A recent report from the United Nations Development Programme (UNDP) and the National Bureau of Statistics (NBS) has shown that 20 percent of the full-time workforce in Nigeria lost employment during the COVID-19 pandemic in 2020.
The report, which assessed the impact of COVID-19 on business enterprises in Nigeria, was based on in-depth interviews with almost 3,000 businesses from both the formal and informal sectors across major industries of the economy.
The implication of this finding is that for every ten people that were gainfully employed in 2020, two are currently out of job. This itself has far-reaching consequences on the already dwindling Nigerian economy and socio-economic environment.
As scary as that report was, the more frightening one is that of a new report by the Presidential Economic Advisory Council (PEAC) which states that Nigeria’s unemployment rate is projected to increase further by 7 percent to 40 percent by the end of 2021. This warning appears dire considering that the current unemployment rate put at 33.3 percent by the National Bureau of Statistics (NBS) is producing devastating consequences, increasing rising criminality, and the exodus of the skilled and unskilled workforce and worsening poverty in the country where over 23 million people have no jobs.
There are various definitions of unemployment according to what is obtainable in a country. According to Organisation for Economic Co-operation and Development (OECD), an international organisation that works to build better policies for better lives, unemployment is persons above a specified age not being in paid employment or self-employment but currently available for work during the reference period.
The problem of unemployment in Nigeria is becoming chronic without a solution in sight. It has also been exacerbated by the prevalent retrenchment, unbridled rural-urban migration among others.
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Unemployment is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the labour force.
The Doyin Salami chaired PEAC blames rising unemployment largely on the low capacity of the manufacturing sector. Citing the Central Bank of Nigeria (CBN) July 2021 Purchasing Managers’ Index report, the group said that the sectors’ employment indices at 46.5 remain constrained below the 50 points mark. A figure below 50 indicates a contraction in employment levels.
The problem of unemployment in Nigeria is becoming chronic without a solution in sight
Manufacturing is known to be among the top job-creating sectors of the economy. Although growth in the sector has improved over the last year, it is still very weak along with other job-creating sectors.
Experts validated the projection of the advisory group adding that the impact of the coronavirus could worsen the situation.
An expert explained that the effect of the Covid-19 pandemic and some of the policies taken by the federal government is still affecting businesses. According to the recent second-quarter 2021 GDP report by the NBS, the manufacturing sector grew by 3.49 percent from 3.40 percent in the first quarter of 2020 and a contraction of 8.78 percent in the second quarter of 2020.
It is obvious that a lot of manufacturing companies are leaving the country for Ghana and other neighbouring African countries due to the perceived unfavourable business environment.
The most unfortunate aspect of this exit from Nigeria to neighbouring counties is that this creates employment for the destination countries while increasing unemployment in Nigeria, yet the goods produced in the destination countries still find their ways back to Nigeria to explore the population advantage and by extension high consumption in the country.
The increasing unemployment rate also has an adverse effect on the manufacturing sector as loss of jobs affects aggregate disposable income in the country which in turn weakens the market for the manufacturers and thereby compounding their woes. This becomes cyclical as manufacturers are forced to further cut down their labour force.
In of all these, what policies measures and concrete plans are being put in place to address this economic challenge?
From all indications, Nigeria tends not to be making enough efforts to create quality and decent jobs that the youths truly deserve. Rather the country is busy expanding indirect jobs which are mostly informal in nature.
The Federal Government recently announced the launch of a plan to tackle Nigeria’s youth unemployment crisis, called the Nigerian Youth Employment Action Plan (NIYEAP 2021-2024).
The plan is the government’s attempt to achieve its goal of creating 3.7 million jobs annually so as to achieve sustainable economic growth in the country.
In the words of Sunday Dare, Minister of Youth and Sports Development, the plan would emphasize the 4Es, which are: employability, entrepreneurship development, employment creation, and equality and rights, with detailed actions required in support of employment creation for youths in critical economic and social sectors.
The PEAC has suggested that for the Nigerian economy to rebound there must be a massive investment in research and development, digitization of health and education and also empowering the youthful population with productive skills. Nigeria needs an industrial or manufacturing revolution. This is going to be very critical in taking people out of joblessness. Although the low wage jobs might not make them the richest, at least, everybody will have the money to take care of their basic needs of life,
The consequences of unemployment in Nigeria includes a reduction in the national output of goods and services. Increased rural-urban migration and high levels of poverty.
Unemployment can also have a significant impact on a person’s physical health. Being unemployed is a highly stressful situation, so it may cause stress-related health issues such as headaches, high blood pressure, diabetes, heart disease, back pain and insomnia as well as increased suicide rate in the country. There is nothing more frustrating than youths who have done all they need to do in terms of education and yet remain unemployed.
While the government is doing what it deems right to reduce the embarrassing rate of unemployment, experts believe that the most important thing for the government to do is to create enabling environment for the private sector, especially manufacturing sectors to create low-skilled jobs with lower wages that can help Nigeria temporarily tackle Nigeria’s unemployment problem.
There is also a great need to initiate policies and educational curriculum that emphasizes entrepreneurial initiatives among our graduates to enable Small and Medium Enterprises (SMEs) to flourish. This can be done by developing agriculture and make it more attractive for our youths,
Pre-vocational courses that could help young ones acquire skills in areas such as electrical/electronics, woodwork, metalwork, block-laying, automobile, hairdressing, fashion, computer tech; etc; should be taught; these will make our educational products to be job creators instead of job seekers.
