NESG’s warning on rising unemployment

The recent warning to the federal government by the Nigerian Economic Summit Group (NESG) on rising unemployment should be taken seriously. The consequences are likely to be unpleasant, if the situation is not urgently reversed. To avert the ticking time-bomb, the NESG has recommended that the government must create at least 27 million new formal jobs within the next five years or risk a sharp rise of about 30 per cent in unemployment and underemployment. In a research document titled “Job and Productivity Report”, published recently and signed by the chairman, Niyi Yusuf, it described the next 5 years as very ‘critical’ for the country’s fragile economy and the need to stabilise the labour market and deliver inclusive growth.

According to the NESG document, jobs and productivity are central to the country’s economic development. This is because in the next 5 years, Nigeria’s work-age population is projected to hit 168 million. By that time, the country will be facing a ‘defining challenge’ to create 27 million new friends jobs. Currently, unemployment rate is on the rise, even though under the new methodology adopted by the National Bureau of Statistics (NBS), unemployment in 2024, seemed to be on the decline. This is a disconnect from present realities. However, youth unemployment remains a major concern across the country.

At the heart of the report is ‘Nigeria works framework, a blueprint for jobs and productivity agenda built on six strategic pillars. This represents a bold and pragmatic framework for creating decent jobs in the country over the next 5 years. In all of this, there are challenges that have hindered job creation. These include a shallow private sector that is not creating enough formal jobs, weak education system that is not adequately preparing people for job market demands, as well as skill mismatch, a situation where there is a gap between the skills the labour market needs and what the workforce possesses.

In addition, there are structural bottlenecks, including power supply, macroeconomic instability, and limited access to finance that stifle business growth and job creation. As depressing as job opportunities are in Nigeria presently, there is urgent need to speedily create more jobs in the country. There will be dire consequences if the government fails to create more jobs. Without that, Nigeria will witness stunted economic growth, rising poverty, inequality, social unrest and insecurity. This could be more pronounced among the unemployed youths.

Any nation with a large population of unemployed youths will not realize its full potential. It will also lead to low Gross Domestic Product (GDP). Undoubtedly, this represents a colossal waste of human capital where the productive capacity of millions of people is lost. Besides, the widespread unemployment will lead to more poverty. And without steady income, and low purchasing power,  many Nigerians can hardly meet their basic financial obligations, which leads to more hardship and misery. The young and unemployed could become willing tools in the hands of corrupt politicians during elections.

Sadly, that has been the case with Nigeria for some years now. With the next election fast approaching, the warning of NESG looks foreboding, especially as foreign direct investment inflows remain weak due to policy inconsistencies, and poor ease of doing business. This creates a negative cycle of reduced demand which can force businesses to cut production and lay off workers. In a situation where the unemployed cannot save or invest, this decreases national output and productivity. Altogether, we advise both federal and state governments to take the recommendations of NESG seriously. Economic transformation is possible. It requires a clear focus on raising productivity and creating better jobs in large numbers.

As the NESG document highlighted, creating new formal jobs before 2030 calls for coordinated reforms across government, private sector, academia and civil society to deliver on the agenda. Reforms must be well-thought out. They must go beyond the present perfunctory occasional cash transfers that are riddled with corruption. The programmes of the various governments must align skills with employment to optimise scarce resources and ensure that training efforts match the needs of the labour market.    Reforms that result in job creation must also expand the breadth of the private sector, upgrade and reorganise the informal sector and encourage productivity as a central metric of competitiveness. Nigeria’s labour market has been in jobless growth largely because economic growth is happening in sectors that don’t create large-scale employment. Therefore, to achieve a comprehensive, “Nigeria Works Framework” that will tackle the current unemployment and create millions of jobs in the next five years, the framework should drive growth in key sectors like manufacturing, agribusiness, ICT and construction. It must also support entrepreneurship growth, formalise the informal sector of the economy, strengthen institutions and data systems and adopt productivity as a core national metric. In all, success will depend on strong political will, stakeholder collaboration, and commitment to implementing concrete reforms that should focus on the people as the centrepiece of national development.