CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Unemployment is generally seen as a macro-economic problem as

well as socio-economic problem .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 (R.A.I

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).

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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 categorizedas 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 1987 and Raheem 1993). Unemployment is a

very serious issue in Africa (Vandemortele 1991 and Rama 1998) and

particularly in Nigeria (Oladeyi 1994 and Umo 1996). 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.

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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

(1999:62) 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 61249485

in 2007 indicating an increase of 3.9%. Total employment in 2007 stood at

52326923 compared with 50886836 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.

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Unemployment according to lipsey (1963:456) brings about

economic waste and cause human suffering. 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.

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

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 south-

west 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%.

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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 RESEARCH QUESTIONS.

1. Is there any relationship between unemployment and economic growth?

2. Do unemployment have any significant impact on economic growth?

1.4 OBJECTIVE OF THE STUDY

1. To determine the relationship between unemployment and economic

growth in Nigeria

1.5 RESEARCH HYPOTHESIS

The null research hypothesis for this work is;

1. Unemployment does not affect economic growth in Nigeria

1.6 SIGNIFICANCE OF THE STUDY

The significance of this study is to make research on the effect of

unemployment for most qualified graduates of various institutes of learning and

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also qualified skilled labour. 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 thirty years duration

from 1980-2010. 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 posses alot 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 centres

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