Creating low-skilled jobs in the manufacturing sector that offer lower wages can help Nigeria temporarily tackle unemployment problem, experts have said.
With the unemployment rate at 33.3 percent and youth unemployment rate at 42.5 percent, Nigeria’s population forecast could create a situation where the structure and pattern of growth are insufficiently geared towards job creation.
“In order to create more jobs, low-wage manufacturing, which would be an engine of urban wage jobs, has to feature,” said Haroon Bhorat, a professor of economics with expertise in labour economics at the University of Cape Town, South Africa, at a recent webinar organised by the Carnegie Endowment for International Peace, a nonpartisan foreign-policy think tank.
Bhorat said without this, it would be difficult to create jobs even if the high oil price in Nigeria translated to 5-6 percent growth. “This is cyclical growth, what is important is structural growth.”
According to Bhorat, this system has a better chance of generating the type of jobs people need than a primary commodity type of transformation.
In the era of the first industrial revolution, the manufacturing sector relied heavily on low-skilled physical labour, making it one of the largest job producers.
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It is known to have significant contributions to economic development such as productivity gains and job creation for low-skilled workers.
Clear evidence of countries that benefited from this initiative is China, the world’s most populated country.
The country was successful in maximizing its large pool of low-skilled labourers. It helped the country to engage in the international market and become a successful breeding ground for manufacturing, receiving an overflow of outsourcing from various companies.
“If you have an industrial or manufacturing revolution, it is going to be very critical in taking people off the jobless markets. Although the low-wage jobs might not make them the richest, everybody will have the money to take care of their basic needs of life,” Ayorinde Akinloye, an analyst at United Capital plc, said.
The informal sector is large in Nigeria as it is estimated to be about 65 percent and consists of activities that range from agricultural production to mining and quarrying, small-scale building and construction and machine-shop manufacturing.
Nigeria’s manufacturing sector is still far away when it comes to factories and industries.
According to the National Bureau of Statistics, the sector grew by 3.4 percent in the first quarter of 2021 from -1.51 percent in the fourth quarter of 2020 and 0.43 percent in the first quarter of last year.
But Ayodele Shittu, a lecturer at the Department of Economics, University of Lagos, disagrees with the low-wage manufacturing job policy as an approach to solving the country’s unemployment problem.
“China used it and it has worked for them because there was a high poverty rate in the land, they had internal migration from rural to urban areas and an average Chinese is content, they respect their income status, unlike Nigerians,” Shittu said.
He also added that in the fourth industrial revolution, technology is king. “if you are going to be applying technology to manufacturing, obviously, you are going to be employing tech-savvy workers or technology inclined workers, so how will you now pay them low wages.”
Under the Economic Recovery and Growth Plan (ERGP) and Economic Sustainability Plan (ESP), some interventions by the government have been made to address the issue of unemployment. One of these interventions is payroll support for Small and Medium Scale enterprises.
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