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Unemployment And Inflation In Nigeria
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With the adoption of the Structural
Adjustment Programme (SAP) in 1986, there was a temporal reduction in
fiscal deficits as government removed subsidies and reduced her
involvement in the economy. But as the effects of the Structural
Adjustment Programme (SAP) policies gathered momentum, there was a fall
in the growth rate of Gross Domestic Product (GDP) in 1990 from 8.3% to
1.2% in 1994, with inflation rising from 7.5% (1990) to 57.0% (1994). In
1995, inflation rate rose to 72.8% due to increased lending rate, the
policy of guided deregulation, and the lagged impact of fiscal
indiscipline.
The increase in unemployment in Nigeria, on the other
hand, has resulted to decrease in consumption, due to low income earned
by the citizens, thereby resulting to low production- the inability of
firms to sell their goods, forces them to reduce their output. This has
led to decrease in the economic growth of the nation.
Unemployment
also has social consequences as it increases the rate of crime. Also,
being without a job in Nigeria, is as good as losing your self-respect
and self-esteem among the people of your age bracket. The proportion of
workers who are unemployed shows how well a nation's human resources are
used and serves as an index of economic movement (positive or
negative).
In 1999, the unemployment rate was 17.5%, while at the end
of President Olusegun Obasanjo‟s administration in 2007; the rate of
unemployment had reduced marginally to 12.7%. From 1999 to 2007, the
rate of unemployment averaged at 13.1% – still quite high, since 5% is
perceived as the accepted rate. In 2008, the rate of unemployment was
almost 14.9% and rose drastically to about 23.9% in 2011. The
unemployment rate has been rising from 1980 to 2011. A recent forecast
shows that the rate would continue to increase up to the year 2020.
In the light of the foregoing analysis, the research work will be guided by the following question:
1. Is there any trade-off relationship between unemployment and inflation in Nigeria?
2. Does government expenditure have any significant impact on unemployment?
3. Do increases in the gross domestic help reduce unemployment?
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