THE EFFECT OF UNEMPLOYMENT ON THE ECONOMIC GROWTH IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Unemployment is generally seen as a macroeconomic problem as well as socioeconomic problem. Unemployment arises as a result of insufficient and nonavailability of jobs to correspond with the growing population, even those who are employed sometimes live with the fear of been unemployed due to job insecurity and retrenchment of workers. There is employment of the 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 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 unemployment is a situation where somebody chooses not to work because they have means of support other than employment example is the idle rich man. On the other hand, involuntary unemployment exist when persons who are willing to work at the prevailing rate of pay are unable to find work Anyanwa 1995. According to the central bank of Nigeria 2004 unemployment rose to 30 during 2004 statistics on unemployment rate.

Unemployment has been seen as a worldwide economic problem and has been categorized as one of the serious impediments to social progress. A part from representing a colossal waste of a countrys manpower resources, it generates welfare loss in terms of lower output thereby leading to lower income and well being Akinboyo, 1987; and Raheem, 1993. Unemployment is a very serious issue in Africa vandemoortele, 1991 and Rama, 1998. And particularly in Nigeria oladeji, 1994 and umo, 1996. The need to avert the negative effect of unemployment has made the tacking of unemployment problems to feature very prominently in the development objectives of many developing countries .

In the study of unemployment in Africa, okonkwo 2005identified three 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. Moreso, lack of enough education and skill to have access to credit and capital.

One peculiar feature of the unemployment problem in Nigeria is that it was more endemic in the early 1980s than any other period. It became an acute problem in Nigeria immediately after independence. According to Udabah 1999:62, the major factor contributing to low standard of living in under developed countries is their relative inadequate or inefficient utilization of labour in comparism with advanced nations. Unemployment rate is given 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 aged 18 and over who are employed that is, those who currently have jobs and unemployed that is those who do not have jobs but who are actively looking for work. Individuals who do not fall into either of these groups such as retired people and discouraged workers are not included in the calculation of the labour force.

The international labour organization I L O defines unemployment as the proportion of the labour force which was available for work but did not work for at least one hour in the week preceding the survey period. National Bureau of Statistic 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 39 hours in the week preceding the survey period.

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 socioeconomic effect of unemployment includes fall in national output, increase ruralurban 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 etc. The social effect of unemployment brings to limelight the need to profer possible solution to salvage our nation Nigeria.

1.2 STATEMENT OF THE PROBLEM

Available data from the National Bureau of Statistics indicated 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 for the age group of 2544 to 23.5 for the age group of 6570. Desegregation according to geopolitical zones showed a very uneven distribution with the southsouth zone having the highest unemployment rate of 29.5 and the southwest at the rear with 8.5. Between these extremes were the northeast with 18.5, southeast 18.1, north central 15.8 and northwest 14.2.

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 OBJECTIVE OF THE STUDY

1. To determine the relationship between unemployment and economic growth in Nigeria.

1.4 RESEARCH HYPOTHESIS

The research hypothesis for this work is:

1. That unemployment does not affect economic growth in Nigeria

1.5 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 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.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of this study is centered on the effect of unemployment on the Nigerian economy. The research work is also centered on twenty eight years duration from 19802008. 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 ttest, ftest etc possible suggestions and recommendation were also made.

It is worthy of note that every research work possess 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 difficult in locating the various research centre