Non Parametric Analysis Of The Rate Of Unemployment In Nigeria

Project and Seminar Material for Statistics

Non Parametric Analysis Of The Rate Of Unemployment In Nigeria


Abstract


This study examined the rate of unemployment in Nigeria. The data used was a secondary data collected from Nigeria Bureau of Statistics (NBS) on forty one observations. The research studied the effect of some factors on unemployment rate in Nigeria, the factors includes gross domestic product, government expenditure and population growth. Chi square analysis was use to ascertain the relationship between the various factors. The analysis shows that unemployment rate depends on gross domestic product. Based on the outcome of the research, it was recommended that the government should try to create policy that will enhance job creation in the country and also give grants and loans to entrepreneurs that seeks to start their own business.


Chapter One


Introduction

1.0 Background to the Study

Unemployment is generally agreed to be symptom of macro-economic illness which could be “voluntary” or “in voluntary”. When is said voluntary I mean a condition where somebody chooses not to work because they have a means of support other than employment example is the idle rich man. On the other hand involuntary unemployment exists when persons who are willing to work at the prevailing rate of pay but unable to find work. (Anyanwu 1995).

Balogun, (2003) also defined unemployment as the percentage of the labour force that is without job, but is able and willing to work. In Nigeria however the ability and willingness to work is not sufficient. It is necessary for the unemployed to be registered with an employment bureau in order to be recognized as unemployed. Yet, from an economic viewpoint, the unregistered unemployed are part of the labour force and are, therefore, technically unemployed. In Nigeria, unemployment data are obtained through labour force sample surveys which ask if the respondent has worked in the week preceding the survey. However, the international labour organization (ILO), realizing the shortcomings of the labour survey as it affects developing economies, such as Nigeria, with a large informal sector, has encouraged a review of the methodology to incorporate further disaggregation of respondent responses to bring out the true rate of unemployment.

In order to establish the type of unemployment existing in an economy, economists have classified unemployment as frictional, seasonal structural or cyclical.

  1. Frictional Unemployment occurs when people are temporarily out of work because they are changing jobs. This is unavoidable in an economy in which both the labour force and the jobs on offer are continually changing.
  2. Seasonal unemployment is said to occur in a situation in which people are laid off seasonally, due to the nature of the job they do, e.g. agriculture workers in developing countries may be laid off during the growing season.
  3. Structural unemployment is the unemployment that exists when an economy is in full employment. Structural unemployment occurs where employment in one or more declining industries is falling. It is as result of movement in the natural employment rate itself, which can result from changes in labour market institutions, demographic shifts etc. this situation is brought about by economic variables, such as the level of aggregate demand and the actual and/or expected real wage rate.
  4. Cyclical unemployment occurs as result of fluctuations around the natural employment rate, which can be attributed to changes in aggregate demand.

Industrial relations refer to the process of conflict resolution, such as collective bargaining, between employers and employees in the course of fulfilling an employment contact. It could be achieved either by conquest (when one party overwhelms the other), or by mutual consent. The latter, preferred outcome is likely to result from collective bargaining. Continuous industrial harmony is, therefore, often the result of positive industrial relations.

In Nigeria, unemployment is regarded as one of the most challenging economics problem facing the federal government. Although, there are variations in the measurement of unemployment, official estimates show their results as follows: from 1985-2003, the data shows a highly fluctuation trend from both the urban and rural sectors of the economy. From the data, the 1985 figure shows the percentage of the national urban and rural unemployment as follows: national 6.10%, urban 9.8% rural 5.2% and in year figure is as follows: national 3% urban 3.8% rural 2.7 % ( CBN 2004).

The rising rate of the population of the country which is faster than the job opportunities, a situation in which birth rate is rising, death rate falling and the population growth rate is between 2.5% and 3% unemployment is bound to exist. There had been also a total neglect of the agricultural sectors and other sectors that could have reduce the rate of unemployment in the country and consequent mass exodus of able bodied youths from the rural to urban areas in search of the non-existing white cooler jobs.

This further reduces employment in agriculture and puts pressure on existing urban jobs (Anyanwu 1995).


1.1 Statement of the Problem

Unemployment has reached a very alarming proportion in Nigeria, with a greater number of the unemployment being primary and secondary school leavers and university graduates. This situation has recently been compounded by the increasing unemployment of professionals such as bankers, engineers and doctors and other professions both skilled and unskilled persons. The toll is within the productive segment of the Nigeria population (Vision 2010).

The extent of unemployment in Nigeria is not justified by the available financial statistics phenomenon. This is because of the nature of unemployment in the country where many job seekers do not see the need for registration as unemployed persons necessary due to expression of futility in such exercise. This harnesses the sharp disparity between the official statistics on the phenomenon and the reality on ground (Bello 2003). Disguised unemployment otherwise known as concealed unemployment is a situation in which more people are available for work than is shown in the unemployment statistics (Bannock et el 1998).

The problem of disguised unemployment is quite acute in Nigeria. This explains why official unemployment statistics sharply differs from the true state of employed or unofficial statistic available. The recorded figure unemployment significantly understates the number of people who are actually willing to work at the existing set of wage rate. Consequently, the unemployment figure in Nigeria is obtained through labour force sample survey, by asking if the person has worked in the past week preceding the survey.

Obviously, because even a graduate who hawks around respond yes to the question, the unemployment rate will always be very low.

Unemployment is a situation of a labour force not having enough paid work or not doing work that makes full use of his skills and ability. It can be measured by the numbers of hours worked per week.

Generally in Nigeria, the official period of working time per week is forty hours which many workers fall short of due to non–availability of work. In some instance available work is rationed especially among the low skilled and casual labourers in the formal sector tends to be worse (Bello 2003) therefore the major problem we have in Nigeria is the distinguished unemployment form. The official figures of the rate of unemployment from December1998, a total of 66.3% of male and 62.0% of female unemployment were recorded at the urban centres while rural centres had an estimate of 47.1% and 45%male and female job seekers respectively. As at December 1999, school leavers’ unemployment rate had raised to 67.0% for males and 68.8% for females in the urban centres while the rural centres was as high as 59.1 and 55.7%. For male and female respectively (Bello 2003).For polytechnic and university graduates, the figures shows relatively low unemployment rate as compared to the school leavers experience. For instance, during the period under investigation a peak of 14.0% rate of unemployment was recorded for polytechnic female graduate in 1998 while the male graduate records had its peak in 1999 with 15.0% point in urban areas (Bello 2003). The graduate unemployment rate in the urban centres had 8.5 per cent record high in September 1999 for males and 4.5%in June 1999for female during the periods (Bello 2003).

Many people are frustrated by lack of employments opportunities they include those without work and those who have jobs but want to work longer hours or more intensively. A considerable size of utilized and underutilized labour abounds in Nigeria and which ought to be brought into the circle. These shows that Nigeria’s unemployment problem has become chronic and should be a matter of utmost national concern.


1.2 Aim and Objective of the Study

The aim of the study is to ascertain the rate of unemployment in the country

This current study will be conducted with the objective of:

  1. Determining the relationship between unemployment and economic growth in Nigeria.
  2. Ascertaining the magnitude of this relationship
  3. Determining if the unemployment rate is in an increasing trend or a decreasing trend.

1.3 Significance of the Study

One of the macroeconomics goals of any country is the actualization of full employment. Therefore, unemployment in any system is seen as a policy failure and should be eradicated from the system. The significance of the study is as follows:

The study will be of great importance to students in a way that it brings out the picture of unemployment in the country and make them think of better ways of being self-employed and employment creators instead of depending solely on the government for their employment.

The study will be significant to the staff of Nigeria Bureau of Statistics (NBS) by showing clearly the trend of unemployment in Nigeria either in an increasing or reducing trend.

The study will be significant to the general public because it will show clearly the rate of unemployment in the country so as to make the general public draft out alternatives means of creating jobs for themselves instead of relying solely on the government.

The study will `be significance to the government by providing government with knowledge of the state of unemployment rate in the country so as to enable the government provide programmes and initiatives like poverty eradication progammes and other programmes to control and eradicate the rate of unemployment in the country.

The study will also be of great significance to scholars and researchers because it will be as a guide to them to enhance further research on the topic.


1.4 Scope and Limitation of the Study

The study is carried out with a scope of data ranging from 1970-2010.

The limitation of the study is the inability to get data before the scope date of 1970 which is as a result of lack of record keeping from the authorities responsible for record keeping and also data after the scope date of 2010 which is as a result of data coalition process.

The second constraint to this research was finance and time. The time allowed for the completion of this work was short, coupled with the fact that other academic work were in progress. This research is however limited to data obtained from the National Bureau of Statistics headquarters Abuja.


1.5 Definition of Terms

Work force:

It is the total number of people employed or seeking employment in a country or region. Or it refers to all the members of a particular organization or country who is able to work viewed collectively.

Economy:

An economy or economic system consists of the production distribution or trade and consumption of limited goods and services by different agent in a given geographical location. The economic agent could be individuals, businesses, organizations or government.

Poverty:

Refers to the state or condition of having little or no money, goods or means of support. It also refers to the percentage of population living on less than 1.25 dollar per day.

Economic Growth:

Is the increase in the market value of the goods and services produced by an economy.

Inflation:

A general increase in price and fall in the purchasing value of money. It also refers to a reduction to the purchasing power per unit of money and a loss of real value in the medium of exchange and unit of account within the economy.

Gross Domestic Product:

Is the monetary value of all the finished goods and services produced within a country borders in a specific time period usually a year.


Chapter Five


Summary of Findings, Conclusion and Recommendation

5.0 Introduction

This chapter summarizes the findings of this project work and then conclusions thereof. Recommendations were also made for further research, governments at various levels, and for the Nigeria populace.


5.1 Summary of Findings

Unemployment is an important factor which strongly affects economic growth in any nation; this research paper put into consideration some factors which may affect the rate of unemployment in Nigeria.

Unemployment is generally agreed to be symptom of macroeconomic illness, which could be “voluntary” or “involuntary”. Voluntary unemployment is a condition whereby one chooses not to work because he or she has means support other than employment. On the other hand, involuntary unemployment exist when persons are willing to work at the prevailing rate of pay but unable to find work.

Base on this, unemployment has different types such as frictional, seasonal, cyclical, and technological unemployment.

In Nigeria, Unemployment is regarded as one of the most challenging economic problem. A situation whereby the population of a country grows faster than the job opportunities, that is birth rate is rising while death rate is falling and unemployment is bound to exist.

There had been also a total neglect of the agricultural sector and consequently mass exodus of able bodied youths moving from the rural to urban areas in search of non – existing white collar jobs.

This research was carried out using the chi-square analysis, Mann Whitney U test and Kruskal Wallis test Statistics. The chi-square analysis was used to check for dependency between unemployment rate and some factors such as gross domestic product, government expenditure and population growth.

The results show that unemployment rate is only dependent on Gross domestic product; all the other factors such as Government Expenditure and Population Growth are independent on unemployment rate.

Also the Mann Whitney U test yielded the same result as the chi square analysis. It was also observed that a strong positive correlation exist between unemployment rate and gross domestic product. From the analysis, chi square gave more precise p values than Mann Whitney U test.

Also kruskal wallis test was use to test if the factors are from identical population or not. The result shows that they are from different population.


5.2 Conclusion

This research work ascertained that unemployment rate is dependent on the gross domestic product and a strong positive correlation exist between them i.e an increase in gross domestic product leads to a decrease in unemployment ratealso government expenditure and population growth does not have effect on unemployment rate. The analysis also showed that chi square test of independence gives more precise p value than Mann Whitney U test.


5.3 Recommendations

Having studied the unemployment rate in Nigeria, the following are the recommendations given to the beneficiaries of this research work.

  1. There is need for the government to revitalize the agricultural sector, modern equipment in agricultural facilities is likelyto entice the youths into that sector, since the sector have been left in the hands of the old men.
  2. Government should formulate policy that will aim at discouraging gender discrimination in the labour market since this will provide more opportunities for the females in the labour market participation final.
  3. Government should embark on provision of social amenities in the rural areas so as to reduce the urban –rural drift which have consequences of reducing the rate of unemployment.
  4. There is need for government to restructure the educational system in a way it will lead to the youths with capability of self-reliance and self-employment.
  5. Government should formulate monitoring policy to check the channel of increase government spending to find out why the huge spending has not transmitted into a viable economic growth.
  6. The government should embark on social security program that would help in elevating the unemployment condition of the people in Nigeria.
  7. There is equally an urgent need for more infrastructure facilities like expanding the telecommunication network to the rural part of the country, good roads and electrification projects which can create employment for the jobless citizens.
  8. A conducive environment for foreign direct investment should be created to ensure Nigeria’s full participation in the global business opportunities that would create job for the teeming population.

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