Employment Policies and Outcomes in Nigeria
Eric Kehinde Ogunleye[1]
Unemployment is one of the deepest, most widespread and most intractable socioeconomic problems facing the contemporary Nigeria (Falae, 1971; Orimalade, 1971; Akinnifesi, 1986; Balogun, 2003). Unemployment generates social, economic and psychological costs that can hardly be fully quantified. There is a large waste of human resources especially when a large number of the unemployed are educated just as we have it in Nigeria today. This leads to a lower national output and lower income with negative impact on wellbeing (Akinboyo, 1987 and Raheem, 1993). There is also a social stigma associated with the unemployed. The unemployed is viewed by the society as a social miscreant. At the individual level, the unemployed feel a sense of insecurity, vulnerable and worthless. Rising unemployment can also induce social misbehaviour such as crime, prostitution and hostage-taking as Nigeria is currently experiencing in its oil-rich Niger Delta region. All of these explain why eradicating unemployment or at least reducing it to the barest minimum is a major macroeconomic policy in any economy.
Unemployment started manifestingin Nigeriaas far back as the 1960s but was not seen as a problem then. It started with unemployment of primary school leavers in the 1960s which continued on into the 1970s. Unemployment during these periods was limited to the urban areas and to unskilled and illiterates (Ogbe, 1986 and Ojegbile, 1986).The composite unemployment rate that was 4.3% in 1970 increased to 6.4% in 1980. Following the implementation of the Structural Adjustment Programme (SAP) in 1986, unemployment further increased to 7% in 1987 with the urban and rural unemployment being 9.8% and 6.1%, respectively. This policy appeared to have changed the nature, structure, pattern and trend of unemployment in Nigeria. Unemployment became pervasive not only in the urban areas and among the unskilled but also in the rural areas and among the university graduates (Olaloye, 1986; Obadan and Odusola, 2000; Odusola, 2001). Unemployment rate reached an unprecedented level of 19.9% in 1999 before receding slightly to 11.2% in 2003 (NMB, 2004). Agriculture, the highest employer of labour in Nigeria, which employed a total of 66.6% of the total labor force in 1960, experienced employment decline to 60.4 in 2003. In the same vein, while university graduates unemployment rate was only 0.3% in 1976, the figure stood at 11.3% in 2003.
Several conscious attempts have been made to tackle the problem of unemployment in Nigeria by successive governments, both military and civilian. These include the national development programmes, the privatization or indigenization programme, the national directorate of unemployment (NDE), Family Economic Advancement Programme, National Poverty Eradication Programme, National Economic Empowerment and Development Strategy (NEEDS), etc. However, unemployment persists.
This paper provides a detailed dossier and analysis of unemployment problem in Nigeria beginning from independence to date,with particular focus onits nature and dynamics, reviews the policies aimed at solving them while highlighting their shortcomings, and assesses the outcomes by estimating dynamic unemployment and error correction models for Nigeria.
Specifically, effects of total domestic credit extended to the private sector (CRPT), bank lending rate (INTRT), government investment in education (EDU), electricity provision (ELECT), other infrastructures other than electricity (INFRAS), and other social expenditures (SOC) are examined on employment. The empirical results indicate that domestic credit to the private sector, sound interest rate policy, provision of reliable and functional infrastructures are some of the potent tools of employment generation in Nigeria. The policy implications of the findings are thoroughly discussed and innovative solutions proffered.
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[1] Contact: Department of Economics, University of Calabar, Nigeria, E-mail:
Economic Research and Statistics Division, WTO