Widespread unemployment in Nigeria, how can it be solved?

Any society with a high rate of unemployment carries with it a great risk of instability, armed robbery, prostitution, social disorder, lack of development, no adherence to civic responsibilities, all imaginable crimes and above all, insecurity to life and property. The individuals affected have no work and therefore nothing to earn and their “tomorrow” is dim. The family is thrown into jeopardy; and those employed within the society cannot even enjoy their earnings and run their lives to their tastes and aspirations.

There would exist low output and low national income, loss of purchasing power of the unemployed which reduces the size of the country’s market, fall in savings and investments, and a reduction in government’s tax base. There would equally exist the emergence of slum areas, low standard of living, fall in marriages and the emergence of ideologies like communism, fascism, Leninism etc. which promise the frustrated people strong action to defeat unemployment.

The most alarming unemployment type in Nigeria is graduate unemployment. After a year of national service immediately after finishing from college, a lot of Nigerians are still unemployed. Graduates finish the mandatory NYSC program and return home to their father’s house hoping that one day they would be lucky enough to secure that dream job. The reality is that it is very difficult for a graduate to get a job, especially in an economy as harsh as this. Let us us take a look at some of the causes of graduate unemployment.

Causes of Graduate unemployment

• The preference of Nigerians for foreign goods and the resultant shift in demand from local to foreign goods which leads to a reduction in the expansive activities of the local industries

• Nigeria’s heavy dependence on the export earning of her primary product which fluctuate greatly and leads to frequent suspension or abandonment of development projects as a result of shortage of funds. This in turn leads to retrenchment of workers.

• The frequent changes in government with the resultant changes in policies which lead to the suspension or abandonment of projects and the displacement of workers.

• The imperfect mobility of factors of production coupled with improper planning and reconstruction of the economy.

• Graduate unemployment occurs as a result of depression or slump in prices of goods which results from a general fall in demand for goods and the slow rate of growth of the economy. This makes industries retrench rather than absorb workers.

• The graduates unpreparedness to farm

• The graduates unwillingness to move out of their states of origin to work in other states.

• Low level of industrialization: The country is beset with the problem of low level of industrialization. The basic infrastructural facilities facilitating industrial growth are grossly inadequate

• Rural / urban migration: There is incessant exodus of people from rural areas into cities either in search of jobs because of high disparity between urban and rural incomes and attractions

• Lack of finance: Potential entrepreneurs among school leavers are incapacitated financially to stand on their own and even act as employers of labor. These young men and women of vision are often faced with the problem of collateral security in their struggle to obtain finance from banks.

• The dwindling foreign exchange from oil occasioned by falling oil prices. Problems arose from the structural imbalance in the economy with undue emphasis on import oriented industries. The collapse of the oil market dealt a deadly blow to the home industries which relied exclusively on the foreign imports for survival.

How unemployment can be solved

• By settling substantial portion of the debts that the government owes contractors, suppliers and consultants and by the reactivation of public works so as to stimulate the demand for labor.

• Through the use of direct labor by the federal, state and local government in carrying out general repairs and maintenance of public buildings, highways, plants , machinery and equipment.

• By supporting young people (especially college graduates and school leavers) who may have bright ideas with management advice and allowing them to have reasonably liberal access to financial credit (loans).

• By organizing the informal sector like road mechanics, fabricators, iron welders, artisans and small scale entrepreneurs into production co-operatives so as to enable them receive assistance to enable them receive assistance in form of infrastructure, credit and management.

• By checking population growth.

• By giving monetary incentives to prospective school leavers in order to reduce the number of new entrants into the labor force.

• By reducing the retirement age in order to create room for young school leavers to work.

• By giving financial inducement to industries to retain workers on their pay rolls instead of retrenching them.

• Government may adopt the policy of encouraging location of industries particularly in areas of high unemployment.

• By introducing a package of budget and monetary policy measures to reflate the economy and increase the level of aggregate demand.

• By introducing reflationary measures in terms of relaxing credit measures, reducing taxation and increasing the level of government spending.

Recommended Readings

Olivier Blanchard., David R Johnson., Macroeconomics (6^th edition)

Schaum’s outline of macroeconomics (third edition)

Timothy Taylor., The instant economics: Everything you need to know about how the economy works.