Unemployment, underemployment and related challenges

Understandably, unemployment and underemployment remain a global problem but Nigeria is having an appropriate portion of it.

Incidentally, Nigeria as a post-colonial nation has experienced many of the problems common to other nations. For instance, it began its independent existence in an enviable position of having proven reserves of oil and gas that it currently earned between $18 billion and $30 billion yearly. Moreso, it had a relatively developed infrastructure associated with primary industry development and a fully functioning administration bureaucracy at independence.

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However, its subsequent history is one of economic difficulty, corruption, political violence, insecurity, growing poverty and inequalities amongst its citizenry.

Nigeria is the African largest country with an estimated population of over 200 million and an average annual population growth of 2.98 per cent.  Arguably, one of such economic difficulties is unemployment, a situation where the Nigerian state has not been able to grasp this obtrusive phenomenon.

With the depressing figures released recently by the National Bureau of Statistics (NBS), which stated that the computed national unemployment rate rose from 27.1 per cent in Q2, 2020 to 33.3 per cent in Q4, 2020, while the underemployment rate decreased from 28.6 per cent to 22.8 per cent. Meanwhile, a combination of both unemployment and underemployment rate for the reference period gave a figure of 56.1 per cent. Thus, this means 33.3 per cent of the nation’s labour force pointing to 23,187,389 persons who either did nothing or worked for less than 20 hours a week.

Interestingly, what constitutes employment, unemployment and underemployment may be necessary here in terms of its meaning. For instance, a person is regarded as employed if he/she is engaged in the production of goods and services. In other words, such a person is contributing to the Gross Domestic Product (GDP) in a legitimate manner, which is a component of the national accounts and receives any form or amount of compensation for that activity. Coincidentally, these can cause fluctuations if the economically active and labour forces populations at any given time are not properly managed.

Although, there is no universal definition of unemployment, as various countries adopt definitions to suit their local priorities, the International Labour Organisation (ILO) definition is handy here as it covers persons aged between 15-64 available for work, actively seeking work, but were unable to find work. Yet, all countries use the International Labour Organization’s (ILO) definition, or a variant of it to compute unemployment on the basis of situation analysis and findings.

To a great extent, this may have provided the input to fathom the meaning of unemployment in Nigeria, which indicates persons available for work and looking for a job but were unable to find one within the age aforementioned. For this reason, the unemployment rate is calculated as a percentage of the number of unemployed persons in the labour force.

Accordingly, underemployment occurs if a person works less than full time 40 hours but work at least 20 hours on average a week. In addition, underemployment also means that if a person works full time but are engaged in an activity that under-utilises their skills, time, and educational qualifications..

Consequently, it is imperative to remind ourselves that the meaning of unemployment, underemployment or employment from an international or local perspective is not a function of the amount of wages earned nor it is a function of job satisfaction. That is why Karl Marx opines that, workers exchange their labour power for money, and in addition, this exchange takes place at a certain ratio.

Numerous factors may be blamed for the prevalence of unemployment and underemployment in Nigeria. Poor infrastructure, stagnation in the real sector due to a hostile investment climate and general business depression in the private sector.

For instance, available statistics reveal that in recent years, over 150 multinational industries have divested from the Nigerian economy. Many more are planning to pull out. In the same vein, government’s multiple tax and tariff are obstacles to some companies to produce locally as it is more lucrative to import and market products.

Adding to this, many of the cottage industries are practically dead, many medium and small scale enterprises often described as the real engine for job creation have been folding up. Most impacted is the textile industry with over 200 firms closing shop. The inexplicable hike in the price of cement and other building materials and abandoned construction projects, which are the traditional employment creation avenues particularly during the recession, are not helping the situation. Similarly, the particular problem of poor electricity supply, poor road network, inadequate physical security and the high cost of finance are some of the factors that diffused SMEs, render, artisans’ jobless and the real sector odious.

Furthermore, is poor quality and dysfunctional educational system that has created an army of unemployable graduates. Reasons had been deficient school curricula and failure of our educational institutions to provide students with appropriate skills. Special importance on university education at the abandonment of technical and vocational education is another missing link in our system.

The way forward. A policy to address unemployment and underemployment in Nigeria is not far fetched if the government will not pay lip service to it. The sincerity of purpose on the part of our policy makers as well as all stakeholders are the drivers to get it right. Several interventions from the government currently and in the past have been deployed. However, it is unclear to what extent they reduced the unemployment rate. Perhaps, it is time to rethink and rejig our policy direction on employment creation. Magnificently, we must appreciate the availability of data as lack of data makes it difficult for policymakers to tackle unemployment, underemployment and related economic challenges in Nigeria.

By Adefolarin Olamilekan, who is  a Political Economist & Development Researcher and can be reached via [email protected]