THE EFFECT OF UNEMPLOYMENT ON YOUTHS IN NIGERIA SOCIETY
CHAPTER TWO
LITERATURE REVIEW
2.1Theoretical Review
2.1.1Human Capital Theory
Human capital theory has been used to explain the importance of knowledge, altitudes, and skills in productive activities (Hornbeck and Salamon, 1991).The term human capital came into being as early as the 1770s, when Smith, 1776/1937; Alfred Marshall, 1890/1930; and Irvin Fisher, 1906 hypothesized that the investment in human beings through the provision of education, training and medical treatment would improve the productivity of individuals and the workforce as a whole. In investing in young people for example, governments and parents consider both opportunity cost and the direct cost of investment and therefore, education and training have been perceived as important investment on young people to gain paid employment and are used to signal who have the most productive potentials in employment. Spence explain how an individual’s level of education can be used as a signal not only on knowing a specific subject, but also of their generally (otherwise) unobservable ability such as higher level of logical thinking and judgment. However, as this study indicates, some employers consider other Unobserved characteristics such as motivation, job experience and hardworking, which may not result from education and training. However, Human capital theory has been validated by empirical labor economics research and many employers still use this theory when they make decision to hire. However, there may be a situation where a certain level or type of education may not be entirely necessary for a particular job, but still it is used as an unobserved ability to productivity.
2.1.2Neo-classical Theory
Neo-classical employment theories have been used to explain three characteristics of unemployment: structural, frictional and cyclical unemployment. Structural unemployment is conceived as a product of the institutional set up of the economy, including policies, laws, regulations, private and government organizations, types of market arrangements and demography. The structural unemployment is particularly tied to demand and supply of labor, price and wage formation (Campbell and Brue, 1995, Davidson, 1990). In this context, when the demand is high, the possibility of getting employment is also high and the vice versa. Frictional unemployment on the other hand is very much related to structural unemployment where there is temporary unemployment spells. In such a situation, accessing employment becomes harder and youths are more disadvantageous than adults due in part, to the societal perception of them as displaying lower labor market attachment than older workers (Rees, 1986).
Cyclical unemployment differs from structural and frictional unemployment by basically being tied to economic fluctuations. Structural and cyclical unemployment are usually regarded as disequilibrium phenomena in the since that they reflect excess labor supply at existing wages (Campbell and Brue, 1995).Normally employers strive to achieve equilibrium by ensuring that there is no labor supply from low productive workers, whose productivity is lower than the real return from their employment. Then, individual employers informally tend to hire most efficient workers.
In Nigeria, both the human capital and Neo-classical theories have been used to determine who have more qualifications to access employment. Since political independence in 1961, Nigeria has tried to pursue various policies favorable to human resource development. These policies were aimed at educating and training people with a view to improve the individual productivity. In order to achieve this goal various policy measures were taken on board including universal primary education, introduction of adult education and inculcating into the citizens, education for self-reliance, in which theory was merged with practice (URT, Composite development goal 2000). Although the initiatives were taken, to develop human resource, the government was unable to achieve equilibrium in the labor market.
After independence young people ran from manual jobs in rural areas to urban areas in search of white collar employment. This escalated the friction unemployment in which many youths found them in urban centre with no employment. In 1996 the government realized that there is a need to deal with urban youth unemployment through specific policy interventions. The youth development policy and the National Employment policy were published for that reasons. Both policies aimed at fighting the problem of urban youth unemployment through increasing employment opportunities (Komba, 2002). However ,although these policies were developed to curb the problem of urban youth unemployment, the government did not pay special attention to ways to develop youths ‘capacities needed in the job market, including inculcating to them job skills, entrepreneurial skills, motivation and hardworking skills. Thus, there are indications that, many youth lack these skills and significant increase of unlikelihood to access employment.
Youths continued to suffer unemployment within economic reforms during economic adjustment period which started with the home grown National Economic Survival
Programme (NESP) (1980/81-1981/82) and the Structural Adjustment Programme
(SAP) (1982/83-1984/85). This group of young people became the victim of ‘last in first out’ policy, leaving hundreds of youths unemployed in Nigeria (mjema, 1999). For over two decades now, Nigeria is faced with the problem of urban youth unemployment, which has paralleled a rise in youth “frustration, anxiety and despair, culminating in crime, drug addiction and alcoholism” (wanjohi,2004, p.30). Hopelessness and desperation has made young people easy recruits in armed rebel or insurgent movements experienced in many urban centre such as Arusha, Dar salaam and Mwanza.The prevalence of urban youth unemployment in Nigeria was regarded as a major national developmental challenge, and an impediment of sustainable development.
The vast existing literature on sustainable development hints at active and quality youthful population as one – possibly the only – factor reasonably consistently associated with economic growth and social development in general. In his early review of the literature, Check way and Finn (1997, 23) concluded that “the closest thing to a consistent finding among the studies is that quality and active youth can provide unique energy and insights to guide and lead struggles for community change.” Likewise, the ILO Regional Director for Africa, Charles Dan (2012) asserts that “...enthusiastic and energetic young people can drive the social and economic prosperity of the continent. – Although even on these accounts, the existing evidence is not overwhelming. Important studies estimating the association of quality youth and access to employment in Africa include Haji and Haji (2012), Argenti (2002),
Cooper (2007), Thompson and Arsalan (2007), Guarcello et, al. 2005), and Mjema (1997). Examples of economic growth function estimates with youth contribution through employment in Africa include Martins’ (2013) report for the World
Development, Pollin et, al.’s (2006) report on South Africa, Messkoub (2008) in the Middle East and North Africa, and ILO (2011) in South Africa. Compared to decades ago, “modern” socioeconomic structures have only served to reduce significantly the time young people spend with the older generation. This in turn may have reduced adult confidence in youths’ abilities to handle responsibility and consequently eliminated opportunities for positive role modeling and role learning for young people from their elders (Chinman & Linney, 1998). Regrettably, this situation has led a significantly large proportion of young people in Africa to live in social environments where chances “of living decent lives are negligible and in which many find themselves stuck in positions of inadequate life chances and bleak prospects” (Christiansen, Utas & Vigh, 2006, p. 11).
However, the existing evidence on the association between quality of youth and access to employment be it in level or value-added form – is still likely to suffer from bias due to unobserved youth characteristics, and employers’ perspectivesvariables. Obvious examples where such bias would occur include incidents where employers prefer certain type of observable characteristics regardless of the individual preparedness and motivation. In short, estimates of the effect of youth observable characteristics that convincingly overcome such biases are so far missing in the literature.
2.2.3Going beyond neoclassical theory
The main assumption of New Keynesian economics, that distinguishes it from neoclassical economics, is that wages and prices do not adjust instantly to allow the economy to attain full employment (ILO, 2011). The logical starting point of Keynes’s theory of employment is the principle of effective demand .According to this theory; total employment depends on total demand and unemployment results from deficiency of total demand (Ambilikile, 2006)
The Keynes’s theory is useful in this study but it is too narrow to explain factors that may contribute to unemployment, unemployment cannot occur only because of supply and demand; instead depends on many factors including individual profile such as level of education and inclination, such as motivation to work. Also Keynes talk about unemployment as a results from deficiency of total demand also this is not true because unemployment is caused by many factors, also he considered that wages and prices do not adjust instantly to allow the economy to attain full employment this also is not true because wages and prices have more impact on the economy. Therefore the researcher aims to find other factors that cause unemployment through use of research objectives to get information and have a solution about youth unemployment.
In a Classical (idealized) marketfor labor, the only thing that can cause true unemploymentis something that interferes with the adjustments of free markets, such as a legal minimum wage.
In Figure 1, where the marketis free to adjust, there is no involuntary unemployment. Everyone who wants a job at the going wage gets one. There may be many people who would offer their services on this market if the wage were higher as the portion of the supply curve to the right of LE demonstrates. But, given the currently offered wage rate, these people have made a rational choice not to participate in this labor market. Within the Classical model, the only way true, involuntary unemployment can exist is if something gets in the way of marketforces.
The presence of a legal minimum wage is commonly pointed to as one such factor. As illustrated in Figure 2, if employers are required to pay a minimum wage of W* (“W-star”) that is above the equilibrium wage, this model predicts that they will hire fewer workers. At an artificially high wage W*, employers want to hire only LD workers. But at that wage, LS people want jobs. There is a situation of surplus. The market is, in this case, prevented from adjusting to equilibrium by legal restrictions on employers. Now there are people who want a job at the going wage, but can’t find one. That is, they are unemployed.
Classical economists suggest other “market interference” reasons for unemployment, as well. The economy might provide less than the optimal number of jobs, they believe, because: regulations on businesses reduce their growth, restricting growth in the demand for labor, labor-related regulations (such as safety regulations, mandated benefits, or restrictions on layoffs and firings) and labor union activities increase the cost of labor to businesses, causing them to turn towards labor-saving technologies and thus reducing job growth ,public “safety net” policies such as disability insurance and unemployment insurance reduces employment by causing people to become less willing to seek work (Ackermanet al, 2013)
The classical theory was too narrow because it consider the only cause of unemployment as something that interferes with the adjustment of free markets for instance:- regulations on businesses , labor-related regulations, public “safety net”
policies such as disability insurance and unemployment insurance reduces employment by causing people to become less willing to seek work .Therefore the researcher of this study sees this as cannot be the only causative of unemployment there are other factors which must be found.
2.3Empirical Review
2.3.1Processes Necessary for Youth Employment
UNDP (2008) suggests that each person is endowed with a mix of capacities that allows them to perform, whether at home, at work or in society at large. Some of these are acquired through formal training and education, others through learning by doing and experience. UNDP (2008) identifies levels or processes for capacity building. These include the enabling environment in which people are facilitated to develop their knowledge, skills and attitudes. These environments determine the
‘rules of the game’ for interaction between and among organizations. In the process of developing knowledge, skills and attitude to enhance individual capacity the enabling environment include policies, legislation, power relations and social norms, all of which govern the mandates, priorities, modes of operation and civic engagement across different parts of society.
At the school level, the development of capacity comprises the internal policies, arrangements, procedures and frameworks that allow a school to operate and deliver on its mandate, and that enable teachers and students to work together to develop the envisaged capacities. This requires that schools are well-resourced with quality teachers, teaching materials, using quality teaching methodologies and appropriately assess the required capacities.
If all the environments, enabling environment and schools are well aligned to develop the capacities of the students, the students will gain necessary knowledge, skills, and experiences required to solve the perceived problems including access to employment. In the field of education, the development of human capacity is understood from different perspective, including humanistic, cognitive, as cognitive development where one is able to know and solve a problem. In terms of the work of schools, we typically think of cognitive development as the knowledge required solving problems in the academic disciplines. Cognitive development includes not only knowledge of tasks—in this case academic tasks—but also knowledge of self, settings, and others.
According to Lee (2008), knowledge of self involves one’s identity as a member of a family, of peer social networks, and of larger communities, including those defined by ethnicity, race, and nationality (Lee, 2008; Sellers et al., 1998). Knowledge of self also involves one’s identity as a learner of particular field, subjects and in a school/college in general (Dweck, 1999) and as a participant who identifies to a greater or lesser extent with the culture of a classroom and a school (Wigfield, Eccles, & Rodriguez, 1998).
Spencer, (2006) suggests that the goals we set and our persistence in efforts to accomplish them—especially in the face of scarcity of jobs—are influenced by our motivation, our interpersonal skills and our ability to perform. An understanding of one’s identity is an important guidepost because it makes one realize his or her capacity, the likes and dislikes and build a range of networking and affiliations within and outside the school including in a workplace. This self reflection lead into a conception of the job as interesting, doable, relevant, and whether it fits to individual competing goals (Spencer et al., 2003).
Eccles et al (1993) observe that, human ability to learn to accomplish the goals set,- is influenced by the nature of the supports or scaffolds that are available for learning to perform the tasks in question. For example, teachers, with the help of peers and learning materials are required during the learning process to develop the necessary ability to perform.This implies that, for the capacity to develop, there must be some forms of support to help make sense of those aspects of knowledge (Lee, 2007; Spencer et al., 2003). For example, students who have clear long-term objectives to access employment may persist in school to get the knowledge, skills and attitude necessary for them to be employed. It is also crucial to note that academic learning are developmental in nature, in that, those who have attained primary education are not the same as those who have secondary education. Likewise, those from high school are qualitatively different from those with college certificates.
2.3.3The Employer’s Perceptions about Youth Unemployment
Employers have a fundamental contribution to make in tackling youth unemployment. A study by Jones (2013) found that employers liked the fact that young people enable them to mould their workforce to suit their needs, they often liked the positive effect employing young people on their company profile, appreciated young people’s greater digital literacy, and recognized the benefits to their sector and geographical area from giving young people employment. However, Jones also found some employers failing to employ the youths because they considered them as lacking job experience, both in specific jobs and in work in general. Stiftung (2014) did a study on factors that employers identified as necessary for employing youths. 29% of employers thought that the number of years of professional experience acquired as well as the educational background of the applicant was as by far the most important qualifications.
Snape (1998) found that employers were often sensitive to the reason for unemployment so, for instance, a redundancy arising from recession or because of business closure was not seen as the ‘fault’ of the job seeker. Snape (1998) while generally sanguine about unemployment, employers were wary of applicants who were unemployed for a long time, which they regarded as a serious risk. They considered such people as additional cost, poor performers and a risk of leaving the job at short notice.
Employers’ perceptions of the long-term unemployed are intertwined with their perception of other employment issues. The risk of unemployment is strongly related to issues such as physical and mental health and disability and basic skills such as literacy and numeracy. Job seekers with disabilities or who had recovered from serious illness posed a dilemma for employers as they were sympathetic but concerned that the applicant’s disability or illness might pose a costly problem in their jobs (Danson et al, 2009).
EPS (2010) suggest that if an employer decides to go to the external job market to recruit labour, there are a number of alternative groups from which recruitment can take place. Unemployed job seekers are in competition for jobs with people already in employment who are looking for a new job, new entrants to the labour market, people returning to the job market (e.g. people who take time out to care for children or other dependents, people who take a ‘gap year’ to travel abroad or do voluntary work) and international migrants. Employers’ perceptions of the qualities of these groups can play a significant role in determining the opportunities open to job seekers, especially if current employment status is used as a basis for statistical discrimination faced with a choice between a person who is currently unemployed and one who is currently in employment.
2.3.5The extent to Which Education Prepare Youth for Self-Employment
Education is a necessary step to prepare people to be ready for work. In education, people get knowledge, skills and positive attitude towards job. The World Development Report 2007 (World Bank 2006) shows that in spite of improved primary education completion rates, fewer individuals might be attaining competitive
skill sets.
This report suggests that there is a need for changes in curricula and teaching methods to inculcate in students strong thinking, communication, and entrepreneurial skills, which are in high demand in workplaces. The report also suggests that education system has failed to provide students with both general and core competencies and skills, which are valuable in labor markets. For education to prepare youths for the world of job, the report suggested, it is necessary to inculcate in them the necessary knowledge and skills that are characterized by change and in which there is a constant demanded by the employers.
Stiftung (2014) did a study on the role of education in improving labor market outcomes, with a particular focus on policy considerations for developing countries. He reviewed a literature on the role of education in Ghana and Pakistan. He found that education plays a central role in preparing individuals to enter the labor force and in equipping them with the skills needed to engage in lifelong learning experiences. He suggested that educational reforms should create a realistic balance between theory and practice; there is need to heavily invest on quality adequate infrastructure that includes spacious classrooms, energy, offices, laboratories, workshops, hygiene and sanitation facilities, and portable water facilities, as critical for overall students’ academic excellence.
Peterson et al, (2003) found that work-based learning experiences can have a positive impact on school achievement and outcomes. Students who participate in work-based learning show an increase in completion of related coursework as well as an increase in attendance and graduation rates .Early work-based learning experiences can help students build crucial job-keeping skills or soft skills. Peterson et al, (2003) identified that work-based learning is one way youth can identify interests, strengths, skills, and needs related to career development. A hands-on experience in a real setting, work-based learning includes a broad range of opportunities including shortterm introductory activities such as job shadowing, informational interviews, and workplace tours, as well as more long-term and intensive training including workplace mentoring, apprenticeships, and paid employment. Volunteer work, service learning, and activities at a student’s school site can also provide rich, workbased learning opportunities.
2.3.6Ways for Solving the Youth Unemployment Problem In Nigeria
Juma (2007); suggested some ways that can be used to solve the problem of youth unemployment, these include: (1) providing youth with appropriate post primary education, support change of mindset and develop their skills in order to promote self-employment and increase their employability in the expanding private sector investments. E.g. setting of skill development centres within the rural areas. (2) Collaborative effort to educate people and create public awareness on the harmful effects of substance abuse, prostitution and the risk of HIV/AIDS transmissions. Counseling, testing, promotion of dissemination of information on HIV/AIDS and the use of Anti Retro-Virals (ARVs) need to be further advocated (3) Develop betterpolicy and laws to provide proper guidance for informed labour market and youth programmes designing and implementation (4) Provision of appropriate support to rural youth livelihood activities and the strengthening of access of young men and women to technical and financial services as well as access to market information is vital for expanding rural employment opportunities and improve rural youth livelihoods (5) strengthen institutional linkages and capacity building at all levels in order to address the challenges of youth unemployment in rural areas and (6) opening up export market opportunities for local products, including increasing investments in processing and manufacturing and relaxation of restrictive conditions in the international trade.
2.4Conceptual Framework
The conceptual framework describes the independent variables, intermediate variables and dependent variables related to the effect of unemployment on youth in Nigeria, voices from Odeda community.
Figure 2.3: Conceptual Framework of Independent Variables, Intermediate
Variables and Dependent Variables
The figure1 above shows the interrelationship between independent variables, intermediate variables and dependent variables in such a way that independent variable brings changes to dependent variables but this is only if action is undertaken in the middle stage which is intermediate variables, for instanceEconomic intervention is seen as independent variable in which if action is undertaken like establishment of other economic activities like Agriculture, tourism and livestock keeping activities which stands as intermediate variable cause positive change of dependent variable. Through the above explanation the variables are interrelated in such a way.