ABSTRACT
The objective of this study is to assess youth on unemployment in Nigeria and its implication to the service sector growth. Three research questions and hypotheses were constructed to guide this study. The study employed Unit root test to determine the order of integration of the variables, the co-integration test was carried out to examine the existence of long run relationship between the variables. Ordinary Least Square (OLS) and Granger Causality techniques were employed to determine the relationship between the variables and its nature. The OLS regression result showed that unemployment had a negative relationship with Service sector growth in the economy. Also, the Granger causality tests showed that there exists no casual relationship between the variable.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria, like most developing countries in the world is faced with myriad of problems such as poverty, terrorism, political instability and most importantly unemployment. In recent years, increased unemployment rate has affected many young school leavers who fall within the working age but have been denied job opportunities. Graduate unemployment in the words of Dabalen et al (2000), accounted for about 32% of the unemployed labor force between 1992 and 1997. This has compelled the Nigerian government as far back as the 1960s to start implementing programmes aimed at tackling the unemployment situation in the country. Providing employment was made one of the cardinal objectives of the first developmental plan; an objective aimed at not just creating employment but to also to train people in skills that will meet the challenges of an ever dynamic economy. The above was indeed the catalyst for the establishment of a number of employment programmes such as the National Directorate of Employment (NDE), Family Economic and Advancement Programme (FEAP), Poverty Alleviation Programme (PAP), National Poverty Eradication Programme (NAPEP), National Economic Empowerment and Development Scheme (NEEDS) and many other similar programmes funded by various stakeholders like state governments, non-governmental organizations (NGOs), and international organizations like the World Bank and the United Nations.
Unemployment is one the developmental problems facing every developing economy in the 21st century. Agu (2008) pointed out that there has been an exponential increase in youth unemployment in the country. In his words, youth unemployment in the country has caused serious problems that past and successive administrations have not been able to find a lasting solution. Although successive governments in Nigeria since independence have implemented several programmes to address the problem of youth unemployment and poverty, the assessment of the various contributions of such programmes remains scanty compared to the huge amount of resources committed to them (Egware, 1997). In the words of Yakubu (2010), youth employment and poverty alleviation programmes implemented in the last few decades have failed to confront the multidimensionality of poverty as most of these programmes were unable to respond to the exact needs of the poor. Programmes such as the NDE, FEAP, Better Life Programme, NAPEP, NEEDS have all been affected by common problems; such as: inadequate funding, project duplication, gross inefficiency, poor coordination of programmes, corruption, lack of transparency.
Nigeria’s current unemployment situation is erratic and falls short of expectations, such that a large percentage of educated, able and qualified citizens cannot secure paid employment (Omotosho, 2009). This indicates that Nigeria over the years has steadily crumbled from its extremely resilient and esteemed position among developing nations (Ipaye, 2008). One of the major concerns of various administrations in Nigeria is the growing rate unemployment in the country and it has consistently formed part of the macroeconomic objectives of the government for the past decades (Omotosho, 2009). According to the World Bank Report (2003), the growing trend of employment and productivity of the Asian Tigers and Japan is responsible for their enviable and brilliant economic performance. Evidently, the absence of the necessary framework to enhance employment and productivity level in Nigeria is the sole cause of the retarded nature of Nigeria, the acclaimed giant of Africa. The trend and problem of unemployment in Nigeria remain obstinate with a tendency of growing geometrically to the alarming rate of 3 million unemployed youth annually (Adelodun, 2006). The trend of unemployment in Nigeria has a devastating effect on the youths from an extensive gamut of socioeconomic clusters, both the high and less educated, even though it has mainly troubled a sizeable portion of youths from less privilege backgrounds (Ipaye, 2008). According to Adebayo and Ogunrinola, (2006), unemployment trend in Nigeria touches the job seekers within the ages of 20 – 24 and 25 – 44 years more while there is fewer prevalence of unemployment within the ages of 15 – 19, 55 – 59 and 65 years and above. The rate of open unemployment was 12% in March 2005; it rose to 19.7% in March 2009 while the rate of underemployment hovered around 19% in 1998 (National Bureau of Statistics, 2010). From this point of view, it is apparent that unemployment, particularly the unemployment of young graduates, hinders Nigeria’s progress in so many ways. Aside from economic issue, it also creates eminent danger for political stability of our dear country (Ipaye, 2008). Consequently, massive youth unemployment as it is presently recorded in Nigeria portend a serious multifaceted problems and the threat of unemployment has gradually been acknowledged as a pressing challenges facing Nigeria (Ipaye, 2008, Udu & Ugu, 2005). According to Umaru and Zubairu (2011), unemployment has been recognized as one of the major impediments to social-economic growth in most developing countries. It reduces the aggregate output of the economy and results in underutilization of human resources. The need to avert the negative effects of unemployment has made the tackling of unemployment problems of feature very prominently in the development objective of developing countries (Omotor & Gbosi 2006). The issue of real output and employment growth in developing nations is a sine qua non for poverty reduction and a more equitable income distribution (Fofana, 2001). Omotor and Gbosi (2006) noted that the seriousness and nature of unemployment in Nigeria is relatively high when placed on the same pedestal with those of other African countries. According to them, in absolute terms; it is estimated that there are presently about 22 million youths unemployed in Nigeria.
The major factor that determines unemployment in Nigeria is the population growth increase relative to the stage of development and technological growth of the country. Voluntary decisions could also lead to unemployment. Voluntary unemployment occurs when individuals decide not to take a job at a particular wage rate due to one reason or another, and hence remain unemployed. This problem may be solved by increase of the wage rate and individuals reducing their expectations.
In order to reduce the issue of unemployment more employment opportunities needs to be created and also training programs provided in other to give individuals needed skills.
1.2 STATEMENT OF THE PROBLEM
Unemployment is one of the serious socio-economic problem in Nigeria and is really a tragic condition that requires urgent and proactive attention. Indeed, it is alarming and worrisome to observe that Nigeria’s graduates who are educated, able and willing to work cannot find a job. The situation is becoming hopeless, as the rate of unemployment keeps rising without any proactive attempt to curb the menace (Kayode, Samuel & Silas, 2014). A cursory look at the state of the nation, portend more danger with declining likelihoods of young graduates become gainfully employed; going with the trend of events in the country, most especially, the falling oil prices, economic recession, insurgency in the Northern parts of the country among other factors. As a matter of fact, unemployment is one of the major developmental challenges facing Nigeria at the moment. (Obadan and Odusola (2010) have found that the prevalence of unemployment in Nigeria, especially in this 21st century, is getting deeper and more pathetic, spiteful through all faces of age groups, educational level, and geographical spread.
Due to the increasing negative effects posed by unemployment on people and country as a whole, government has been adopting various policies to help reduce and control the issue of unemployment, but the problem seems to be increasing rather than it producing positive results. Accurate policies need to be adopted in order to solve this problem of unemployment. The statement of the problem is based on the political, social as well as economic effects of unemployment.
1.3 RESEARCH QUESTIONS
1. Does unemployment have any relationship with service sector growth?
2. Is there any causal relationship between unemployment and service sector growth in Nigeria?
1.4 OBJECTIVES OF THE RESEARCH
The broad objective of the study is to examine the impact of youth unemployment on The Service Sector Performance. To achieve that, the following specific objectives were pursued:
1. Investigate the relationship between the service sector growth and unemployment in Nigeria.
2. Determine if growth in the economy has a causal relationship with unemployment in Nigeria
1.5 RESEARCH HYPOTHESIS
To complete these aims hypothesis are set;
1. The null hypothesis (H0) is;
H0: Youth Unemployment has no relationship with service sector growth.
And the study’s alternative hypothesis (H1) is;
H1: Youth Unemployment has a relationship with service sector growth.
2. The null hypothesis (H0) is;
H0: Service sector growth has no causal relationship with unemployment. And the study’s alternative hypothesis (H1) is;
H1: Service sector growth has a causal relationship with unemployment.
1.6 SIGNIFICANCE OF THE STUDY
The significance of the study is to establish the incidence of Youth Unemployment has in Nigeria. In view of the fact that price stability and full employment are two conflicting macro-economic goals, the result of this study becomes an important tool in the hands of the policy makers in Nigeria in order to achieve the two goals simultaneously.
As living standard of a country increases, one of the important macro-economic objectives is the attainment of full employment. So, unemployment is viewed as a failure caused by the policy makers. Hence, efforts are made by the government to control the impact of youth unemployment in an economy.
The study of unemployment is very important to economics students, policy makers and also politicians. The study of the unemployment rate of an economy helps in setting up policies that would help an economy reach a desired level.
1.7 SCOPE AND LIMITATION OF THE STUDY
The scope of this study is focused on the relationship between unemployment and SSG in the Nigerian economy. The study adopted OLS regression which is focused on a 32 years annual time series data (1986-2018) that are sourced from the international monetary fund (IMF) and Nigeria’s central bank statistical bulletin.
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