1.1 BACKGROUND TO THE STUDY
Unemployment is generally seen as a
macro-economic problem as well as socio-economic problem. Unemployment
arises as a result of insufficient and non-availability of jobs to
correspond with the growing population, even those who are employed
sometimes live with the fear of being unemployed due to job insecurity
and retrenchment of workers. There is employment of factors of
production if they are engaged in production. The term unemployment
could be used in relation to any of the factors of production which is
idle and not being utilized properly for production. However, with
reference to labour, there is unemployment if it is not possible to find
jobs for all those who are eligible and able to work. Labour is said to
be underemployed if it is working below capacity or not fully utilized
in production. (Anyawuocha, 1993).
Unemployment can either be voluntary or
involuntary. Voluntary in the sense that one chooses not to work because
he or she has means of support other than employment. Example is an
idle rich man. On the other hand, involuntary unemployment exist when
persons who are eligible and willing to work at the prevailing rate of
pay are unable to find work. (Anyanwa, 1995).
According to the central bank of Nigeria (2004), unemployment rose to 30% during 2004 statistics on unemployment rate.
Unemployment has been seen as a world-wide economic problem and has
been categorized as one of the serious impediments to social progress.
Apart from representing a huge waste of a country’s welfare, it also
implies loss in terms of lower output thereby leading to lower income
and wellbeing of the people (Akinboyo, 1987, and Raheem 1993).
Unemployment is a very serious issue in Africa (Vandemortele, 1991, and
Rama 1998), and particularly in Nigeria (Oladeyi, 1994 and Umo, 1996).
The need to avert the negative effect of unemployment has made the
tackling of unemployment problems to feature very prominently in the
development objectives of many developing countries.
In the study of unemployment in Africa, Okonkwo (2005) identified
three (3) causes of unemployment, namely; the educational system, the
choice of technology which can either be labour intensive or capital
intensive and inadequate attention to agriculture. The use of machines
to replace work done by labour and computerization has contributed to
these social problems in the sense that for example; a task meant to be
manually undertaken by forty (40) men can be done by a machine with only
five (5) men involved. Therefore, the remaining thirty five (35) are
unemployed. More so, lack of enough education and skill and inability to
have access to credit and capital.
One particular feature of unemployment
in Nigeria is that it was more endemic in the early 1980’s than any
other period. According to Udabah (1999:62), the major factor
contributing to low standard of living in underdeveloped countries is
their relative inadequate or inefficient utilization of labour in
comparism with advanced nations. Unemployment rate is measured by the
proportion of the labour force that is unemployed divided by the total
number of the labour force. The total labour force was projected at
61,249,485 in 2007 indicating an increase of 3.9%. Total employment in
2007 stood at 52,326,923 compared with 50,886,836 in 2006. This
represents an annual increase of 2.8%. The labour force(that is, those
who currently have jobs) consists of the number of people age 18 and
above and unemployed (those who do not have jobs but who are actively
looking for work).Individuals who do not fall into either of these group
such as retired people and discouraged workers are not included in the
calculation of the labour force.
The International Labour Force
Organization (ILO) defines unemployment as the proportion of the labour
force which was available for work but did not work for at least one
hour in the week preceding the survey period. National Bureau of
statistics (N.B.S), Nigeria defines unemployment as the proportion of
the labour force that is available for work but did not work for at
least thirty nine (39) hours in the week preceding survey period.
Unemployment according to lipsey
(1963:456) brings about economic waste and cause human suffering.
According to Fadayomi, 1992, Osinubi, 2006, unemployment is as a result
of the inability to develop and utilize the nations manpower resources
effectively especially in the rural sector.
The socio-economic effect of
unemployment includes: fall in national output, increase in rural-urban
migration, waste of human resources, high rate of dependency ratio,
poverty, depression, frustration, all sorts of immoral acts and criminal
behavior e.g prostitution, armed robbery e.t.c. The social effect of
unemployment brings to light the need to proffer possible solutions to
salvage our nation Nigeria.
1.2 STATEMENT OF THE PROBLEM
Working with the data from the national
bureau of statistics, it indicates that the national unemployment rate
in the first quarter of 2007 was 14.6%, compared with 13.7% in 2006. The
urban and rural rates were 14.4% and 15.0% respectively compared with
10.2% and 14.8% in 2006. Further analysis showed that the distribution
of unemployment ranged from 14.1% for the age group of 25-44 and 23.5%
for the age group of 65-70. Desegregation according to geopolitical
zones showed a very uneven distribution with the south-south zone having
the highest unemployment rate of 29.5% and south-west at the rear with
8.5%. Between these extremes were the north-east with 18.5%, south-east
18.1%, north central 15.8% and north-west 14.2%.
It is based on the increasing problem
posed by unemployment on individuals and the nation at large that the
government has been embarking on various policies to control and reduce
unemployment but yet has not yielded any positive result, rather it
seems to be escalating. Drastic measures must be taken by the government
to curtail this problem of unemployment. The statement of problem is
based on the economic, social and political effects of unemployment.
1.3 OBJECTIVE OF THE STUDY
The broad objective of the study is
to examine the impact of unemployment on the economy growth of Nigeria.
The specific objectives of the study are;
- i. To examine the relationship between unemployment and economic growth in Nigeria
- ii. To examine the impact of government’s expenditure on education.
- iii. To examine the impact of government’s expenditure on health.
1.4 RESEARCH HYPOTHESIS TO THE STUDY
In assessing the relationship between
unemployment and economic growth in Nigeria, the hypothesis stated below
was subject to empirical test. Using quantitative statistical
Ho: Unemployment does not have significance impact on economic growth in Nigeria.
1.5 JUSTIFICATION FOR THE STUDY
Studies on contribution of education to
growth and development of an economy have shown that there is casual
relationship between education and economic growth. Briggs (1999) stated
that the economy of the developing countries and their slow rate of
progress could be attributed to their deficiency in education.
According to ILO (1999), ‘’a
healthier, more educated and highly skilled population is the surest way
to higher productivity’’. Following these assertions, therefore, one
may suggest that in ensuring sustainable economic growth and development
in an economy, education is a critical factor. In the Nigerian context,
education is looked upon for social and economic transformation (see
national policy on education 2004). There is a large amount of evidences
suggesting the positive association between education and economic
growth. Notable among these studies include Shamistha and Grabowski
(2004); Prodrecca and Carmei (2002), Temple (2001). Odusola (1998).
Examines the impact of human capital investment on economic growth in
Nigeria. He disaggregated government expenditure on education into
capital and re-current expenditure on education with view to determine
the particular expenditure pattern of government with the larger
contribution to education quality growth. Realistically, the development
in Nigeria’s educational system has attracted considerable empirical
scrutiny (Yesufu 2000). The mechanics of how human capital influences
economics growth has however, attracted modest inquiry. Investing in
human capital most especially women education, will also enhance their
productivity capacity, increase their income and make them better
informed about the value of health care and personal hygiene. An
educated woman will be able to improve the health and life expectancy of
her children and create incentives for reducing family size, which in
turn will help reduce poverty (Psacharopaulos and winter 1990)
The political rhetoric surrounding this
issue is quite long, but augmentation with specific investigation
especially for Nigeria is scarce. This is the motivation behind this
study and also the study is important for Nigeria that is faced with
astronomical levels of unemployment, paradoxically among the highly
educated. Thus, it is pertinent to investigate how significant public
expenditure is to human capital development in the context of high
unemployment among the well-read.
1.6 SCOPE OF THE STUDY
The scope of this study is centred on
the effect of unemployment on the Nigerian economy. The research work is
also centred on ten years duration from 1990 - 2014. The regression
analysis will be based on the use of time-series data extracted from the
central bank of Nigeria statistical bulletin. The method of analysis
used in testing the hypothesis is the t-test, f-test e.t.c.
1.7 PLAN OF THE STUDY
The study is structured into five
chapters; chapter one deals with the background to the study, statement
of problem, objective of the study, hypothesis of the study,
justification for the study, scope of the study and plan of the study.
Chapter two covered the literature review and the theoretical framework.
Chapter three contains the nature and sources of data, model
specification, a priori expectation, re-statement of hypothesis, method
of analysis and evaluation criteria. Chapter four is on data
presentation , analysis and discussion of empirical results, chapter
five contains the summary of major findings, conclusion and