Unemployment defies govt. policies, worsens misery index
March 29, 2021553 views0 comments
By Charles Abuede
- Despite government’s huge investment funding, youth employment initiatives
- United Capital, FBNQuest, Afrinvest analysts weigh in
- Analysts canvass structural, policy changes
Nigeria’s rising joblessness rate has continued to add to its worsening misery index and low human capital development, forcing analysts to canvass for functional and structural policy changes to counter the huge unemployment which continues to defy several investment funds, policies and initiatives by the federal government to curb the excess job losses through support for the economy.
The latest unemployment and underemployment statistics from National Bureau of Statistics (NBS) in Abuja showed that the labour force, which comprises of the population of working age between 15 and 64, increased to 122 million in the last quarter of 2020, 4.3 per cent higher than the figure recorded in the second quarter of the same year, while the unemployment rate worsened to 33.3 per cent from the 27.1 per cent reported in the respective quarters, posting the worst performance on record, since the reporting of quarterly data began in 2010.
Nigerian government’s efforts has no felt impact yet
A more worrying picture emerges in the youth unemployment rate. This is alarming considering the Federal Government’s effort at boosting youth employment; particularly the most recent N75 billion Nigerian Youth Investment Fund (NYIF) that aims to generate 500,000 jobs by 2023, which was created in July 2020 but which impact is yet to be felt by all and sundry. Rising youth unemployment unmasks the motives behind the youth restiveness witnessed in 2020. The federal government also announced plans to initiate a N2 trillion stimulus package and survival fund for Micro Small and Medium Enterprises (MSMEs) to stay afloat during the Covid-19 crisis.
However, the data released by NBS shows that this teeming age group has the highest unemployment rate even though a lot of interventionist schemes have been directed towards the group. This has forced analysts to opine that it clearly explains that, like many fiat-backed interventions, they are inadequate as long as structural issues remain. Nigeria’s unemployment has been steadily rising over the years as efforts to curtail it have proved abortive. The recent Covid-19 pandemic has further exacerbated the unemployment levels with fiscal and monetary measures implemented to support the economy inadequate to curb job losses.
From the published NBS report, it is shown that, among the states, Imo reported the highest unemployment rate with 56.6 per cent, while Adamawa and Cross River states recorded unemployment rates of 54.9 per cent and 53.7 per cent respectively; while the state with the lowest rate was Osun at 11.7 per cent. Taking a cue from the myriads of events in the economy, this becomes more worrying as inflation continues to be on an expansion race, the weakening purchasing power of the naira continues, the global health pandemic which has caused many businesses to cut their workforce and also adopt a work-from-home approach to business operation, among other factors.
Analysts at FBNQuest Capital Research have stated that these unrelenting numbers in the unemployment rate still mirror the growth of the real sector as being in a poor state. “The rise in the unemployment rate mirrors the poor growth of the real sector. The economy has experienced an additional challenge from Covid-19 in the form of supply chain disruptions and slumping demand, with some workers losing their jobs and disposable incomes squeezed. Official data show that the 37 million-plus micro, small and medium enterprises (MSMEs) in Nigeria provide over 59 million jobs, and account for almost 50 per cent of GDP,” they noted.
“Although the pandemic affected the labour market,” research economists at Afrinvest Securities Limited, wrote in a note, adding that, “The Nigerian economic woes pre-date the pandemic as population growth at 2.6 per cent (IMF) continues to outpace real economic growth rate, impeding employment growth. With the associated effects of the pandemic, poor FDI flows and unfavourable macroeconomic conditions, significant improvement in employment may not be a walk in the park. In addition, the government appears to lack the necessary creativity and capacity in using data to design job elevation programmes for the Nigerian masses,” they said.
Major high points to note from the NBS data still points to the fact that structural changes are needed to improve the menace of unemployment in Africa’s largest economy with over 200 million people and a burgeoning youthful workforce. Consequently, the decline in the labour force, despite a 4.3 per cent increase in the working-age population to 122 million, implies that more people have lost interest in job search. A key takeaway is that the Nigerian economy is not sufficiently developing to accommodate the rising number of individuals entering the work force year in, year out as this exposes the country’s age-long inefficiency in prioritizing key macroeconomic information like job opportunities and the nonchalance in using such measurements in driving vital speculation strategy choices that would, thus, stimulate capital inflows and propel robust and sustainable growth.
A revamped policy framework, structural changes are a panacea to ameliorating the situation
Analysts have also, in their various weighted views, asserted that for the situation to be savaged and to get Nigeria out of the misery index, several structural issues needed to be resolved, as they pointed out that a revamped policy framework that can allow for private sector partnership with the public sector in expanded job creation goals is sacrosanct to achieving accelerated economic growth and a steep fall in the rate of unemployment.
According to analysts at United Capital Securities Limited: “To truly resolve the unemployment situation, we reckon several structural issues need to be resolved. First, a revamp of policy frameworks (Regulatory and Economic) that influence the business environment must be implemented.
“In addition, the institutions designed to implement these policies must be strengthened to adequately enforce them and prevent volatile policy backflips. Furthermore, under-tapped sectors like mining should be opened for private sector participation. These measures will help galvanise private sector investments and drive establishment of business which, ultimately, leads to improved job creation and accelerated economic growth,” they posited.
Sharing the same view as the United Capital analysts are the FBNQuest analysts who opined that more investments in the development of human capital will help ameliorate the level of unemployment as this process could be achieved with the revamping of the education system in the country.
“Enhancing employability necessitates significant investment in human capital development, starting with the basic education system’s revamp. The 2021 national budget allocates N497 billion for statutory transfers, of which 14 per cent will fund the Universal Basic Education Commission.
“The Nigerian federal government has allocated the federal education ministry N545 billion and N226 billion for its recurrent and capital expenses. The rise in projected capital expenditure indicates the FGN’s commitment, amid many competing departmental claims, to increase its investment in human capital development,” they said.
Basically, Nigeria’s economic growth is best case scenario a jobless development given that the measurements of the levels of activities are not moving in the same direction with the development of its output. The country needs a comprehensive methodology supported by solid political will. To creep out of this major trouble Nigeria has gotten itself, the government needs to open the space for private sector players to come in and create more job opportunities.