployment in Nigeria.

1.4 RESEARCH QUESTIONS

1.  What are the causes of unemployment in Nigeria and its effects on the economy of the country?

2.  What are the effects of unemployment on the nation’s economy?   

3.  What is the relationship between unemployment and economic growth in Nigeria?

4.  What is the role of unemployment in the production of the GDP?

5.  What is the way forward in reducing the problem of unemployment in Nigeria?

1.5 RESEARCH HYPOTHESIS

Hypothesis 1

H0: There is no relationship between unemployment and economic growth in Nigeria from 2001-2020

H1: There is a significant relationship between unemployment and economic growth in Nigeria from 2001-2020

Hypothesis 2

H0: There is no relationship between inflation rate and Nigerian economic growth from 2001-2020

H1: There is a significant relationship between inflation rate and Nigerian economic growth from 2001-2020

1.6 SIGNIFICANCE OF THE STUDY

The significance of the study is to establish the impact of GDP on unemployment in Nigeria. In view of the fact that price stability and full employment are two conflicting macro-economic goals, the result of this study becomes an important tool in the hands of the policy makers in Nigeria in order to achieve the two goals simultaneously. As living standard of a country increases, one of the important macro-economic objectives is the attainment of full employment. So, unemployment is viewed as a failure caused by the policy makers. Hence, efforts are made by the government to control the impact of unemployment in an economy. The study of unemployment is very important to economics students, policy makers and also politicians. The study of the unemployment rate of an economy helps in setting up policies that would help an economy reach a desired level. The result of this study will provide useful information needed by government to fight unemployment and help create employment opportunities in Nigeria.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

The scope of this study is centred on the effect of unemployment on the Nigerian economy. The research work is also centred on twenty years duration from 2001-2020. The analysis was also based on the data extracted from the central bank of Nigeria statistical bulletin. The method of analysis used in testing the hypothesis is the regression analysis. Possible suggestion and recommended were also made.

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Unemployment: This is the non utilization of labour resources as a result of which the actual output of the economy is below its potential G.N.P

Economy: this refers to the relationship between production, trade and the supply of money in a particular country or region.

Effects: Changes that cause results

Labour: is the human factor of production that is taken to mean the supply of human efforts for the main sum of wages and salaries