Knowledge-Based Economy and Unemployment Challenge in Nigeria

We in our last post titled, Knowledge-Based Economy andYouth Unemployment: The Role of the 21st Century Nigerian Graduatesintroduced the subject matter. In this post, we shall be continuing with review of related literatures, knowledge-based economy and Nigeria, and we shall be rounding up with an insight into youth and universities graduates unemployment challenges in Nigeria.

The pivotal position occupied by knowledge-based economy in relation to employability (and productivity) of labour has led to intensive study into the subject matter. The specific attention given to university graduates employability in this study is not just a Nigeria phenomenon, employability and individual skill development has been of growing importance for most developed and developing countries alike.

The Organization for Economic Cooperation and Development (OECD) for example actively aims to place employability in the forefront of national educational and labour market policies and stresses that ‘human capital accumulation is an important determinant of individuals’ earning capacity and employment prospects, and therefore plays an important role in determining the level and distribution of income in society’ (OECD, 2001, p.i).

Garsten and Jacobson, (2003, p.8) recognized the pressure on individuals to gain new skills or experience in other to compete within the global labour market and wrote “becoming and remaining employable can be seen as a challenge as well as an opportunity, as it is equated to the capacity to adapt to the demands of the labour market.

Economic theories are not left out in supporting the idea knowledge-based economy as key driver of sustainable economic growth and development. Lucas’, (1988) endogenous growth theory has shown that countries with a larger stock of human capital experience higher growth rates. Romer, (1990) linked human capital to new technology creation and adoption (for economic development);

while Nelson and Phelps (1966) argue that a larger human capital stock aids technological catch-up between lagging nations and more advanced economies. Finally, Artadi and Sala-i-Martin (2003) find that primary school enrollment rates are positively correlated with GDP growth rates in African countries.

KNOWLEDGE BASED ECONOMY AND NIGERIA

We can have confidence that progress towards the global knowledge economy will not be reversed but be a sustained economic development strategy and Nigeria like any economy (whether developed or developing) can benefit from it tremendously.

The sustainability of the benefits of this concept has been underpinned by three fundamental drivers:

• Consumer demands are changing – as consumers become richer, more sophisticated and more diverse, they increasingly buy intellectual content and technologically advanced products and services. This is driving up the demand for knowledge-intensive products and services;

• Technological progress – the development of new technologies both increases productivity and creates new products and jobs; in particular, the proliferation of powerful cheap computing power and the internet has made many knowledge intensive ways of working possible; and

• Globalization – increasing flows of ideas, knowledge and goods from around the world have accelerated the transition towards a knowledge economy.

THE CONCEPT OF UNEMPLOYMENT

Abiodun, (2010) regards unemployment as the proportion of the labour force, expressed in percentage, which is not employed at any given point in time. Graduate unemployment, therefore, refers to the unemployment among people who have graduated from tertiary institutions and who are qualified to work but do not work at any given point in time.

The National Bureau of Statistics (NBS) defines unemployment as the proportion of the labour force that is available for work but did not work for at least 39 hours in the week proceeding the survey period (Central Bank of Nigeria Annual Report, 2008).

INSIGHT INTO YOUTH UNEMPLOYMENT IN NIGERIA

The challenge facing youth unemployment is a global menace and has remained a major focus of international discuss. At one of the recent Spring Meetings of the World Bank, a high-level round-table meeting was organized for leaders from all over the world to come together to share views on the nature of the challenges that the youth now faces, and especially on possible solutions.

At the regional level, you may be aware that Africa faces a pressing problem of youth unemployment. Youth unemployment on the continent is now assuming crisis proportions and is steadily worsening over the years.

For Nigeria, the 1980s was a difficult decade and was popularly recognized as the genesis of the present high level of unemployment witnessed in Nigeria today as the result of oil price collapse and the subsequent economy recession. Although we enjoyed high oil prices in the 1970s, we forgot (or intentionally) refused saving and so we entered the 1980s without any fiscal buffers and resulted into negative average GDP growth rate of -1.42 percent, while our population continued to grow at about 2.6 percent during the same period.

The 1990s also came along and did not help Nigeria economy; the economic instability witnessed in the 1990s persisted with periods of hyperinflation.  In 1995, inflation went as high at 73 percent! Economic growth was very slow during this period with GDP growth of about 2.5 percent and population growth rate of 2.5 percent, Nigeria was basically at a standstill.

 

The 1980s and 1990s were lost decades for Nigerian economy and thus explain economic backwardness and high level of unemployment witnessed among youth in Nigeria today.

According to the National Bureau of statistics (2013) the national unemployment rates for Nigeria between 2000 and 2011 showed that unemployed persons constituted 31.1% in 2000, 13.6% in 2001, 12.6% in 2002, 13.4% in 2004, 11.9 in 2005, 12.3% in 2006, 12.7 in 2007, 14.9% in 2008, and 19.7% in 2009, 21.1 in 2010 and 23.9 in 2011.

The date above indicated that unemployment growth rate during the period has been fluctuating between -11.19 and 3.21. A closer look and analysis of the data showed that unemployment growth rate was 3.82 in 2001, decreases by -7.35 in 2002, it went as high as 17.46 in 2003 and then declined by -9.46  and -11.19 in2004 and  2005 respectively, it started increasing again between 3.36, 17.32,  32.21, 7.11, and 13.27 in 2006, 2007, 2008, 2009 and 2010 respectively.

Government in addressing the mass unemployment in the country claimed to have created some jobs. According to the National Bureau of Statistics, about 1.9 million jobs were created between third quarter of 2012 and 2014. Other jobs created through special intervention programmes include YouWiN (27,000 jobs) and the SURE-P Community Services Scheme (120,000 jobs). The new President Buhari administration recently claimed to have created about 1 million jobs less than one year after assuming office.

Given the large number of graduates and new entrants into the labour force (about 1.8 million) in Nigeria each year more appreciable effort will need to be made by the government and the graduates themselves to create more jobs for the growing unemployed graduates in the country.

International Labour Organization, (2010) reported graduates unemployment rate in Nigeria between 2003-2009 to be 25.6%, 38%, 32.3%, 32.2%, 32.1%, 37.5% and 40.3 % in 2003, 2004, 2005, 2006, 2007, 2008 and 2009 respectively.

Given this gloomy Nigerian graduates unemployment picture it is clear that large mismatch appears to exist between university output (labour supply) and labor market demand in the country. The analysis shows that the employment prospects of recent graduates have clearly deteriorated.

Without doubt, the main reason for this poor employment condition is the weak performance of the Nigerian economy; but there are only two main reasons why an economy would perform badly.

One is the policy environment, widespread agreement exists that the policy environment for economic growth in Nigeria has not been favorable for many years, the discussion of why this has been the case is not the subject of this paper. The second reason is an inadequate level and quality of inputs that businesses in the economy employ, one vital input is skilled human resources, especially the quality of the university trained portion of the work force.

We shall in our last post on the topic be discussing the actual role of universities graduates in Nigeria in reducing youth unemployment in Nigeria.