INTRODUCTION
It is a widely accepted view in economics that the growth rate of the GDP of an economy increases employment and reduces unemployment. This theoretical proposition relating output and unemployment is called “Okun’s Law”. This relation is among the most famous in macroeconomics theory and has been found to be hold for several countries and regions mainly, in developed countries (Lee, 2000; Farsio and Quade, et al, 2009). Unemployment with its economic and social implications is one of the most pressing problems facing Nigerian policy makers, high rates of unemployment signal a deficiency in the labour market, deepening poverty incidence and spread indecent standards of living (World Bank, 1994).
It has always been part of the culture and tradition of employment in the private sector for employers to resort to squeezing their employees when their profit margin begins to narrow; they employ a few measures: increase work hours for the same pay, cut pay and benefits, increase targets and output, reduce the number of employees. These measures are applied just to maintain profit margins, even in times of economic boom. In times of economic crisis, therefore, it is to be expected that the burden on workers will increase in magnitude (Ipaye, 1998).
Indeed throughout history, economic down-turns have always resulted in hardships and reduced quality of life for workers, employees, low-income earners and vulnerable members of the society. The ‘Great Depression’ of the 1930s (said to have originated on October 29, 1930, following the crash of the American Stock exchange) resulted in dramatic socio-economic consequences not only in the United States, but worldwide, there was a sharp drop in personal income, tax revenue, prices and profits, international trade plunged by two-thirds, unemployment rose to 25% in the United States and up to 35% in some other countries; construction work was virtually grounded in many countries, rural areas and farming experienced tough times as the prices of crops dropped by as much as 60% (Wikipedia); businesses collapsed and many people committed suicide. The issue of unemployment is clearly one of the most important problems of the world, so it covers an important area in macroeconomic and econometric research. Macroeconomists have tried to explain the hysteresis in unemployment, the cause of unemployment and the relationship between unemployment and some macroeconomic variables such as inflation, growth etc. These subjects play a very important role in macroeconomic building and provide some significant knowledge for macroeconomic policy; furthermore the knowledge of the relationship between unemployment and economic growth is regarded as a benchmark for policy makers to measure the cost of higher unemployment (Adelodun, 2006).
The World Bank (1993) reported that continuously enhanced employment and productivity have been central to the brilliant performance of the so-called “Asian Tigers” and Japan. This implies that absence of such enhanced employment visibly retards Nigeria’s chances. Therefore it can be deduced that correspondingly, high productivity stimulates both global balances of powers, which affect Nigeria and its people, as well as the direction of world resources, such as labour. The unemployment problem in Nigeria remains persistent and even growing by the day with a labour force approximately 3 million persons (mostly youths) annually moving into job market (Adelodun, 2006). Statistics of Nigerian unemployment seems to consist, not of uneducated, rural populations, who have been uprooted by failing agricultural production resulting from the absence of mechanisation and decreasing incomes but also of some highly educated populations, as well, who normally, would form the core of the productive vanguard in a developing country. In other words, many of Nigeria’s unemployed and consequently poor are well educated even by European and American standards. Nigeria’s underemployment and low productivity constitute a vicious cycle that explains the endemic poverty in the country.
Overall, unemployment in Nigeria has affected youths from a broad spectrum of socioeconomic groups, both the well and less well educated, although it has particularly stricken a substantial fraction of youths from low income backgrounds and limited education. From the foregoing, it is obvious that unemployment, especially the unemployment of graduates, impedes Nigeria’s progress in many ways. Apart from economic waste, it also constitutes danger for political stability (Ipaye, 1998). It is disturbing to note that Nigeria’s graduates have limited chances of becoming gainfully employed. It is even more disheartening that the country’s economic condition is such that, it is hardly able to absorb an optimal proportion of the production of its own educational system. Gone were the days when employers go about looking for employees. It is now the turn of employees to move from one office to the other seeking non-existent jobs. These days thousands of young people are found waiting to be interviewed for just one, two or few vacant positions in some organisations or firms. Most people who cannot earn their living are prone to social vices. They look at themselves as second-class citizens for being unable to contribute to the society. The state of unemployment can even lead to depression, low self-esteem, frustration and a number of other negative consequences (Ipaye, 1998).
Youth employment is a crucial issue in Nigeria because the youth constitute a major part of the labour force and they have innovative ideas, which among other factors are important in the development process of the country. A large proportion of the youths however are unemployed. The negative consequences include psychological problems of frustration, depression, hostility and gradual drift of some visible unemployed youths into all manner of criminal behaviour (Okafor, 2011). The menace of unemployment has increasingly been recognized as one of the socio-economic problems currently facing many developing countries like Nigeria and Africa as a whole. Unemployment in Nigeria is indeed a pathetic situation that calls for urgent attention, to address these socio-economic effects accompanied by it.