Borrowing money

Costs of the downward trend in the labor market

OFTEN described as a ticking time bomb, Nigeria’s explosive unemployment crisis has returned to center stage with the revelation that 20% of people working full time have lost their jobs after the COVID-19 pandemic hit the country last year. A joint survey by the National Bureau of Statistics and the United Nations Development Program into the impact of COVID-19 on businesses confirmed that between the second quarter of 2020 and the fourth quarter, businesses in the formal and informal sectors have lost 20% of their workforce, exacerbating the country’s already critical unemployment rate. Therefore, the federal and state governments must put in place measures to stimulate job creation and mop up the army of idle youth.

Major economic downturns always result in sharp increases in permanent layoffs among workers. Brookings Institution report says job displacement leads to lower income and employment stability, poorer health outcomes, higher mortality, lower education for children of displaced workers and other undesirable consequences. And as external development partners and domestic observers have long warned, the jobless time bomb is turning louder and louder.

The joint report, based on a survey of nearly 3,000 companies across various industries, found that 28 percent lost up to 50 percent of their original workforce, 14 percent lost more than 50 percent of their employees, and some companies have closed their doors altogether. He found that 58 percent of companies were successful in retaining their workforce. Reasons given for the downsizing include declining revenues, steep increases in costs, and general – mostly long-standing – difficulties in the operating environment.

More worrying is the impact on the informal sector, which has a disproportionate role in the economy. Informal businesses accounted for 62 percent of job losses where the lack of safety nets such as pensions, gratuities and health care support added to the misery of the victims.

Thus, unemployment, already at 27.1%, climbed to 33.3% in the fourth quarter of 2020. This makes Nigeria the country with the third highest unemployment rate in the world after Africa’s 33.5%. from the South and 33.4% from Namibia, according to Bloomberg. Among young people aged 15 to 34, who make up about 50 percent of the labor force, 42 percent are unemployed and 21 percent underemployed. The figure of 13.9 million unemployed youth given by the NBS in mid-2020 is likely to have increased.

While the pandemic has taken its toll on jobs around the world, the situation in Nigeria is dire, with previous underlying issues compounding the contraction. Around 225 million jobs have been lost globally since January 2020, the International Labor Organization has said. Representing more jobs and more than 50 percent of GDP, the World Bank describes Nigeria’s informal sector (mainly SMEs and micro-enterprises) as “the main source of economic growth, productivity and competitiveness. “. Rejuvenating the sector, which created 59 million jobs in 2017, according to the Nigerian Small and Medium Business Development Agency, should be a priority for federal and state governments. A currency crisis has degraded the naira, increased costs and deprived legitimate businesses of foreign exchange for parts, machinery and raw materials.

Nigeria must overcome debilitating constraints to free up production, investment and jobs. The Buhari regime is too preoccupied with politics, sectionalism, religion and favoritism. The times demand objective and pragmatic ideas to prioritize the economy and its revitalization. Policies should aim to restart the economy, stimulate production, safeguard existing jobs and create new jobs, and diversify sources of income and exports. Allocating funds to income-generating and employment-stimulating activities instead of the dominant culture of sharing and entitlement should be the norm.

Economies run by the private sector perform the best. Buhari must immediately relaunch the privatization and liberalization program that he has virtually suspended since taking office six years ago. The transfer of control of ports, airports, railways, Ajaokuta Steel, refineries, pipelines and depots to private capital will mobilize investment and job creation.

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Short-term measures to overcome the fallout from COVID-19 are expected to shift from mediocre programs and misdirected cash distributions to the inactive to protect the wage bill, support large employers, SMEs, start-ups, co-ops and more. women in agriculture, services and commerce. Proactive governments follow the ILO prescription to craft a “strong and broad recovery, focused on jobs, incomes, workers’ rights and social dialogue: a people-centered recovery”. It is futile to celebrate growth fueled by rising oil prices when the World Bank predicts an additional 11 million Nigerians will fall into poverty.

In the United States, President Joe Biden’s massive $ 1.9 trillion response to COVID-19, Brookings said, included a $ 1,000 billion cash disbursement to verifiable families and vulnerable households, and $ 150 billion dollars in grants and loans to SMEs which account for 49.2% of jobs and 98% of businesses exporting goods. The UK government has provided tax breaks, housing support and rent suspension to support businesses and jobs. The IMF credited Denmark with responding “quickly and forcefully through various initiatives” such as corporate payroll support, wage compensation schemes and deferral of tax payments. Ghana’s coronavirus mitigation program included 600 million cedis as a stimulus to protect jobs, livelihoods and SMEs, and help them with digital tools, the ILO reported.

Buhari and state governors should aim to stimulate and attract investment in high-yield employment sectors like agriculture, food processing, mining, manufacturing, SMEs and ICT. They should improve the ease of doing business, fight against widespread insecurity and lawlessness. States must embark on providing rural infrastructure to make the hinterland livable. They must design individual economic programs with job creation as the primary objective.

Buhari must bring his expertise to his sleepy government. Knowledgeable Nigerians abound at home and abroad, and some have been recruited by advanced economies. The forex crisis should be resolved. Without an adequate power supply, little progress can be made. Buhari is expected to take drastic measures to revitalize the sector. States should also have their own electricity supply programs as part of a corruption-free partnership with the private sector. At both levels, a strong partnership should be forged with the organized private sector. The unemployment rate has reached an emergency level, it must be treated as such.

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