CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

Unemployment is generally agreed to be symptom of macro-

economic illness which could be “voluntary” or in “Voluntary”. When

is said voluntary I mean a condition where somebody chooses not to

work because they have a means of support other than employment

example is the idle rich man. On the other hand involuntary

unemployment exists when persons are willing to work at the

prevailing rate of pay but unable to find work. (Anyanwu 1995).

Balogun ed et el (2003) also defined unemployed as the

percentage of the percentage of the labour force that is without job

but is able and willing to work. In Nigeria however the ability and

willingness to work is not sufficient. It is necessary for the

unemployment to be registered with an employment bureau in order

to be recognized as unemployed. Yet from an economic viewpoint

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the unregistered unemployed are part of the labour force and are

therefore technically unemployed. In Nigeria unemployment data

are obtained through labour force sample surveys which ask if the

respondent has worked in the week preceding the survey. However

the international labour organization (ILO) realizing the

shortcomings of the labour survey as it affects developing economies

such as Nigeria with a large informal sector has encouraged a

review of the methodology to incorporate further disaggregation of

respondent responses to bring out the true rate of unemployment.

In order to establish the type of unemployment existing in an

economy economists have classified unemployment as „frictional‟

„seasonal‟ „structural‟ or cyclical‟.

1. Frictional Unemployment occurs when people are temporarily

out of work because they are changing jobs. This is

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unavoidable in an economy in which both the labour force and

the jobs on offer are continually changing.

2. Seasonal unemployment is said to occur in a situation in which

people are laid off seasonally due to the nature of the job they

do e.gagriculture workers in developing countries may be laid

off during the growing season.

3. Structural unemployment is the unemployment that exists

when an economy is in full employment. Structural

unemployment occurs where employment in one or more

declining industries is falling.

It is as result of movement in the natural employment rate itself

which can result from changes in labour market institutions

demographic shifts etc. this situation is brought about by

economic variables such as the level of aggregate demand and

the actual and/or expected real wage rate.

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4. Cyclical unemployment occurs as result of fluctuations around

the natural employment rate which can be attributed to

changes in aggregate demand.

Industrial relations refer to the process of conflict resolution such

as collective bargaining between employers and employees in the

course of fulfilling an employment contact. It could be achieved

either by conquest (when one party overwhelms the other) or by

mutual consent. The latter preferred outcome is likely to result

from collective bargaining. Continuous industrial harmony is

therefore often the result of positive industrial relations.

In Nigeria unemployment is regarded as one of the most

challenging economics problem facing the federal government.

Although there are variations in the measurement of

unemployment official estimates show their results as follows:

from 1985-2003 the data shows a highly fluctuation trend from

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both the urban and rural sectors of the economy. From the data

the 1985 figure shows the percentage of the national urban and

rural unemployment as follows: national 6.10% urban 9.8%m

rural 5.2%and in year figure is as follows: national 3% urban

3.8% rural 2.7 %( CBN 2004).

The rising rate of the population of the country which is faster

than the job opportunities a situation in which birth rate is rising

death rate falling and the population growth rate is between 2.5%

and 3% unemployment is bound to exist. There had been also a

total neglect of the agricultural sectors and consequent mass

exodus of able bodied youths from the rural to urban areas in

search of the none existing while cooler jobs.

This further reduces employment in agriculture and puts

pressure on existing urban jobs (Anyanwu 1995)

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1.2 STATEMENT OF THE PROBLEM

Unemployment has reached a very alarming proportion in

Nigeria with a greater number of the unemployment being

primary and secondary school learners 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 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 due to expression of

futility in such exercise. This harnesses the sharp disparity between

the official statistics on the phenomenon and the reality on ground

(Bello 2003). Disguised unemployment otherwise known as concealed

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unemployment is a situation in which more people are available for

work than is shown in the unemployment statistics (Bannock et el

1998)

The problem of disguised unemployment is quite acute in

Nigeria. This explains why official unemployment statistics sharply

differs from the true state of employed or unofficial statistic

available. The recorded figure unemployment significantly

understates the number of people who are actually willing to work at

the existing set of wage rate. Consequently the unemployment

figure in Nigeria is obtained through labour force sample survey by

asking if the person has worked in the past week preceding the

survey.

Obviously because even a graduate whohawks around respond

yes to the question the unemployment rate will always be very low.

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Unemployment is a situation of a labour not having enough

paid work or not doing work that makes full use of his skills and

ability. It can be measured by the numbers of hours worked per

week.

Generally in Nigeria the official period of working time per

week is forty hours which manyworkers 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 distinguished unemployment form. The

official figures of the rate of unemployment form.

December1998 a total of 66.3% of male and 62.0% of female

unemployment were recorded at the urban centres while rural

centreshad an estimate of 47.1% and 45%male and female job

seekers respectively. As at December 1999 school levers

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unemployment rate had raised 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).For

polytechnic and university graduates the figures shows relatively low

unemployment rate as compared to the school leavers experience.

For instance during the period under investigation a peak of 14.0%

rate of unemployment was recorded for polytechnic female graduate

in 1998 which the male graduate records had its peak in 1999 with

15.0% point in urban areas (Bello 2003). The graduate

unemployment rate in the urban centres had 8.5 per cent record high

in September 1999 for males and 4.5%in June 1999for female during

the periods (Bello 2003).

Many people are frustrated by lack of unemployment‟s

opportunities they include these without work and those who have

jobs but want to work longer hours or more intensively. A

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considerable size of utilized and underutilized labour abounds in

Nigeria and which ought to be brought into the circle. These shows

that Nigeria‟s employment problem has become chronic and should

be a matter of utmost national concern.

1.3 RESEARCH QUESTION

From the above discussions the research question is:

Has unemployment had any impact on Nigeria economy?

1.4 OBJECTIVE OF THE STUDY

The objectives that will guide this study are as follows;

1. To determine the relationship between unemployment and

economic growth in Nigeria.

2. To ascertain the magnitude of this relationship.

3. To make policy recommendations based on the finding.

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1.5 STATEMENT OF HYPOTHESIS

The hypothesis that would guide this work is as follows;

1. H

0

: Unemployment has no significant impact on economic

growth in Nigeria.

2. H

1

: Unemployment has no significant impact on the economic

growth in Nigeria.

1.6 IMPORTANCE OF THE STUDY

One of the macroeconomics goals of any country is the

actualization of full employment. Therefore unemployment in any

system is seen as a policy failure and there is always 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 politicians and student of economics.

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To the policy makers ascertaining the rate of unemployment in

an economy to the desired height the policy maker with the

knowledge of the state of unemployment in the system stands the

best chance of controlling it through appropriate initiative like poverty

eradication programmes and creation of employment opportunities

that touches the lives of the population.

1.7 SCOPE AND LIMITATION OF THE STUDY

The limitation of this research were much and varying.

First was the difficulty in getting access to some relevant

research documents. There were several cases of limited copies of

materials.

The second constraint to this research was finance and time.

The time allowed for the completion of this work was short coupled

with the fact that other academic work were in progress.

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