Youth Unemployment and Underemployment: Empirical Analysis

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Published on International Journal of Economics & Business
Publication Date: August, 2019

Stella-Maris Okey, Enagu Tabe, A. & Emmanuel, U. B.
Department of Education Management, Cross River State, University of Technology, Calabar
Department of Business Administration, Open University of Nigeria
Department of Accountancy, Taraba State University

Journal Full Text PDF: Youth Unemployment and Underemployment: Empirical Analysis (Studied in Nigeria).

The scourge of youth unemployment in Nigeria is increasingly pervasive and gruesome accelerating the rate of socio-economic downturn. Majority of Nigerian population live in abject poverty unable to cater for themselves as a result of joblessness which leads to frustration, crime and suicide. The objective of this study therefore to examine the current scenario of the increasing and devastating upsurge of unemployment and underemployment among youths in Nigeria. As a measure to proffer possible panacea out of this regressive cycle of youth unemployment., secondary data were extracted from National Bureau of Statistic (NBS, 2015-2019), National Population Commission (NPC, 2015-2019), using descriptive approach of previous research publications and analysis of scholars to gather empirical data. The findings revealed that there exists disequilibrium between the growing rate of population and the demand for labour force in the labour market, not everyone who wants a job can get one. As a result of such socio-economic environment, Nigerian youths are trapped in a state of voluntary and involuntary unemployment leading to waste of human capital. Further findings identified the pivotal role played by the federal government in curbing the paralysis of youth unemployment and underemployment, as they are urged to do more in order to create an enabling environment that nurtures entrepreneurship and also invest heavily on educational, developmental training programmes to enable the youth become self reliance and creator of employment opportunities in the country

Keywords: Youth employment, poverty, solution, crime, skills development, Nigeria

Nigeria, just like any other country in the world has experienced devastating economic drawback over the years, including the depression of 2014. This entire debilitating scenario has no doubt hampered the productivity of the nation’s economy. Irrespective of all these economic challenges Nigeria emerged from recession in 2017 and still remain a key regional player in the economic development of West Africa, with a population of approximately 200 million (United State estimate May 31, 2019). It ranked as the 27th largest economy in the world in terms of nominal Gross Domestic Product (GDP) of $103.8bn (CEIC 2019), making it the largest economy in Africa. Nigeria is a multi-ethnic and culturally diverse society, embedded with abundance of both human and natural resources. It is Africa’s biggest oil exporter, and also the largest natural gas reserves on the continent.
Now, this brings us to the question of why is there disequilibrium in the level of labour employment as compared to the nation’s economic output? Despite the enormous capacity of Nigeria economy, the rate of unemployment is on the increase day by day in the country. There is rising tension and panic as the streets of Nigeria covering Her 36 states are over flooded and littered with jobless youths who though are willing to work but remain unemployed. The total population in Nigeria is divided into labour force and non-labour force. The labour force population covers all persons aged (15-64 years) who are willing and able to work regardless of whether they have a job or not. The definition of unemployment therefore covers persons aged (15-64) who are available for work, actively seeking for work but were without work (National Bureau of Statistic NBS, 2018). World Bank (1998) defines the unemployed as numbers of the economically active population who are without work but available for and seeking work, including people who have lost their jobs and those who have voluntarily left work.
Unemployment has been grouped into two categories; first, the older unemployed who lost their jobs through retrenchment, redundancy, or bankruptcy, and second, the younger unemployed, most of who have never been employed (Oyebade 2003).
Economywatch (2005) reported that unemployment in Nigeria is one of the critical problems the country is facing. In Sub-Saharan Africa, youth population was estimated at 138million people in 2002-2003 with 28.9million 21% of them unemployed [ILO2004]. Nigeria accounts for about 47 percent of West Africa’s population, and has one of the largest populations of youths in the world (World Bank 2009). This is a clear statistic that the alarming rate of unemployment in Nigeria is mostly among the young people aged (15-35 years). Alanana (2003) opines that unemployment is potentially dangerous as it sends disturbing signal to all segments of the Nigeria society. This is a wakeup call as the rate of crimes appropriate with the increasing rate of unemployment in the country.
In order to suggest possible solutions to the problem of unemployment among the youth in Nigeria, this study seeks to lay hold on the root cause of unemployment. To achieve the objectives of this research, critical questions must be asked judging from the economic wealth and capacity of the nation. Such questions like why is there a persistent rise in the rate of unemployment in Nigeria? What are the factors responsible? What is wrong with the various intervention programmes initiated by the government? What are the socio-economic and political implications of the rising rate of unemployment among the youth? Is there a possible panacea to such socio-economic paralysis? This paper will be incomplete without proving valid answers to the above questions which is the objective of the study.

Among the relevant theories for this study is the Classical and Kenyesiantheoryof employment and unemployment, which opines that when there is excess supply of labour, unemployed workers can offer to supply labour at a lower money wage, firms can offer to hire labour at a lower wages to existing employees (Karl1978). The truism of this theory brings to our attention, not only the issue of unemployment but also underemployment. According to Asaju (2016), underemployment is unemployment in disguise. Underemployment is a situation where people are paid less for a job which they are over qualified for or work more than the stipulated terms of agreement. It is a state of underutilization of one potential and a waste of human resources. This is possible as a result of the fear of losing one’s job.
Both unemployment and underemployment are resultant effect of excess supply for labour in the labour market. Nigeria youth’s are trapped in the state of involuntary unemployment as a result of the inability of the labour market to absorb the growing number of job seekers. Over 18.22million people are underemployed as revealed by the third quarter report on labour statistic National Bureau of Statistics (NBS 2018) The ordeal of unemployment and underemployment has literally led millions of youth into the hands of exploitative employers who considers employees as factors of costs in the working environment, leading to dehumanization of the vulnerable youths who are desperately seeking for employment by all means possible. Employers of labour recently are actively exploiting the human resources as a result of the threatening increase rate of unemployment in Nigeria.
International labour Organization (ILO2007) defined unemployed workers are those who are currently not working but are willing and able to work for pay, currently available to work and have actively search for work. In a situation where there is a devaluation of the human resources (labour force) as a result of supply over demand of labour, it will be difficult to determine real wages as observed by Lucas (1972). This means that people will be working almost for free which will bring about voluntary unemployment in the country.
According to the Marxian theory of unemployment, unemployment is inherent, inevitable and is profitable because mass unemployment lower wages which are costs from the perspective of the employer. Unemployment is an economic tool use to create a downward pressure on wages as the number of unemployed workers increases the demand for workers decreases. Marx (1956) theorized that the functions of the surplus proletariat are dividend into [employees] and underemployment [unemployed]. This reserve army of unemployed labour fights among themselves for scares jobs at lower and lower wages.

Types of Unemployment
In this session, the study will be highlighting briefly on the main types of unemployment which include classical, cyclical, structural and frictional unemployment among many others.

Classical unemployment
Classical unemployment, sometimes called real-wages occurs when the numbers of job seekers exceed the number of vacancies. As argued by economist, when wages fall below a liveable wages many choose to drop out of the labour market and no longer seek employment. When wages are low it result in lower labour participation in the labour market leading to classical unemployment. Workers tend to actively participate in the labour market when wages are high enough to motivate them. Therefore higher wages increases labour participation and decreases unemployment.

Cyclical unemployment
This type of unemployment also known as the deficient-demand unemployment occurs when there is no aggregate demand for goods and services to provide jobs for everyone who is willing and available to work. In an economy where there is a fall in the demand for goods and services, lesser production will be required and consequently fewer workers are needed leading to the retrenchment of workers. When there is a decrease in money supply it will suddenly cause a fall in the purchasing power which inhabit a fall in aggregate demand and this inhabit labour demand leading to cyclical unemployment. With cyclical unemployment, the numbers of unemployed will exceed the number of available jobs, making it impossible to attend full employment.

Structural unemployment
Structural unemployment occurs when an economy of a nation is unable to absorb the number of workers who wants to work. This is basically as a result of a mismatch between the skills of the unemployed workers and the skills needed for the jobs available. Structural employment occurs when there is a change in the structure of an industry or the economic activities. Such structural changes can be stimulated by the change in technology, thereby rendering the skills of job seekers rusty and obsolete, making them unmatched for the jobs available.
Empirically it is difficult to separate structural unemployment from frictional unemployment also known as search unemployment. Frictional unemployment occurs within the time period where a worker is searching for or transitioning from one job to another. However if the search-period takes too long it leads to frequent mismatches of skills and available jobs just like in the case of structural unemployment.

Rapid Population Growth:
According to National Population Commission (NPC 2015), Nigeria had an estimated population of 193million with an annual population of growth rate of 3.2%, while the United Nation Estimate on May 31, 2019 estimated Nigeria population at over 200million. This is equivalent to 2.6% of the world population ranking Nigeria as the 7th most populated country in the world and the most populous nation in Africa. Irrespective of the varying estimates, population growth has been identified globally as one of the stimulating factor directly responsible for the high rate of unemployment as the rapid growth of the labour force outstrip the supply of jobs.
Nigeria president, Muhammadu Buhari admitted that among the enormous problems of Nigeria is population growth rate and teeming young people (Scooper 2019). The accelerated population growth on Nigeria’s unemployment problem is multifaceted. It affects the supply side through a high rapid increase in the labour force relative to the absorptive capacity of the economy (Uddin 2013).

Increase in the Supply of Educated Manpower:
The state of unemployment that was originally limited to those without basic education is now compounded with professionals like accountants, engineers, lawyers among others. Education in Nigeria can no longer provide assurance for getting a job as so many people are educated and jobless. There exists a lack of synergy between the supply and demand for graduates who are mostly youths in the Nigeria labour market. (Balodun 2016) hinted that almost half of the 10million graduates, churned out of the over 668 universities in Africa yearly, do not get jobs.
As revealed by National Universities Commission (NUC 2018) that there are about 1.9million students currently studying in Nigerian universities, whereas popular estimates shows that Nigerian universities produce 500,000 graduates annually. We now find ourselves in a system where too many people are chasing too few jobs. The future remains bleak for graduates if formal jobs are not created at a considerably faster rate. Considering that the country has many people still in school which increases the supply of educated manpower over the demand for graduates.

Poor Political Governance:
Political Governance has a long history traceable to ancient Greece the city of Athens about 2500 years ago during the time of Kleisthens (500/507BC). It was such a powerful and appealing idea that produced a cycle of men whom interest of the polis and demos (community and people) became of paramount concern (Dunn 1993). Nigeria has experienced pervasive failure in the leadership structure over the years thus, crippling the economy and engendering and exacerbating unemployment which creates abject poverty, hunger, frustration and suicide. Welcome to Nigeria where the competency of a job seeker is compromise with nepotism, favouritism, and tribalism. This is one of the consequences of poor political governance that one has to buy a job in cash or kind. As a result of such porous political governance in Nigeria, there have been records of high profile corruption and misdirection of the nation’s resources. The political unwillingness of Nigerian leadership has inhabited a chronic youth unemployment that is almost out of control if not out of control. If the federal government of Nigeria can generate and allocate 19.89billion naira overhead allowance for the 9th general assembly (NASS), then the government should be able to successfully wrestle the problem of youth unemployment to the ground.
The government of any country plays a pivotal role in curbing and tackling the phenomenon of unemployment because it is considered not only as the largest employer of labour but also policy maker. Policies which when fully implemented will not only reduce the rate of unemployment but will go further to create an enabling, sustainable and investable environment where people can demonstrate their skills and resourcefulness and be rewarded.

Falling Standard of Education:
Outdated school curricula and lack of employable skills are other identified factors contributing to the growth of youth unemployment in Nigeria. Some scholars have argued that the average Nigeria graduate is not employable and, therefore, does not possess the skills needed by the employers of labour for a formal employment (Oyokunle, 2016). Findings showed that there was no effective collaboration between universities and labour employers in providing relevant skills required for employability. Nigerian universities train students to become labourers rather than employers of labour having the requisite skills and knowledge of creating a job when one cannot be found. There is a pending need for educational reform in Nigeria, so that the number of graduates turned out by the universities annually into the labour market can competently fill in the available jobs vacancies. With high standard the educational sector can single handedly combat the gruesome rate of youth’s unemployment by initiating entrepreneurship training scheme starting from primary schools to tertiary institutions, making the youth not just employable but jobs creator.

Technological Adoption:
Despite the immerse benefits of technology in any growing economy which cannot be over emphasized. A shift in technology is one the silent causes of unemployment most especially in a developing country like Nigeria. The adoption of sophisticated technologies by multinational companies has brought about the replacement of workers with machines. Before now it takes more hands to get a job done but with the adoption of advance technologies even in the production industries, it’s requires fewer hands to actually get a job completed. This is one of the bitter truths we must accept on the disadvantage of technological adoption by companies as we work toward a lasting solution to the problem of unemployment in Nigeria. A large number of the unemployed are categorized as unskilled and uneducated. With the adoption of high technologies by industries, these sets of unemployed people are completely left out of the possibility of ever getting a job. As a measure of costs control companies are downsizing more frequently as more machines are bought to take the place of workers leading to loss of jobs thereby increasing the rate of unemployment thereby intensifying the level of suffering and hardship of the unemployed.

Firstly, one of the most frightening phenomenons associated with the upsurge of unemployment in Nigeria is crime. Crime is a phenomenon that is bedevilling various countries across the globe in varying degrees as it affects policies and development Abayomi (2013). Available data show that crime related activities such as armed robbery, kidnapping, political thuggery, prostitution, homicide, militancy, internet scam, (ritual killing) and all social vices found among the unemployed and jobless youths have negatively contributed greatly to the social unrest and slow pace of development in Nigeria. These social vices have a negative effect on the country because this has been the fear of most foreign investors and they are also giving the country a bad reputation internationally.
According to Anthony (2013), the population of any nation represents the driving force for development. However, for the youths to become useful resources, they must be gainfully employed. No country can make socio-economic progress under a climate subdued with crime related activities, which we see in the case of Nigeria. Youth unemployment and the rising waves of crime have a serious implication in the nation’s development and prosperity. World Bank Report states that the youth holds the key to achieving the vision (2020).
Data supplied by the Nigeria prisons service showing the age distribution of prisoners convicted of different offences are 16-25 years National Bureau of Statistic (NBS 2009). Hypnotically, we can rightly posit that there exist a nexus between youth’s unemployment and the alarming rate of hideous crimes perverting Nigeria. Idleness or joblessness is a silent stimulator of crimes. When people are not rightly engaged, they will certainly be wrongly occupied. The increasing presence of unemployment among the youth spells great adversities for Nigeria in the present and also in the future.
Secondly, on economic implication of youth’s unemployment in Nigeria, the proportion of workers employed shows how well a nation’s human resources are fully utilized and also serves as an index for economic movement( positive or negative). Human resources remain a major catalyst for economic growth and development in Nigeria. The full potentials of the human resources are utilized when people are actively participating in the general economic activities as labour force, thereby contributing to the economic growth and expansion. There will be negative effects on the nation’s economy when the human resources are unutilized and undeveloped. The youth’s are contributing factor to the total growth of the economy.
Human capital is the master key to the rapid industrialization and socio-economic growth. What this Implies is that we might have money, sophisticated machines, high quality materials and land with the most precious materials on it. Unless we have the right quality and quantity of human resources, real development and economic growth will be almost impossible (Nagga 2000).
Unemployment in Nigeria is a major problem both economically and socially. To an extend unemployment have an effect on the making of the Gross Domestic Product (GDP). Increase on the unemployment rate has drastically diminished the making of the Nigeria GDP over the years. Unemployment has a pivotal role to play as increase in its figures will lead to economic drawback and vice-verse (Muhammad 2011). The issue of unemployment has been hindering the positive movement of the Nigerian economic growth. Findings showed that unemployment has enormous effect (over 65%) on the making of the Nigerian GDP and there exist an inverse relationship between the model (unemployment) and the GDP-increase in the model leads to decrease on the GDP and vice verse Oye (2011). The higher the unemployment rate in an economy the higher would be the poverty level and associated welfare challenges (Emeh I. E et al 2012).

The Rate of Youth Unemployment and Underemployment in Nigeria
Findings indicate that unemployment among the young people in Nigeria is on the increase yearly likewise the rate of underemployment:

Table 1: statistics of unemployment and underemployment in Nigeria
Working Age population 115,493 –
Labour force 90,471 –
Employed persons 69, 165.60 –
Unemployed 20, 928 23.1
Unemployed 18, 216 20.1
Youth unemployed 13, 145, 708 29.72
Youth underemployed 11, 358, 381 25.7
Source: (Adapted from NBS labour force statistics Q3 2018)

From the above table, the working age population (15-64 years of age) stood at 11.5million. And the labour force is 90.5million which represent the economically active people who are willing and able to work. And the total employed persons stood at 69.5million this include those who are fulltime workers (40 hours a week), and part time workers (20 hours a week). The total number of people classified as unemployed, which means they do nothing at all, is 20.9million at a growing rate of 23.1%. While the number of people within the labour force who are also classified as underemployed which means they work less than (20 hours a week) is 18.2million with a rate 20.1%. The number of unemployed youth (15-35 years of age) stood at 13.1million with a rate 29.72%, and that of the underemployed at 11.4million with a rate of 25.7% which literally has declined as compared to the previous year at the rate 27.2% Q32017.

Chart 1: Statistic on Unemployment and Underemployment for Q3, 2018

Source: NBS labour force statistics Q32018

As revealed by the above chart, the rate of youth unemployment (15-24 years) stood at 36% and those aged (25-36) at 24.4% putting the total rate of youth unemployment at 27.72%. And that of underemployment aged (12-24) at 32.1% and 20.7% for aged (25-34) making the total rate of youth underemployment 25.7%. This is a clear indication that the youth aged (15-34) bears the burden of unemployment and underemployment in Nigeria.

Possible panaceas suggested by this study were drawn from previous findings.

Strengthening and Reform of the Educational System:
Apart from lack of adequate funding, which has been one of the major set-back in Nigerian universities, there seems be a mismatch between the skills of university graduates and the realistic demand in the labour market by employers of labour. With the growing rate of graduate unemployment one can posit that the competency of university graduates falls below the requisite skills and knowledge required by employers. Graduates are not only unemployable but are also unable to create jobs for themselves. This is as a result of the falling standard of the Nigerian universities which requires a great degree of strengthening. There is also an urgent need for educational reform as this will enable tertiary institutions in Nigeria to develop curricula content beyond mere theoretical knowledge to practical relevance, meeting the needs of their nation’s economy. The reform in the educational system will bridge the schizophrenia gap between school curriculum and real life demand. This will be a path way preparing and equipping students, making them self-reliant and major contributors to the socio-economic and political development in Nigeria. As part of the suggested solution to the problem of youth’s unemployment in Nigeria, Poletaes and Robinson (2008), as highlighted by Olukayode (2017) suggested that universities should engage in concrete partnership with employers of labour to develop a demand driven curriculum that will produce graduates with skills for employment fulfilment. They also proffer a competency based educational scheme to bend theory and practice, thereby inculcating entrepreneurial and vocational acquisition skills in tertiary institution graduates.

Diversification of the Economy:
Diversification of the economy entails strengthening the integration of various economic sectors, which create synergy between them leading to a wealthier global economic climate in the nation. When an economy is diversified, it brings about a shift on investment thereby expanding the nation’s economic output. This increases the level of money supply and also increases the demand for labour in the various diversified sectors which proportionately reduces the piteous rate of unemployment. Diversification of Nigeria economy will bring about inclusiveness of all labour-intensive sectors. This will expand the shocks of the labour market in absorbing the growing population of the unemployed youths. Over reliance on the oil sector by the government is a waste of human capital, resources and other factors of production for a sustainable economy. Nigeria economy is mono-economy, depending on oil. Good percentage of Nigerians lives in abject poverty, unemployment is on the high and productivity at its lowest level (Suberu .O.J 2015). Tellingly, the suggestion of economic diversification as a panacea to youth’s unemployment in Nigeria should not in any way divert the government focus on expanding the oil sector as the 2019 budget of N8.73tn of which expected revenue is N6, 966tn out of which N3, 688tn will be from oil while non-oil income will be N1, 385bn and the rest from borrowing (Deca 2019).

Inclusive Implementation of Youth’s Empowerment Programmes (YEP):
Hard wired implementation of the intervention programmes and non-inclusive approaches adopted coupled with the weak institutional frame work and uncertainty arising from frequent policy changes and inconsistencies of government was identified as the major challenges holding back the objectives of the matrix initiatives like N-power, the Bank of Industry’s Youth Entrepreneurship Support (YES), National Directorate of Employment (NDE) and National Poverty Alleviation Programme (NAPEP), Central Bank of Nigeria and Bank of Africa Support Scheme, SURE-P, You-Win, lifeBank-to scale. These various agencies and intervention programmes designed to tackle youth’s unemployment and underemployment can contribute immensely to the betterment of all Nigerian youth. For example; the N-power programme was designed to empower both skilled and unskilled graduates by providing them with short-term job opportunities in all the sectors of the economy. The programme already has 200,000 beneficiaries and aims to cater for 300,000 before completion. And also the West African Vocational Education (WAVE) Academy is active in this space. As at the end of 2017, the academy was training 2,000 youths on basic work competencies.

Good and Efficient Governance:
Among the various measures proffered by scholars in curbing the scourge of unemployment, good and competent leadership has the highest percentage. When the head is sick every other part of the part gets a fair share of the pains. The federal government owes the country a lot when it comes to creating an enabling environment for socio-economic development. The government must focus on providing good infrastructure, access to finance, equipped healthy care facilities, effective power supply and finding a lasting solution to our security challenges. All these will go a long way in boosting employment opportunities and enhance entrepreneurship development in Nigeria.

Fostering a Culture of Honesty, Dignity of Labour and Hard Work:
If Nigerian leaders and youth can return back their original honest and hard working folks they were known for , unemployment might reduce because people will do whatever their hands find to do not minding whether if it is not a white collar job Olawole (2016). Nigerian youth must start thinking for themselves. The question of what would the government do for us should become what can we do for ourselves and for the government. The future of Nigeria is in the hands of the youth because the youths are the future of Nigeria.

The underpinning element and drive behind this study was evidential in the high level of hardship, crime, frustration and suicide found mostly among the youth in Nigeria. Findings revealed that the problem of unemployment is a global challenge confronting both developing and developed countries across the world. Even among the black nations, the Republic of Congo is ranked as the country with the highest rate of unemployment in the world with an unemployment rate of 46.10% while Nigeria is ranked as 10th with an unemployment rate of 23.10%. Compounding figures shows that over 13.1million youths are unemployment and about 11.4milllion underemployed in Nigeria. Such rising figures is gruesome, devastating and serve as a menace to the socio-economic and political development in Nigeria. In emasculation, For Nigeria to achieve her aspiration all resources both human and natural resources must be optimally and maximally employed and utilized as an aggregate for economic development.