“Graduate Unemployment in Nigeria: Causes, Effects and Remedies”

ELEGBEDE SIKIRULAHI TUNDE DEPARTMENT OF INDUSTRIAL RELATIONS AND PERSONNEL MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION, UNIVERSITY OF LAGOS, LAGOS , NIGERIA. ABSTRACT This paper examines causes of unemployment in Nigeria as well as the consequences and implications of graduate unemployment in Nigeria. The paper also provides useful suggestion and recommendations on how to curb graduate in Nigeria. The paper adopts empirical analysis to examine the causes of unemployment in Nigeria. The data used in this study is of two type primary and secondary data. However, for the primary data the questionnaire was used to solicit responses from the respondents. In conclusion economic recession, governmental policy, employment of expatriates and trade union wage demand increase the rate of unemployment. The study emphasis that planning for human resources use in Nigeria has been based on guesswork and must be re-evaluate. I. INTRODUCTION Economists are unable to agree on the causes of or cures for unemployment (or anything else, it seems). The essence of the Keynesian explanation is that firms demand too little labour because individuals demand too few goods. The classical view was that unemployment was voluntary and could be cleared by natural market forces. The neo-classical theory is that there is a natural rate of unemployment, which reflects a given rate of technology, individual preferences and endowments. With flexible wages in a competitive labour market, wages adjust to clear the market and any unemployment that remains is voluntary. The latter view was that held by Milton Friedman and strongly influenced government policy in the early 1980s, but without success. There is, of course, no simple explanation of unemployment and no simple solution. Unemployment can conceive as the number of people who are unemployed in an area, often given as a percentage of the total labor force. 1 These categorical of persons or people are actively looking for paid employment without success under the prevailing economic condition. Unemployment is the greatest challenge to underdeveloped and developing countries. the phenomenon of graduate unemployment ( GU) as it is being experienced in the developing countries constitute a peculiar problems to labor market and the general economy of these countries. From the content analysis perceptions of job seekers on the issue of graduate unemployment in a study conducted by Fajana (2000), the following factors were identified as the major causes of unemployment in Nigeria: the long period of initial unemployment among university graduates in Nigeria , faulty manpower planning and expansion of educational facilities that have unduly raised the expectations of Nigerian youths , the economic recession , continued proportionality of expatriates in employment , the institution of NYSC ,the collective bargaining process, graduate attitude to some type of jobs attitude to jobs in other location as well as search behaviour of employers and job seekers, use of capital intensive technology , wide rural- urban migration , formal – informal sectors differentials. All these and many other factors contribute the causes of graduate unemployment in Nigeria. The objective of this paper is to critically evaluates all these factors so as to determine t heir impacts graduate job seekers in Nigeria and other LDCs. The purpose of this paper is to examine all the various factors that contribute to graduate unemployment with the view to provide suggestions and solutions on how to curb the problem of graduate unemployment in Nigeria. This paper will also examine how the actions of the industrial relations actors contribute to graduate unemployment in Nigeria. This paper intends to achieve the following: 1- To identify the causes of unemployment in Nigeria 2- To examine the consequences and implications of graduate unemployment in Nigeria. 3- To provide useful suggestion and recommendations on how to curb graduate unemployment. 4- To provide the framework for further studies in this area. 5- T o provide guidelines and information for policy formulation in curbing unemployment in Africa. II. LITERATURE REVIEW 2 Fajana ( 2000), and Standing( 1983) opined that unemployment can be describe as the state of worklessness experienced by persons who are members of the labour force who perceived themselves and are perceived by others as capable of work. Unemployed people can be categorized into those who have never worked after graduation from the university and those who and those who have lost their jobs thereby seeking reentry into labour market. However, most of the previous study on unemployment of youths especially of graduates unemployment in developing countries ( Falae , 1971,Bhalla 1973;Diejomaoh,1979; Bear and Herve 1966;Bhagwati 1973; Diejomaoh and Orimolade 1971) have tended to ignore the special case of the university graduates that are first time job seeker. This study makes an attempt to focus on the university graduate first job seeker. According to William (1976) the meaning of work to paid employment is the result of the development of capitalist productive relations. However, according to Fajana (2002) the concept of work has partly shifted from productive effort itself to the predominant social relationship. For instance , it is only in the sense of social relationship that a woman running a house and bringing up children can be said not to be working ( Hayes and Nutman,1981;Iyoha ) UNEMPLOYMENT IN NIGERIA: TRENDS After the 1967-1970 civil war in Nigeria , the incidence of graduate unemployment was suspected, rumored and feared( Fajana 2000). In this regards professor Diejomaoh ( 1979) in a study conducted at the human resource unit of the university of Lagos found that the incidence of graduate unemployment between 1965 and 1972 was not a serious problem contrary to what is being dreaded. Similarly , Folayan Ojo ( 1979) attributed whatever level of graduate unemployment ( presumably small ) during the period 1965-1972 to ; slow bureaucratic machinery for the processing of application for jobs and the influence system might have caused some graduates to remain temporarily unemployed for the first few months after graduation. However at that time there had been shortage of medical doctors, graduate teachers and engineers while agriculture graduate are under-utilized. However, the trends have changed greatly from late 1970s till date. Currently the number of universities has increased and their curricular have expanded. The motivation for the establishment of private universities was in part a response to unprecedented demand by Nigerians for higher education ( Sylverster Ugoh ,1982) 3 with phenomenal expansion in education , the demand for this service and students enrollment had become so rife that by 1985 the turn out figure had risen to 30,000 per year even into the 1990s ( federal ministry of labour ,1985) the trend of undergraduate application and admission into universities is shown in table 1 and 2 below: 2003/2004 M F 2004/2005 M F 2005/2006 M F 2006/2007 M F 2007/2008 M F 603,176 443,764 484,217 353,834 527,180 390,780 521,170 391,180 578,715 455,368 TABLE 1: TOTAL NUMBER OF UNIVERSITIES ENROLMENT BETWEEN 2003 AND 2008. SOURCE: JOINT ADMISSION AND MATRICULATION BOARD, 2009 2003/2004 M F 2004/2005 M F 2005/2006 M F 2006/2007 M F 62,023 43,984 60,049 45,906 39,743 25,775 42,953 28,044 TABLE 2: TOTAL NUMBER OF ADMISSION OFFERED BETWEEN 2003 AND 2007. SOURCE: JOINT ADMISSION AND MATRICULATION BOARD, 2009 The trend of undergraduate application and admission into all universities in Nigeria between 2003 and 2008 shows that between 2003/2004 sessions 603,176(male) and 443,764(female) candidates applied for different degree programmes and only 62,023(male) and 43984(female) candidates were offered admissions. 4 TABLE 3: TOTAL ENROLMENT IN FEDERAL UNIVERSITIES BY MAJOUR DISCIPLINE. 5 TABLE 4: GRADUATE OUTPUT IN NIGERIA The identified developmental problem by the Nigerian developmental plans of 196285 includes shortages of skilled manpower, uneven distribution of available manpower among regions and between urban and rural areas, unemployment in the informal sector s well as widespread under-employment particularly in the informal sector, inadequate or undeveloped organizations and institutions for mobilizing human effort , lack of incentives for people to engage in particular activities which are important for national development , and a rapidly growing population( Folayan Ojo,1979) and ( Fajana, 2000). Since the middle of the 1970s, the policy of increased enrolment and turnout of university graduates was aimed at easing some of the development problems 6 identified above. It was hoped that by providing the required quality and quantity of different manpower the nation can advanced at a faster pace. Hence the incidence of graduate unemployment is indeed an unfortunate problem, as these graduates find it difficult to enter labour activities to generate growth and development for the economy (Fajana, 2000). UNEMPLOYMENT IN NIGERIA: CAUSES The yearbook of labour statistics (1984, 1985, 1986) reports that unemployment rate has generally risen during the world wide recession of the 1980s and 90s. The rational steps taken by most management to cope with the recession includes ban on recruitment. Since graduate are mostly first job seekers, this practice of natural wastage, which involves the refusal to fill vacancies imply that graduates directly hit. The annual reports of civil service commission ( 1981,1982) show that overseas recruitment were carried out ostensibly because of the absence of qualified Nigerians to fill some technological and professional jobs. This may have contributed to the problem of unemployment in Nigeria. Contrary to this, Fajana (2000) argued that the presence of expatriates in jobs may not cause graduate unemployment. Nevertheless, this factor become very important when solutions to the problem are being sought. One of the measures adopted by governments in developing countries as part of their policy package to solve manpower problems is the establishment of national youth service programmes (Godfrey, 1970). The National Youth Service Corps (NYSC) in Nigeria came into being in 1973 in response to the particular urgent needs of fostering national unity, a means of recouping government investments in graduates. Unfortunately, the NYSC scheme has encouraged employers (private and public) to shy away from employing graduates. It can be said that it has contributed to graduate unemployment in Nigeria. The labour decree (1974, section 19) protects older workers from being laid off in a situation of redundancy. As labour and management makes an attempt in trying to cope with the recession, they adopt the policy of last-in-first out, coupled with the ban on recruitment during recession. These seemed to have combined to exert a great impact on the employment situation for graduates trying to seek first jobs. Industrialization in Nigeria has been pursued haphazardly with little or no attention paid to manpower development implications of the adopted strategies. For instance , 7 after independence , a battery of incentives were offered to industrialists to lure foreign investment into Nigeria. But, the industrialists that came were capital intensive in their operation and could not absolve proportional size of the growing labour force in gainful employment (Yesufu, 1971). PSYCHO-SOCIAL EFFECT OF UNEMPLOYMENT Graduate initial unemployment and idleness have adverse psychological , social , occupational and financial effects on them Fashoyin (1987) and Fajana (2000). unemployment has serious effects both on the their present living conditions and their outlook in the future and on the society in which they are supposed to be part. Unemployment is the undoing of graduates because its literally destroys them morally and rapture the ties and relationship they form. People who have no jobs feel insignificant and inferior. And always having the feeling that they are ostracized from the rest of the society , and most often they are regarded as parasites by other people. In most societies conventional work ethic suggests that unemployment is unwelcome because of the special role and meaning work has. In particular, young people in this situation feel that they must find work, no matter what. At the beginning of the search period , they look for jobs suited to their qualifications , training or trade but later on they look for any kind of work ( Hayes and Nutman , 1981) and any kind of pay ( Kasper,1987) Unemployment and under- employment may cause people to flee the rural areas , move about or migrate. The later effect will tend to explain some of the current wave of brain drain to the advanced countries from less developed world. The unemployed produce an unsettled labour force, and in urban areas they may lead to overcrowding and crimes. Research findings by Hayes and Nutman (1980) indicated that in a period characterized by a permanent stable high unemployment situation, there will be considerable increase in deaths due to cardiovascular diseases and cirrhosis of the liver and murders too. According to Banks and Ullah (1988) there will also be increase in admission into psychiatric hospitals (for mental illness) and also imprisonment arising from the criminal tendencies of idle hands. In summary, Fajana (2000) opined that unemployment can lead to the following: loss of status , loss of prestige and economic strength or power as a result of the loss of 8 ages and benefits of job, infliction of psychological injury as result of the breakdown in social contacts and isolation from the world of work , loss of responsibility ,identity and respect which the position at work ensures , loss of purchasing power , los s of union check off dues , loss of production and stunting of gross national product , reduction in the pay –roll tax revenues of the state . III. METHODOLOGY The data used in this study is of two type primary and secondary data. However, for the primary data the questionnaire was used to solicit responses from the respondents. It has been structure objectively, considering the time lag and its relative advantage to minimize cost. The questionnaire is divided into two main parts i. e. part I and part II. Also interviews was conducted among graduate job seekers. Part I seeks personal data of the respondent ranging from age, sex to educational qualification. These were used to compare the characteristics of the sample with that of the population. Part II is structured basically o delve into the opinion of the respondents so as to have a logical yardstick to refute or accept our research hypothesis. The population of this study was Stronix Consults Nigeria Limited (SCNL). SCNL is a recruitment and employment firm with focus on recruitment, selection and placement of job applicants into different organizations. The total number of job applicant including unsolicited applications is 1500 job applicants. This number is assumed to be the study population and 10 percent of this number was used as the sample size which is 150. Stratified sampling method was used for this study. The stratified methods group the population into some definite characteristics (strata). This is suitable for the purpose of this research as it makes it possible for our random selection to be done across all disciplines (Art/Humanities, Sciences and Education). As mention earlier the data for this study was collected basically through the questionnaire and interview method. The questionnaire was administered at random among job seeker. The study population consists of unemployed graduate in Gbagada, Lagos. IV. RESULTS SPSS data analysis was used to test the hypothesis for this study. The major hypotheses tested are as follows: 9 Hypothesis one H0: Governmental policy, economic recession, employment of expatriates and trade unions wage demands does not significantly contribute to the rate of unemployment in Nigeria. H1: Governmental policy, economic recession, employment of expatriates and trade unions wage demands significantly contribute to the rate of unemployment in Nigeria. Hypothesis two H0: rural urban migration, imposition of minimum wage and influence system does not significantly contribute to the rate of unemployment in Nigeria. H1: rural urban migration, imposition of minimum wage and influence system significantly contribute to the rate of unemployment in Nigeria. TESTING THE FIRST HYPOTHESIS TABLE 4. 1 Model Summary Adjusted Std. Error Mod el 1 2 3 4 R . 255(a) . 251(b) . 244(c) . 218(d) R Square . 065 . 063 . 060 . 048 R Square . 019 . 029 . 037 . 036 of the Estimate 1. 231 1. 224 1. 219 1. 220 Regression coefficient was use to test if there is any significant relationship between unemployment ( criterion/ dependent variable) and governmental policy , economic recession , employment of expatriates and trade unions wage demand ( predictor / independent variables) The backward regression analysis was used and from table 4. 1 above the first model has the best fit for the purpose of analysis because it has the highest percentage of R square of 0. 065. Therefore, the first model was used to analysis major findings. 10 TABLE 4. 2 Coefficients(a) Standardiz Unstandardized Coefficients Mod el 1 (Constant) Unemployment rate in Nigeria is as a result of economy recession Do you think that government economic brings unemployment Nigeria? Do you think that employment expatriates contribute graduate unemployment the country? Do you agree that trade unions wages demand the increase . 047 rate of . 125 . 042 . 376 . 708 in to the -. 053 . 092 -. 063 -. 578 . 565 of policy about in -. 101 . 103 -. 108 -. 986 . 327 -. 168 . 094 -. 201 -1. 790 . 077 B 3. 451 Std. Error . 550 Beta B 6. 269 ed Coefficients T Sig. Std. Error . 000 unemployment? From table 4. 2 it is only trade union wage demand that has the highest impact on the rate of unemployment in Nigeria. That is trade union wage demand is significance than the other three variables. However, the first hypothesis was tested using 5% 11 level (alpha) of significance. Since alpha is less than p value (table 4. 2, 0. 077, 0. 327, 0. 565, 0. 708) In conclusion economic recession, governmental policy, employment of expatriates and trade union wage demand increase the rate of unemployment. Normal P-P Plot of Regression Standardized Residual Dependent Variable: For how long have you been unemployed 1. 0 0. 8 Expected Cum Prob 0. 6 0. 4 0. 2 0. 0 0. 0 0. 2 0. 4 0. 6 0. 8 1. 0 Figure 1 Observed Cum Prob 12 TESTING THE SECOND HYPOTHESIS Table 4. 3 Model Summary Adjusted Std. Error Mod el 1 2 3 4 R . 214(a) . 209(b) . 162(c) . 000(d) R Square . 046 . 044 . 026 . 000 R Square . 013 . 022 . 015 . 000 of the Estimate 1. 218 1. 213 1. 217 1. 226 Regression coefficient was use to test if there is any significant relationship between unemployment ( criterion/ dependent variable) rural-urban migration, lack of labour market information, imposition of minimum wages ( predictors / independent variables) The backward regression analysis was used and from table 4. 3 above the first model has the best fit for the purpose of analysis because it has the highest percentage of R square of 0. 046 Therefore; the first model was used to analysis major findings. Table 4. 4 Coefficients(a) Standardiz Unstandardized Coefficients Mod el 1 (Constant) B 2. 439 Std. Error . 474 Beta B 5. 150 ed Coefficients t Sig. Std. Error . 000 13 Do you agree that rural-urban migration about bring -. 165 graduate . 093 -. 192 -1. 782 . 078 unemployment? Do you agree that lack market is a of labour information contributory . 052 . 110 . 052 . 469 . 640 factor to graduate unemployment Nigeria? Do you agree that imposition minimum of wages . 103 . 096 . 119 1. 069 . 288 in contribute to the rate of unemployment? From table 4. 2 it is only rural –urban migration that has the highest impact on the rate of unemployment in Nigeria. That is rural-urban migration is significance than the other two variables. However, the second hypothesis was also tested using 5% level (alpha) of significance. Since alpha is less than p value (table 4. 4. 0. 078, 0. 640, 0. 288,) In conclusion rural-urban migration, lack of information and imposition of minimum wage bring about unemployment. V. CONCLUSIONS Planning for human resources use in Nigeria has been based on guesswork. Rational steps taken by most management to cope with the recession include ban on recruitment. The practice of natural wastage, which involves the refusal to fill vacancies imply that job seekers are directly hit. Though the rate of appointment of expatriates has been slowed since 1982, presently a reasonable percentage of the labour force in Nigeria is still dominated by foreigners. Most private and even public institutions tend to see the NYSC as a means of securing cheap labour. They utilize the services corp members each year but tend not to absolve any substantial number at the end of the service year. The 14 adoption of the policy of last –in – first out by labour and management, coupled with ban on recruitment seemed to exert a great impact on the employment situation of university graduates. Existence of artificial barriers to geographical mobility of labour, cultural employment practices , localization and truncating of potentials along tribal lines , marginalization of the poor and the poor state of social infrastructure ( Ukpong,1994). Femi Fajana ( 1994) and Anyanwu ( 1994) argued that failure of the Nigerian government to appraise the employment implications of international trade policies, monetary and fiscal policies immensely contribute to unemployment rate in the country. Notwithstanding the above mentioned adverse effect and consequences of unemployment in the Nigerian economy , a number of general approaches are being recommended for the purpose of curbing the unemployment menace ( Fajana, 2000) these are approaches are : The defective approach to hr planning should reverse ,i. e coordinated planning for human resources should be encourage at all level of the economy. Coordinated effort towards labour intensive project Resuscitate labour exchanges programmes based on comparative cost advantage Orientation of university graduates to change their perceptions about menial jobs Elimination of rigid job and wage preference Graduate should be encourage to study for a higher degree in a more relevant discipline to reduce skills-mismatch Validation of selection instrument and deemphasize reliance on the influence system In a situation of massive unemployment, the union’s role is to protect the interest of members; the labour is segmented in the process. But unions must broaden their aims in such circumstances to include social justice for all employed and unemployed people. The trade unions can also help in creating more jobs by instating as far as possible on labour intensive project. 15 – Population control, reduction in the rate of expansion of higher education , review of funding for higher education , diversification of the economy, exploring the possibility of labour exports. References Beer , W And Herves M. E. A ( 1966). ‘ Employment And Indusstrialization In Developing Countries’, Quarterly journal of Economics, Vol. 30 No. 1 Bhalla A. S ( 1973) ‘ A Disaggregative Approach To Employment In Less Developed Countries ‘ The Journal Of Development Studies Berg, E. J. (1969) ‘wages policy and employment in less developed countries ‘, in R. Robinson, Ibid. Diejomoah V. P And Orimolade W. A. 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