Unemployment is one of the challenges facing Nigeria in today’s world. It occurs when people who are willing to work are not able to find a suitable job during a period. In Nigeria, people who are working but do not have a good job that pays well are also considered unemployed. The problem of unemployment in Nigeria is one that greatly affects the economy of the country. The government has tried to help reduce unemployment by creating the National Directorate of Employment(NDE) and its various skills acquisition programmes that have helped create job opportunities. These skills acquisition programmes include PAP, NAPEP, YOUWIN, SURE-P, and other programmes. In this article, the types of unemployment in Nigeria would be looked into.
The types of unemployment in Nigeria would be discussed below:
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Voluntary Unemployment
Voluntary unemployment is a type of unemployment in which workers refuse low-salary jobs. It is all about their decisions to remain unemployed. Another scenario of voluntary unemployment happens when a worker on his own accord decides to leave a job because the salary is no longer sufficient. In other words, this type of unemployment involves a situation where a person decided not to work just because the salary is poor and they are not satisfied with the amount.
Most people who have voluntary unemployment are without jobs hoping to find jobs that match their qualifications and skill sets. Another factor that could lead to voluntary unemployment is that first-time job seekers who does not have adequate information about the nature of the job and decide to remain without a job until the time they get their desired job offer.
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Hidden Unemployment
Another type of unemployment in Nigeria is hidden unemployment. In this type of unemployment, potential workers do not reflect on the government unemployment statistics because of how the statistics were collected.
In this situation, people who have no jobs but are actively looking for work are not officially inputted in the statistics of unemployed people even though they are unemployed. This type of unemployment also happens to people who retire early to avoid being laid off even though they prefer working.
People who are of working age but are schooling full-time, are not considered unemployed in the government statistics. Hidden unemployment is the reason the employment rate in Nigeria is often underestimated.
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Residual Unemployment
Residual unemployment is mostly caused by physical or mental disabilities and old age. It is also caused by people’s irresponsible attitude towards their jobs.
Residual unemployment is the type of unemployment that remains in periods of full employment due to their inability to work as a result of their mental, physical or emotional health. People who are not willing to work get their names registered under employment entities to continue receiving income.
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Technological Unemployment
Technological unemployment is the type of unemployment that is caused by the constant technological transitions that have heightened the automation of production. This has drastically reduced the need for manpower and the eviction of human labour.
Technological unemployment results from the introduction of new technologies into the economy. This type of unemployment is caused by the replacement of workers with machines to do work that was formerly done by workers.
On a normal day, the introduction of technology has reduced the demand for human labour even though the improvement in technology increases productivity and creates jobs since it would lead to an expansion of the economy.
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Classical Unemployment
Classical unemployment is a type of unemployment that happens when wages or salary for a job is placed about the market clearing level. This has resulted in the number of job seekers exceeding the number of vacancies.
The more the government intervenes in trying to improve the standard of living of people with jobs, the more unemployment increases. For instance, the minimum wage laws raise the cost of labourers with few skills to be above the market equilibrium. The result of this is that people who wish to work at the current rate but cannot because the wage enforced is greater than their value as workers become unemployed.
In Nigeria, before the current recruitment exercise in some government establishments and ministries, there was sanction placed on employment for years. This type of unemployment is also known as real wage unemployment because it refers to real wages being too high.
The causes of classical unemployment are strong unions that bargain for wages above equilibrium, and minimum wages that create a legal minimum for wages. Another cause of classical unemployment is deflation which is a fall in the price of products. When this happens, maintaining full employment of employees would be difficult hence, it would become necessary to cut wages.
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Transitional Unemployment
Transitional unemployment is a type of unemployment that does not harm the economy. It mostly occurs in the construction industries or other contract jobs where workers are temporarily laid off at the end of the project.
This type of unemployment usually depends on heavy and manual labour. When the industries later have other big projects and contracts, the workers they had laid off are then called back to work during the duration of the new project.
Transitional unemployment is a result of a change in the organization of the economy. When this happens, skilled workers would be needed to set up new and better production facilities that the old less skilled workers were not needed to operate. These less skilled workers are then likely to suffer from unemployment during this period.
Transitional employment often happens to people who leave one job today and start another the next day. Also, people leave their jobs because of an injury they have in their place of work.
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Frictional Unemployment
Frictional unemployment occurs when certain occupations have excess workers in one part of the country while positions for similar jobs are not filled in other parts of the country. This type of employment is the period when people looking for a job transition from one job to another. It often happens because people looking for jobs do not get them immediately.
Frictional unemployment could happen between the time a student finishes his studies and the time he gets a job. It is often found in our Nigerian society. It is caused by industrial friction. In as many, as there are jobs, people cannot fill them because they don’t have the skill set required for the job. It could also be that they are not aware of the existence of the jobs. This happens because of ignorance, shortage of raw materials, immobility of labour, and machinery breakdown, amongst other factors.
Frictional unemployment occurs when people look for jobs that are most suitable for their skills. This type of unemployment is mostly associated with people who wish to change their place of work. It also applies to people who whilst looking for jobs are waiting to secure a befitting one in the future. Frictional unemployment is considered inevitable and desirable.
Most people who voluntarily lost their jobs move from low-paying and low-performing jobs to more paying and productive jobs. When this happens, it leads to a more rational distribution of labour resources and an increase in the volume of national products.
People have many reasons for being out of a job. One reason is the low salary. Another is a decrease in the demand for certain goods and services. Finally, frictional unemployment occurs because jobs and employees are heterogeneous, and a mismatch can result from the characteristics of supply and demand.
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Structural Unemployment
Structural unemployment happens when a labour market is unable to provide jobs for everyone who needs jobs. This is because there is a mismatch between the skill of unemployed workers and the skill needed for the available jobs.
Structural unemployment can also result from long-term aggregate demand for products. After some time, there might be a permanent fall in the demand for some products which might have resulted from a change in taste. For instance, the brick industry is not functional in Nigeria currently because people now prefer to build with cement blocks instead of bricks. This fall in demand for bricks has caused unemployment in that sector.
When there is a constant fall in demand, the people who are left out of a job are disheartened while their skills become rusty and obsolete. This would make them not suitable for jobs in that field when the need arises. This type of unemployment is a result of the shift in the economy causing a mismatch between the skills required by employers.
Another factor that can lead to structural unemployment is a technological change in the companies, which includes the introduction of machines that would displace the need for human labour. The current economic situation in Nigeria has seriously caused unemployment since organisations are folding up and new ones are not created.
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Seasonal Unemployment
Seasonal unemployment happens in seasonal organisations. These organisations mostly hire people during peak periods. What this means is that during the rainy season, people who are involved in building construction and fishing may likely be out of a job due to the weather.
Another example is that of some organisations that hire more people to help out during seasonal sales. When the demand for these seasonal products decreases, the extra people that were hired are then laid off. This is a result of the recession which compels these companies to lay off workers to reduce expenses.
When there is a decrease in the demand for goods and services, there is also a decrease in the demand for labour. Seasonal unemployment would cause the number of unemployed people to be greater than the number of actual job vacancies. It is sad that even if there are more jobs for people, some people would still be unemployed because the jobs would not go around.
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Institutional Unemployment
Institutional unemployment is the type of unemployment that often happens as a result of long-term and permanent institutional factors and some incentives. Government policies can contribute to institutional unemployment.
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Demand Deficient Unemployment
Demand Deficient unemployment is a type of unemployment that happens when there is inadequate demand in the economy of the country to sustain full employment. This type of unemployment commonly happens during a recession especially when people would not be buying a large number of goods and services.
Demand deficient unemployment also happens when companies who sell goods and services sell less and therefore reduce production. When the said companies produce less, the demand for workers reduces.
Demand deficient unemployment often increases the youth unemployment rates. In as much as older workers may get laid off as well, it is the younger workers that get more affected after being laid off. Younger workers would most likely find it hard to secure new jobs as most companies are not recruiting new workers.
Most companies prefer not to hire new, younger workers than to make their existing workers redundant under the current labour market regulation. Demand deficient unemployment might also lead to a higher rate of long-term unemployment.
Unemployment can cause people to suffer financial hardship that would have an effect on their families, and lives. People who are unemployed and do not have any means of livelihood rely on their savings and borrowing money from friends and family and sometimes money lending institutions. They depend on this money to feed and pay their bills. Unemployment also results in reduced demand and buying power. This causes businesses to have lower profits and in turn, leads to a reduced workforce. Unemployment also has a negative impact on the mental health of people who are currently in an employed state. They start thinking about the consequences of losing their jobs. They also become hesitant to look for better employment opportunities because they fear being unemployed and count themselves fortunate to be even employed. The longer the unemployment, the more severe the health consequences of the unemployed people. Their unemployed state increases their chances of having depression and other severe health issues. It is not surprising that unemployed people lose friends and also their self-respect. Unemployment has also increased the crime rate in the country. It has led to an increase in robbery, burglary, cybercrime, and other crime.