YOUTH PERSPECTIVES ON WAYOUT OF UNEMPLOYMENT ISSUE IN NIGERIA

CHAPTER TWO

REVIEW OF RELATED LITERATURE

Introduction

Academically, a research work of this kind will appear sickle without adequate reference to related literature of published and unpublished nature, which hitherto helped in shaping and giving more insight on the subject matter.

Overview of Unemployment

Before now, unemployment has become a very serious problem confronting the citizens. Initially, people saw unemployment as the ills of the unfavoured until the effects began to affect the society at large that even the governments begin to view it as a general problem which may cause threat to the nation at large.

Reynolds (1978:122-23) asserts that the most obvious aspect of the problem is full-time unemployment – the situation in which people are willing and able to work but have no jobs. Determining the size of this group is not as easy as it may appear at first glance.

Afolayan (2005:117) explains unemployment as a situation where people who are willing and capable of working have no work to do due to no fault of theirs. But it is not always the case as he says; unemployment can be as a result of one’s fault. For instance, those who for whatever refuses to work, may be because they wanted to be in a particular post or so, may be termed unemployed but for their own fault. Unless you create job yourself, you can hardly be in a position you want to be when you wanted itmost.

Before one talks about unemployment, work must of necessity be the yardstick. In the mid nineteenth century work was extolled as the best way to get rich and today, in all the market-economic countries, it is chiefly seen as the way to individual success (work means social advancement). Another definition that is worth noting is the issue of those who “refuse to work” for one reason or the other best known to them and the issue of housewife. It is difficult to imagine that some women ‘chose’ to stay at home without such a decision being somehow connected with the general condition to which they are subjected to; unequal access to high grade or responsible posts, and thus to interesting work; unequal pay; lack of accessible social facilities in particular for their children, which would make their work easier-in short, the whole weight of tradition regarding women’s role in the family and in society.

What Is Government Doing About Unemployment

What government should do on behalf of the jobless remains a divisive and vexing policy question. One of the things troubling this nation is lack of records or statistical data for planning. It is not a joke when Onyebuchi Ezigbo in Thisday Newspaper of June 7, 2011 lamented “most activities interventionist agencies like NDE, National Poverty Eradication Programme (NAPEP) and other agencies that createjobsgounnoticedbecausewedon’thaverecordsoftheiractivities….”

While broad political and economic conditions determine basic strategies for assisting the unemployed and cause frequent change, specific policies are shaped by past experience. It is interesting that most of these politicians use poverty alleviation and employment as aces during their campaign with no concrete and sustainable strategies in place to tackle unemployment (The Guardian, Tuesday, January 18, 2011). Perceptions of success and failures with earlier government interventions strongly influence the content of newproposals.

Government sponsored training measures tackle an enormously difficult task. In simple term, they seek to transform chronically unemployed people into steady, productive workers. For instance, on the 24th January, 2013, The News Agency of Nigeria (NAN) reported online that the Subsidy Re-Investment and Empowerment Program (SURE-P) has engaged more than 3000 youths, women and vulnerable persons in Lagos State under the Federal Government’s Community Services, Women and Youth Empowerment Programme…, that the selection was going on simultaneously in the 17 local government councils in the state. One need to understand that most of the people served by the current training system have not been successful in school, have only limited skills and may exhibit personal characteristics that make them unattractive to privateemployers.

Nevertheless, Bauma and Van Horn (1985:208) pointed out that, to some observers, the magnitude and complexity of unemployment and the modest success of previous government strategies suggest that further interventions are doomed to fail. Others had convinced that unemployment must not be regarded as a private problem. They pointed out that many people already have benefited from employment and training measures, but that programmes can be improved, arguing that it is government’s responsibility to search for better approaches.

National policy towards unemployment emerges from a complex mixture of political and socio-economic events, public opinion, perceptions of the unemployment problems and opinions about what government can and should do about it. Subsequent governments that came and go did promise us heaven and earth to provide employment to the teeming youths, just as Goodluck Jonathan Administration promised, on inauguration day, that unemployment will be a thing of the past within the second quarter of his reign, but it can be seen that little has been done about it. There has never been any benefit apportioned to the unemployed category in this country since the name, Nigeria, was coined as an entity till the return of the democratic dispensation. Baumer and Van Horn (1985:22) had it that the unemployed people experience a very different political reality. Their voting power is weak, their claim to government assistance is widely questioned and their lobbying forces pale in comparison to other interest groups. They are dependent on the empathy of other voters, but many people think “it cannot happen to me” or “it’s their fault” so there is limited incentive for them to help the unemployed.

In practice, politicians apply varying definitions of politically acceptable unemployment. Both military and civilian governments alike have used varied strategies to allay the burden of the unemployed and the poor ones through the institutions of such programmes like-Family Support Programme, Better Life for Rural Women, National Poverty Eradication Programme (NAPEP), Mother and Child Care Initiative (MCCI), Women for Change Initiative (WFCI) and a host of others.

Whether and how the government of the federation should help the unemployed has been Nigeria’s fundamental political conflicts for more than five decades now to the extent that encouragement, programmes and such title benefits are given to private establishments like Dangote Group Ltd. who employ a great number of labour force in the country.

Why is Unemployment a Big Problem in Nigeria?

According to Iyayi in Belo Iman and Obadan et al (2004), no deliberate attempt was made early in the life of the Nigerian nation to plan for employment generation. The government believes that high level of employment creation would automatically flow from a high rate of economic growth and therefore did not explicitly include it in the first and second National Development Plan, some programmes designed to generate high levels of employment.

The assertion of Bauma and Van Horn (op.cit) was that ‘no’ government strategy can ever hope to end unemployment. They further said that the strategies for reducing unemployment and coping with its side effects are as numerous as the causes of the problem. The federal government often claims that the size of the federal commitment has been large in absolute terms but modest in relation to the number of jobless Nigerians.

Resources that ought to have been used in establishing industries are being squandered by the politicians and the government alike for some ceremonies like birthdays, funerals, anniversaries, voting campaign, inauguration into offices and those who steal and embezzle our wealth to foreign countries are there etc.

The big issue is that the government acts less than it says concerning the implementation of some policies, a case where during campaign, the aspirants will promise heave and earth to provide for the populace and the unemployed as well only to find him/herself on the corridor of power and make every vow a bye-gone issue and nobody asks question. Nigerian cases are always different.

Causes of Unemployment among Youths

The cases of unemployment have been implicitly apparent in all of our foregoing statements; we shall therefore sum them up in a few lines, since it is not possible within the limits of this work to undertake a detailed analysis. Attempting to explain unemployment solely by 'underdevelopment', and vice-versa, is simply going round the circles. In this context, let us start a bit with these;

1. Overpopulation

Nigeria is said to be overpopulated as it is described as the most populous country in Africa. A mere look to the street will make one have knowledge of what is at stake. Entering the market places will assure one that the nation or government can afford to offer us a little thing to alleviate this issue. The universities and other tertiary institutions produce thousands of graduates who are potential workers who do not have a hope of where they will fit in for work. The number of the unemployed youths who pass through the compulsory National Youth Service Corps (NYSC) in different three batches every year is too much compared to the number of vacant positions in both public and private establishments.

1. Lack of Adaptability and Selection

Everybody cannot fit in some areas. Education, technical and vocational training have made this demarcation more encompassing. Engineering works are more or less restricted to those who have such technical know-how as well as it is for medical profession. Some works of artistry are deemed charismatic and those who lack such endowment find it most difficult to adapt to such vacant position even when they are declared free/vacant. Today ‘degrees’ are much in demand and these have made educational system more severe in its social selection of people who possess certain qualifications.

1. Economic Recession/Depression

The meltdown that struck European nations in 2008 has crept into the hinterland of Africa. Many individuals virtually lost huge parts of their wealth and jobs when banks failed and stock market crashed. In furtherance to what Anderson James (2007:2) says, he explains that … until the Great Depression of the 1930s unemployment was viewed in the US as basically a personal problem. Millions of American workers (no one knew precisely how many) were thrown out of work after World War 1.

1. Technological Advancement

This aspect had boomerang effect on us, Africans. It is because the scientific and technological innovations that are meant to help alleviate unemployment problems have, in African soil, worsened the number of unemployed. The numbers of laid-off workers continue to increase despite the advancement they bring in production and services.

1. Factor – Intensive Method of Production

According to Afolayan B(2005:118) in the work, International Journal of Social and Policy Issues, one of the causes of unemployment…. is the factor- intensive method of production. Fortunately, most of the Less Developed Countries (LDCs) have cheap and mostly semi-skilled labour, and ordinarily should adopt labour-intensive mode of production …. Instead is capital intensive mode of production that throws out of employment some of the few people that are even employed.

1. Incidence ofCorruption

In addition to this, the money cost of production is too high in relation to world prices. The high incidence of corruption in the land and the inefficiency of the public infrastructural facilities, where they exist at all, make the cost of production high.

1. Nigerian Economy isMonocultural

The monocultural nature of the Nigerian economy has also contributed to the high level of unemployment. Nigeria places much emphasis on the petroleum sector at the expense of other sectors. By nature, the petroleum sector is highly capital-intensive and the local content in terms of labour input has remained very low; most of highly skilled personnel of the oil companies areforeigners.

1. The Type of Education Pursuit inNigeria

A very high proportion of graduates in Nigeria have little or no skills that can fetch them jobs. Much emphasis is attached to paper qualifications putting less regard to technical know-how. As a consequent, half-baked graduates are being produced who can hardly fit into the present situation of computer and information age.

1. Government Policies andProgrammes

Some policies and programmes of the government also create unemploymentintheeconomy.Apartfromwhateverretrenchmentthathadtaken

place in the past, the Federal Government is bent on further retrenchment at least forty percent (40% or 160,000 people) of its workforce under the right sizing programme (NAN 2011). This in no doubt has worsened the unemployment situation in Nigeria.

Some forms/Categories of Unemployment by Cause or Source

We ought to have in mind that unemployment arises from a variety of causes which stem from remote or immediate phenomenon, and for that note several types of unemployment can as well be distinguished on the basis of causes.

Because there are important differences in the socio-economic and political problems growing out of the varied kinds of unemployment in different countries, such a distinction is helpful as effective methods of control vary from one type to another. There is the notion that what is good for the goose is also good for the gender but in this scenario of unemployment what is useful to tackle a particular situation within a country might not work effectively in the other.

For the purpose of this work, six major types of unemployment are discussed for convenience in analysis and in maintaining appropriate control and relief programmes. They include:

1. Transitional or frictionalunemployment
2. Technologicalunemployment
3. Seasonalunemployment
4. Cyclicalunemployment
5. Personal or hard coreunemployment
6. Spotunemployment

Transitional or Frictional Unemployment:

Transitional or frictional type of unemployment arises out of the mobility of our labour force as expressed in changes from job to job. In transitional or frictional category of unemployment as explained by Yonder and Heneman (1959), the unemployed in this category are those who are “between” jobs. They have quit or have been released. These groups of people are looking for new jobs, which they have not yet found or in which they have not begun to work. Affected by the current labour market conditions is the length of time during which they are unemployed and this vary greatly among members of the group. Worker mobility in this way provides the flexibility of our labour force through which productivity is maximized and economic growth and progress are facilitated. It is clear that a considerable volume of transitional unemployment is unavoidable. Observation shows that it is the price we pay for freedom in choosing and changing jobs and for our versatility and adaptability andprogress.

But in order to avoid unnecessary losses, public aid may assist employees in moving to new localities in which general measures are appropriate, however, only if they impose no restraint on the mobility of workers. Such mobility is essential if the economy is to retain its dynamic characteristic.

Technological Unemployment

As the name implies, technological unemployment is a loss of employment occasioned by changes in productive technology - the processes in which resources are combined. Looking critically at this, it is a special case of transitional unemployment. Some change “substitute machines for men” in the traditional terminology. For example, so many manual labourers were thrown out of work in the introduction of cultivation tractors. Thousands of bankers lost their jobs at the adventure of electronic banking using computers.

This type forces workers to change jobs by reducing or eliminating work opportunities in their existing jobs. Technological change is as old as men and societies has been a major force in long term expansion of employment and the rise of wages and scales of living. Industrial Revolution seems to have been the factor that brought this to bear which greatly speeded its tempo. It is an appreciative wave of development of any kind but both employers and employees find it as a big threat to their economic security. It is a welcome idea on introduction but with grudge institutionalization when gross in number begin to loose jobs.

Whether technology destroys more jobs than it finally creates is unclear, it may simply lower employment growth. Between 1972 and 1980 employment in 50 out of 235 occupations declined by 2 million jobs and in 1983 Atari lay off 1,700 American workers and moved production overseas. But technology has also created jobs, especially in computer related industries (Russel,1984).

Endless arguments have insisted that technological change:

1. result in ever-growing levels of unemployment,or
2. creates more employment than it destroys,or
3. is unimportant in its effects on unemployment, inevitable, and not worthy of any special concern or consideration (Yoder and Heineman1959).

Seasonal Unemployment

In terms of numbers of workers affected and the numbers of days lost, the most important type of unemployment is probably that type described as seasonal. What this connotes is that in a particular season there is influx of labour force and some other seasons there is shortage. During the influx of labour force and there is no corresponding absorption by the employers, seasonal unemployment results.

In Nigeria, for example, there is increase in unemployment level during the dry season for casual workers and in time of pass-out of National Youths Service Corps (NYSC) – February, June and October yearly. This result from reductions in demands for labour attributable either to the seasonal pattern of consumers’ habits and customs or to variations in production associated with climatic change. Christmas season/holidays and that of Easter all have effects on time-to-time demands for labour. It is worthy of note that seasonal unemployment creates seriousproblems.

In fact, in Nigeria, no record of seasonal unemployment is to be reckoned because there is never a season when unemployment seems to be reducing rather; it is always on gallop increase.

In general, it is to the enlightened self-interest of employers of labour to stabilize employment and output. This may in some cases reduce the impetus to expansion and thus creation of additional jobs.

Cyclical Unemployment

Cyclical unemployment is the type of unemployment that is traceable to cyclical fluctuations in business activity. It is essentially depression unemployment, although it may result in part from failure of our economy to provide the million or more new jobs necessary each year to accommodate our ever growing labour force. For that reason, it may also be described as growth unemployment. This type of unemployment causes widespread concern because prolonged depression, as we are experiencing since 2008, and idleness create personal disorganization and desperation in which citizens may accept or welcome radical social and political change.

Cyclical unemployment appears as an accompaniment of the recession and depression phases of business cycle. These periods of reduced activity are followed by stages of recovery and prosperity or boom in which cyclical unemployment tends to disappear. Depression, as the cause of this type of unemployment can occasion vast unemployment which is most serious in the capital goods industries and those producing consumers’ durables.

Personal or ‘Hard Core’ Unemployment

It is a fact that almost all types of unemployment are complicated by the notion that some workers find changes in jobs more difficult than others. As a result, they remain out of work longer. Some are almost chronically unemployed, so that they have been described as a “permanent hard core” of unemployment. This term is used generally to describe an unspecified number of persons regarded as “unemployable” who are likely to remain out of work regardless of job opportunities. This condition, it is said, is regarded as resulting form peculiar personal characteristics that prevent such individual from finding or holdingjobs.

The fact about this alleged hard core of unemployables is by no means clear. That mental and physical illness keeps some adult (youths) out of labour force is obvious. Moreover, some types of personal unfitness come and go. They prevent hiring when labour surpluses exist but are ignored when labour markets become tight. Studies of the so-called unemployables in one locality found them to be of higher average age and to have less education, lower levels of skills, more health problems, and more temperamental maladjustment than the average worker. But clear scrutiny in Nigeria shows that the issue of unemployment takes a different form and in a different dimension because those who are fit and want to work can hardly find the job. We may as well affirm that personal unemployment does create a small “hard core” but that numbers in this group may be much fewer than is frequently assumed. And even those who are regarded as mere unemployables can be assisted in finding work by counseling andrehabilitation.

Spot Unemployment

Sport unemployment may be defined as labour immobility in the sense that we have too many resources in the wrong place at the wrong time. This is the type of unemployment that arises primarily out of changes in the geographical location of demand for labour. It may be a consequent of technological change that makes similar plants in other localities more efficient.

Spot unemployment is aggravated and prolonged if released workers cannot readily adapt themselves to new jobs in the same or other localities. Examples are the unemployment occasioned by the movement of University of Nigeria Teaching Hospital (UNTH) from inside Lagos metropolis to Ituku Ozala the present site. Many traders and casual workers in and around the hospital may experience spot unemployment. It may also result directly from changes in technology or raw materials that create a substitute - possibly better or cheaper - for an older, establisheditem.Itcanalsobeexperiencedbecausesomelocalitieshavelittle diversification in their industries, so that a decline in demand for certain products has a disastrous effect on a large segment of the community. Experience show that spot unemployment is frequently traceable to the opening of competitive plants with lower costs in other localities. Although spot unemployment as the case may be is essentially a local labour market problem, it may occasion wide concern as we are treating itnow.

Are there Such Things like Underemployment and Over-employment?

Underemployment is a situation in which workers hold job that fail to provide opportunities for maximum contribution. Sometimes it is called “unemployment within employment”.

Under-employment is a waste of human resources. The most common examples of under-employment are probably part-time work and restricted employment opportunities for such groups as the handicapped, the aged (including middle-aged), women and various minority groups. They are employed at less than the highest level of their skill. Many employers are concerned about the under employment of qualified personnel-their employment in tasks that do not use their highest skills and abilities. Frequent enquires in groups of supervisors and managers disclose that only a part of their working time is devoted to activities in which they use their special skill. Mere look at some federal jobs in Nigeria will showonethatsomepeopledosleepmostoftheirtimesintheirworkplaces (offices or workshops). Much of the time what they do could be done by others with less skill, less experience, and perhaps less-scarce talents. This sort of misplacements affects a large proportion of our labour force. Basic to all such under-employment are the limited mobility of workers and the imposition of barriers and friction that prevent their optimum allocation. The waste involved may well exceed that occasioned by unemployment.

Over-employment on the other hand results when a worker is placed in a job beyond his capabilities. Employees with marginal reaction a times may “get by” the hiring decision but may be unable to keep up their work place. Over- employment can take varied forms. Excessive work speeds may burn out employees. Such work speed may arise where production pace is set by machines. It may arise when employees on pulse rate get “money hungry”. Excessive work speeds and poor working conditions may cause accidents-a tragic form of over- employment. Over-employment may as well include the dangers of working so many hours as to interfere with family and social responsibilities. Employment of some working mothers may interfere with the personal development of their children. Workers attitudes towards restriction of output may result in a serious but perhaps more subtle form of over-employment. It well makes little difference if a person turns out less output because he is fatigued from excessive hours of work or becausehewantstobeoneofthegang,andlimitoutput;theproductivityresultis the same. Some public concern centre on the effects of long days and weeks on family life, political participation, and citizenship responsibilities. Public concern also noted the hazards of “wearing out” works “before their time” and of causing such exhaustion and fatigue as might result in added on-the-job accidents with permanent disabilities and limited contributions.

Unemployment among Educated Youths and the Challenges

Before gaining admission to tertiary institutions, many young Nigerians had hopes of a better life. But these sometimes become a mirage after graduation …a harrowing story of how unemployed graduates engage in menial jobs to survive. Their plight should form an agenda for our politicians who are now asking for votes lest this generation of Nigerians become a waste for themselves and their nation (Vanguard March 20, 2011). During the 70s or 80s, it was unheard of that a graduate sits for more than six months after graduation without being employed in a well paid job. Prior to one’s graduation from school, job opportunities of varied kind were waiting for the person to make a choice. Certificate of tertiary institutions were held high above board and even secondary school leavers do not have to suffer hell before getting ajob.

Today things are quite different: although the technical conditions for employee’s work have not evolved in the direction of more skilled work calling for a higherlevel of training, that is nevertheless what is now required. We are witnessing a devaluation of the work potential of those who have not obtained higher degree certificate and even of those who have, for they cannot now hope to obtain jobs which are more skilled or carry greater responsibility. One can still observe that this increasing demand for qualifications has arisen in response both to the generally higher educational level of young people and to a slowing down in the growth of the tertiary sector and therefore a decrease in the number of jobs available.

Yet, it is therefore, not the level of education which leads to a particular type of job, but rather the conditions on the labour market whose number grow geometrically these days, making work potentials compete with each other, assigning a higher or lower value to a particular educational level.

But one question need to be asked; is a person who has obtained his/her first degree better trained than one who has been only to secondary school? Of course, the former is better pointing out that the grade of job, the types of occupation to which they can aspire are entirely different. Nevertheless, educational level is not merely an instrument of social advancement, since the grade of an occupation and its level on the social scale are not identical.

Does the raising of educational level not bring with it a systematic devaluation of that level? It does. For any one occupation, higher and higher qualifications are required, so that those who had reached the level previously required now have to be content with low grade-work. This phenomenon shifts the demarcation line between educated and uneducated young people. Very often, young people who have continued their studies beyond compulsory age limit may find themselves downgraded because of low grade job they are offered and classified among the young uneducated. Among the “most highly educated” whom for convenience sake, we shall call ‘young graduates’ are the ones who theoretically aspire to the best jobs and who should, according to traditional thinking, be the least in danger of being unemployed. Today and even the days ahead are at variance with this assumption or theory. Unemployment among young graduates although a new phenomenon, is growingrapidly.

Faced with these difficulties, some continue their studies in order to obtain a second degree, a second specialization, hoping in this way to improve their chances of finding a job. The inflation and accumulation of degrees, which reflect narrowing opportunities and competition between young people and other workers on the labour market, aggravate social inequality as concerns employment. All young graduates are not therefore in the same position as regards finding jobs. The universities and other tertiary institutions which and most highly ‘rated’ on the labourmarketarealsothosewhichadmitthesmallestnumberofpeoplefrompoorer families, because of the difficulty of gaining admissions and the cost/length of studies.

Nevertheless, even those institutions also turn out unemployed graduates who paradoxically take longer time to find work than other people; obviously because of their level of education and they find it difficult in accepting more humble jobs. It becomes noteworthy that the youths who are, or should be, the most highly prized on the labour market, also find that their work potential is devalued when they accept low-grade jobs and when they are unemployed, for them their work potential is neither utilized nor properlyremunerated.

It has been in advocacy for young graduates to start a self-help ventures in the country, Nigeria, which is as well good and acceptable but a situation where people from poor families, who in one way or the other paid through the nose in order to see their way through the higher schools, how can such funds be sourced again, and this scenario will force them to go and take up a variety of jobs, usually requiring no qualifications.

TheoreticalFramework

This is the section that involves the linking of the problem under study to assumptions, postulations and the principles of a theory. Obi (2005:40) stressed that this is a section that establishes the theoretical framework from the within which the research is to be conducted. The theoretical framework utilized in this study is the Job-Search Theory propounded by John J. McCall, a United States Economist in 1970 known for work in search theory. The theory has been modified byReynoldL.G(1978)inhiswork“LabourEconomicsandLabourRelations”, and Mortesen D. (1986) in his book “Job Search and Labour Market Analysis”.

The theory states that, “workers look for jobs, but are only prepared to take a job when a certain real wage (acceptance wage) is determined”. In economics, search theory studies buyers or sellers who cannot instantly find a trading partner, and must therefore search for partner prior to transacting.

As he continues to search, too things happen. His expectation of gainsfrom further search is likely to fall. He will not apply entirely at random, but will start with the places that he believes have the best jobs in the area. As he works down the roster from better to poorer employers, his estimate of the wage he can get will tend to fall also. The theory has been applied in labour economics to analyze frictional unemployment resulting from job hunting by workers. From a worker’s perspective, an acceptable job would be one that pays a high wage, one that offers pleasant and safe working conditions. In this case, whether a given job is acceptable depends on the searcher’s beliefs about the alternatives available in the market.

More precisely, job search theory studies an individual’s optimal strategy when choosing from a series of potential opportunities of random quality, under the assumption that delaying choice iscostly.

The pool of job seekers includes not only those who have quit but also those who have been laid off or discharged and those who are just entering the labour force. The search for work goes on through many channels, differing somewhat with the skill involved. The potential worker needs to decide whether an offer should be accepted or rejected. This criterion is determined by weighing the cost of continued unemployment against the possible gain from continued search. How long this search takes is much influenced by the overall state of the market, that is, the relative numbers of vacancies and number of job seekers.

The search for job is an ongoing phenomenon owing to the fact that there is never a time the labour market is vacant or empty or filled vacant positions in all the firms. Since preferences among workers differ, we obtain a rising supply curve of labour (with rising real wages)". But at any moment we find that there are vacancies and unemployed persons – a ‘disequilibrium’ which explains a consequence of the lack of transparency and homogeneity which is typical of labour market. As a matter of fact, the new entrants may not know fully what is happening in the labour market, hence the notion that, since the labour market is modeled in analogy to competitive commodity markets, the assumption is that it is characterized by flexibility and capacity for adjustment. But information plays an important rolehere.

Assumptions of Job-Search Theory

1. The theory demonstrates that at the arrival of employers and the potential employees at the equilibrium wage or under ‘normal’ circumstance thatevery body who wants to work will find employment.

1. Neither workers nor employees have full knowledge about conditions in different regions andfirms.
2. Unemployment is seen exclusively or at least predominantly as a frictional phenomenon in a world of imperfectinformation.
3. Persons who could get a job, could prefer to stay unemployed for sometimes to get moreinformation
4. Some workers will be unwilling to work under present conditions, while some others will be out on the search, and this is the “natural” unemployment.
5. Rising inflation rates cause mistaken beliefs that real wages have gone up and this means that search periods are shortened as workers enter (by mistake) lower-paid jobs (in realterms).
6. For majority primary employees, the main desire is directed towards a steady job with (normally) fixed hours ofwork.
7. It is assumed that unemployment arises when the unemployed do not have the skills, training, work experience, or geographical preferences to fit into any of the existing job vacancies in theeconomy.
8. An unemployed will want to examine a number of possibilities before acceptingajob,ifhetakesthefirstjobhefinds,heassumestoruntherisk of missing out on a better job because he stops searching too soon.

Rationale of Job Search Theory

In the desire to maximize their income chances, some workers will always prefer to remain unemployed for a while in order to look for a (good) better job.

The theory is chosen to unravel what lies in the minds of the potential employees that are easily fitted into the traditional ‘rational’ optimizing calculus of marginal theory that reminds us that the additional costs of unemployment (lost wages minus unemployment benefits) and of information gathering are set against the additional gain which can be expected from finding a better-paying job.

Job search theory was also chosen because as wage levels, working conditions and career opportunities certainly play an important role in the choice between different job opportunities, but they are less important when it comes to choice between employment and voluntary unemployment.

Again, the choice of this theory is that unemployment is always present in a dynamic demand patterns causing different rates of unemployed growth in different occupations, industries andregions.

Application of Job-Search Theory

Following the qualities or features of this job search theory, as related to this research work, it can be said that, individuals will search for a vacant job in an optimal fashion, i.e., their search activities will maximize their expected utility. The theory implies that unemployed job searchers must weigh the costs and benefits of continuing to search for a job in an uncertainenvironment.

However, it tend to contribute as it provides explanation for a typical frictional unemployment by modelling individual behaviour in the presence of imperfect information regarding the availability of jobs and the wages being paid for specific jobs in the labour market.

It now implies that as there is unending job search for the unemployed, it becomes not a matter of workers engaging in normal job search or lacking the correct skills, in this case, the number of unemployed people exceed the number of vacancies.

Thus, in many cases, people who lose their jobs are not certain whether the loss is temporary or not; given the uncertainty associated with the permanency of a job loss and the cost associated with retraining or relocating.

In this modern economy, unemployed youths enter the labour market/force each year while others retire or leave the labour force; new jobs open up in some firms and disappear in other firms, as a result, unemployed workers and unfilled vacancies co-exist at any point in time.