Impact of Unemployment on Nigeria economic Growth 1981-2015

Impact of Unemployment on Nigeria economic Growth 1981-2015 PDF. download the full material from chapter one to chapter five with references. Premium Times Mobile (2013) noted that, “the rate of unemployment among Nigerians started to get worse since 2010. According to the report, unemployment rate in Nigeria as of 2010 was 21.1%.



1.1       Background to the study

Nigeria is a country that is endowed with enormous resources, both human and material. These resources are scattered across the six geo-political zones which are: North-West; North-East; North-Central; South-West, South-East and South-South. Presently, Nigeria is 54 years old, but the citizens are still struggling to survive due to economic hardships or difficulties (Danjos and Ali, 2014). It is believed by many that Nigeria as a country in the West African sub-region is blessed with huge resources. However, it is the least in terms of comfortable standard of living. This cannot be unconnected with the level of unemployment the youth of Nigeria are faced with. Unemployment has assumed a high proportion and it is also seen as one of the causes of poverty in the country. This monster has been on the increase or is getting worse on daily basis as the numbers of graduates are increasing annually (Danjos and Ali, 2014).

Premium Times Mobile (2013) noted that, “the rate of unemployment among Nigerians started to get worse since 2010. According to the report, unemployment rate in Nigeria as of 2010 was 21.1%. This figure, within the shortest time possible increased to 23.9% in 2011 even with the government poverty alleviation programmes such as National Poverty Eradication Programme (NAPEP), National Directorate of Employment (NDE) and Subsidy Re-Investment and Employment Programme (SURE-P) to mention but a few.

The rise in the level of unemployment is an indication that the measures adopted by the present administration are not yielding the desired objectives. For instance, according to the National Population Commission report (2012), there were 51.18 million Nigerians unemployed in the economy in 2011. This is a large population that could constitute a threat to the Nigeria’s economy, and thus requires adequate government attention (Danjos and Ali, 2014).

Unemployment arises as a result of insufficient and non-availability of jobs to correspond with the growing population, even those who are employed sometimes live 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, 1993)

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 exist when persons who are eligible and willing to work at the prevailing rate of pay are unable to find work. (Anyanwa, 1995 in Amassoma and Nwosa, 2013).

Unemployment in Nigeria is defined as the proportion of labour force that was available for work but did not work in the week preceding the survey period for at least 39hours. 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 (NBS) 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 (Noko, 2013).

Official figures from the Bureau of Statistics puts the figure of unemployed at 19.70 per cent, about 30 million, but this figure still did not include about 40 million other Nigerian youths captured in World Bank statistics in 2009. By implication, it means that if Nigeria’s population is 140 million, then 50 percent of Nigerians are unemployed (Noko, 2013). Viewing this from the perceptive of the recent events in the Middle East where unemployment and poverty among others played a key role in the uprising, one can only conclude that Nigeria’s unemployment poses a threat to its development, security and peaceful co-existence, being that Nigeria is made up of diverse entities from different cultural and religious backgrounds most of whom  have shown differences in political, cultural and religious understanding and accommodation emanating from concerns of abuse of power, resource allocation, nepotism, negligence and corruption among others (Danjos and Ali, 2014).

According to Bello (2003) from time immemorial, the subject of unemployment has always been an issue of great concern to the economists, policy makers and economic managers alike; giving the devastating effect of this phenomenon on individuals, the society and the economy at large. According to Fadayomi, (1992), Osinubi, (2006), unemployment is as a result of the inability to develop and utilize the nations manpower resources effectively especially in the rural sector.

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 (Noko, 2013).

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 (1999), 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 (Danjos and Ali, 2014).

1.2       Statement to the Problem

Unemployment according to lipsey (1963) brings about economic waste and cause human suffering. 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 (Noko, 2013).

The need to avert the negative effects of unemployment has made the tackling of unemployment problems to feature very prominently in the development objectives of many developing countries.  Incidentally, most of these countries’ economies are also characterized by low productivity (Noko, 2013).  Thus, it seems obvious to many policy makers that there must be a straight forward connection between productivity and employment/unemployment. However, the theoretical linkage between productivity and unemployment is yet to be settled in the literature.  While some researchers posit that higher productivity may increase unemployment (e.g. Diachavbre, 1991; Krugman, 1994), some others argue that it could increase employment (e.g Yesufu, 1984; Akerele, 1994; Danjos and Ali, 2014).

The extent of unemployment in Nigeria in is not justified by the available financial statistics. This is because of the nature of unemployment in the country where many job seekers do not see the need for registration as unemployed. This harnesses the sharp disparity between the official statistics on the phenomenon and the reality on ground (Bello, 2003).

Generally in Nigeria, the official period of working time per week is forty hours which many workers fall short of due to non –availability of work. In some instance available work is rationed especially among the low skilled and casual labours in the formal sector tends to be worse (Bello, 2003). Therefore the major problem we have in Nigeria is the disguished unemployment form. The official figures of the rate of unemployment as at  December 1998 was 66.3% of male and 62.0% of female unemployed at the urban centres while rural centres had an estimate of 47.1% and 45%male and female job seekers respectively. As at December 1999, school leavers unemployment rate had risen to 67.0% for males and 68.8% for females in the urban centres while the rural centres was as high as 59.1 and 55.7%, for male and female respectively (Bello, 2003).

In view of the unfolding reality coupled with the protracted debates this paper attempts to examine the linkage between economic growth and unemployment rate in Nigeria.

  • Research Questions.

The researcher has formulated the following research question to guide the study:

  1. To what extent does Unemployment impact on Nigeria economic growth?
  2. Is there any significant long-run relationship between Unemployment, and economic growth in Nigeria?
    • Objectives to the Study

The broad objective of this research work is to investigate the impact of Unemployment on Nigeria economic growth. However, the specific objectives of this research work are as follow; to,

  1. examine the impact of Unemployment on Nigeria Economic Growth.
  2. determine the long-run relationship between unemployment and economic growth.

1.5       Hypotheses to the Study

            This study will be guided by the following hypotheses:

HO:      Unemployment does not have significant impact on Nigeria’s Economic growth.

1:       Unemployment has a significant impact on Nigeria’s economic growth.

H0:       There is no significant long-run relationship between unemployment and economic growth in Nigeria.

H1:       There is significant long-run relationship between unemployment and economic growth in Nigeria.


  • Significance to the Study

One of the macroeconomic goals of any country is actualization of full employment. Therefore, unemployment in any system is seen as a policy failure and there is concerted effort on the part of the government in checkmating the impact of unemployment in an economy. The study of unemployment is important to the following set of people:

  • Policy makers: To the policy makers, ascertaining the rate of unemployment in an economy to the desired height, the policy makers with the knowledge of the nature of the relationship between unemployment and economic growth, and the state of unemployment in the system stands the best chance of controlling it appropriately with initiative like poverty eradication programs and creation of unemployment opportunities that touches the lives of the population.
  • Researchers: the researchers will find the materials useful, by serving as a guide to their study.
  • Student of economics: The student will find the research useful as it will give them more insight on the nature and causes of unemployment in Nigeria.


1.7       Scope and Limitations to the Study

The scope of this study is centered on the Impact of unemployment on the Nigerian economy. The research work is also centered on the duration from 1981-2015. The regression analysis was also based on the use of time-series data extracted from the central bank of Nigeria statistical bulletin. The method of analysis used in testing the hypothesis is the t-test, f-test e.t.c. Possible suggestion and recommended were also made.

It is worthy to note that every research work poses a lot of problems and limitations. However, the difficulties encountered includes, inadequate and non-availability of relevant data owing to the fact that unemployment in most under-developed countries e.g Nigeria is not evenly distributed and thus varies from one place to another, financial constraint, high cost of transportation and the difficulty in locating the various research center and finally time pose another difficulties since the student has to allot her limited time between lecture and writing the project work.

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