Impact of Unemployment on economic Growth of Nigeria

Impact of Unemployment on Nigeria economic Growth 1981-2017 PDF. The impact of unemployment on economic growth includes; 1. fall in national output, 2. increase in rural-urban migration, 3. waste of human resources, 4. high rate of dependency ratio, 5. increase poverty, depression, 5. increase frustration, all sorts of immortal acts and criminal behavior . 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% but has grown to 38.3% (NBS, 2016).



1.1       Background of 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. Despite the abundant resources endowed on Nigeria by nature its citizens are still struggling to survive due to economic hardships or difficulties in the country (Danjos and Ali, 2014). Undoubtedly, parts of the macroeconomic goals which the government strives to achieve are the maintenance of stable domestic price level and full-employment. Macroeconomic performance is judged by three broad measures- unemployment rate, inflation rate, and the growth rate of output (Ugwuanyi, 2004). Unemployment is generally seen as a macro-economic problem as well as socio-economic problem. It has been categorized as one of the serious impediments to social progress. Apart from representing an enormous waste of a country’s manpower resources, it generates welfare loss in terms of lower output thereby leading to lower income and well-being (Raheem, 1993 cited in Noko, 2016). 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.

Still on ,,,,, Impact of Unemployment on Nigeria economic Growth 1981-2016.

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 proceeding 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.

Official figures from the Bureau of Statistics puts the figure of unemployment rate at 38% and youth unemployment rate at 65% as at September, 2016. By implication over 80 million Nigerians are unemployed this means that if Nigeria’s population is 190 million, then 60 percent of Nigerians are unemployed. 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.

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.

In the study of unemployment in Africa Okonkwo (2005) identified three (3) causes 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.

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%.

Still on ,,,,, Impact of Unemployment on Nigeria economic Growth 1981-2015.

Unemployment according to lipsey (1963 cited in Noko, 2016) brings about economic waste and cause human suffering. According to 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, recession, frustration, all sorts of immoral acts and criminal behaviour e.g prostitution, armed robbery etc. The social effect of unemployment brings to light the need to proffer possible solution to salvage our nation Nigeria. Thus, this research aimed at investigating the impact of unemployment on Nigeria’s economic growth.

1.2       Statement of the Problem

The socio-economics 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 immortal acts and criminal behavior (Noko, 2016).

Unemployment has reached a very alarming proportion in Nigeria, with a greater number of the unemployment being primary and secondary school leavers and university graduates. This situation has recently been compounded by the increasing unemployment of professionals such as bankers, engineers and doctors. The toll is within the productive segment of the Nigeria population (Vision, 2010). The recent economic recession ravaging the country has further deteriorated the unemployment situation in Nigeria. Between May 2015 to May 2016, unemployment rose by 65% especially youth unemployment.

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


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.  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.gYesufu, 1984; Akerele, 1994; cited in  Amassoma and Nwosa, 2013).  In view of the unfolding reality coupled with the protracted debates this paper attempts to examine the linkage between economic growth and unemployment.

1.3 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?

1.4 Objectives of 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       Hypothesis of the Study

            This study will be guided by the following hypothesis:

HO:      Unemployment does not have significant impact on Nigeria Economy.

1:       Unemployment has a significant impact on Nigeria Economy.

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

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

1.6 Significance of 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 policy makers, politician, researchers and student of economics.

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.

1.7       Scope and Limitations of the Study

The scope of this study is centered on the impact of unemployment on the Nigerian economic growth. The research work is also centered on the duration from 1981-2016. The regression analysis was also based on the use of time-series data extracted from the central bank of Nigeria statistical bulletin.

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.

However, in spite of the difficulties encountered the researcher made adequate effort to ensure the result of the study can be relied upon to make policies concerning unemployment.

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