AN EXAMINATION OF THE RELATIONSHIP BETWEEN ECONOMIC DOWNTURN AND UNEMPLOYMENT IN NIGERIA (EVIDENCE FROM THE TINUBU ADMINISTRATION).

CHAPTER ONE

INTRODUCTION

Background of the Study

An economic downturn is a period of slowed economic activity marked by declining GDP, reduced global demand, sluggish job growth, increased borrowing costs, and reduced credit availability. An economic downturn can occur within a nation, a region, or on a global scale. An economic downturn can last for a few months or longer, and is usually followed by a recovery. An economic downturn that lasts for at least six months is called a recession (Market Business New, 2024). Economic downturns are usually accompanied by high inflation rate, unemployment, Nigeria, with its economy heavily reliant on oil exports, is particularly vulnerable to economic downturns due to fluctuations in global oil prices (Adegboye, 2023). Despite efforts to diversify the economy, progress has been slow, and non-oil sectors have not developed sufficiently to buffer against external shocks (OECD, 2023) In 2016-2017, the Nigerian economy was hit by a recession, driven by a sharp decline in oil prices and production, leading to a contraction in GDP and a rise in unemployment (Adegboye, 2023). More recently, the COVID-19 pandemic exacerbated existing vulnerabilities, causing a severe economic contraction and further increasing unemployment rates (Balogun, 2024).

The current administration led by President Bola Tinubu took over power in May, 2024, and has since had to deal with the economic woes plaguing the country. His administration has implemented several measures aimed at stabilizing the economy, including fiscal reforms, efforts to diversify the economy away from oil dependency, and initiatives to attract foreign investment (Eze, 2023). Despite these implemented measures, the inflation rate is still high and the country still grapples with severe economic downturns. Critics argue that some measures, such as the removal of fuel subsidies, have had adverse short-term effects on the poor and middle class, exacerbating the economic hardship (Financial Times, 2023).

Unemployment is a situation where someone of working age is not able to get a job but would like to be in full-time employment1. Unemployment is a measure of the health of the economy. There are different types and theories of unemployment, such as cyclical, frictional, structural, and classical. Unemployment means that the economy is not making full use of the workers that are available, and may affect the growth and activity of businesses. Unemployment has also been a critical issue, with the National Bureau of Statistics reporting an unemployment rate of 33.3% in the first quarter of 2023. The economic downturn has exacerbated job losses, particularly in sectors like manufacturing and services, which have been hit hard by reduced consumer spending and investment (NBS, 2023). Economic theories suggest that during downturns, businesses reduce production and cut jobs to cope with declining demand and revenue. This leads to higher unemployment, which in turn reduces consumer spending and further depresses economic activity, creating a vicious cycle (Obasanjo, 2024). The present administration has also implemented measures to help curb the growing unemployment rate in the nation. These include job creation programs, support for small and medium enterprises (SMEs), and efforts to improve the business environment (Balogun, 2024). Again, critics have indicated mixed feeling concerning this implemented measures.

Statement of the Study

Economic downturn has affected the Nigerian society in every way possible, the inflation rate is constantly reducing the purchasing power of Nigerians. This economic downturn has also affected the employment rate in Nigeria. Studies have shown that during economic recessions, unemployment rates tend to rise sharply, particularly in countries with structural economic vulnerabilities (Obasanjo, 2024). The unemployment rate in Nigeria stands at approximately 33.3%, one of the highest in the world (National Bureau of Statistics, 2024).

The economic challenges leading to high unemployment rates, predates this current administration and can be attributed to economic mismanagement, embezzlement, corruption, and lack of economic transparency. President Bola Ahmed Tinubu has pledged to tackle the challenge of unemployment through various economic reforms aimed at stabilizing the economy and creating jobs (Adegboye, 2023). However, the effectiveness of these reforms are still not felt by Nigerians who are still grappling with the effects of unemployment. There is a need to exmine the relationship between economic downturn and unemployment in Nigeria.

Objectives of the Study

The primary objective of this study is to examine the relationship between economic downturn and unemployment in Nigeria (evidence from the Tinubu administration).

Other specific objectives includes;

Determine whether there is a significant relationship between economic downturn and poor job creation in Nigeria.

Determine whether there is a significant relationship between economic downturn and under-employment in Nigeria.

Determine whether there is a significant relationship between economic downturn and job losses in Nigeria.

Proffer practical recommendations for boosting Nigerian economy and employment opportunities.

Research Question

The following research questions would be answered during the course of this study;

Is there a relationship between economic downturn and job creation in Nigeria?

Is there a relationship between economic downturn and under-employment in Nigeria?

Is there a relationship between economic downturn and job losses in Nigeria?

What are the practical recommendations for boosting Nigerian economy and employment opportunities?

Research Hypothesis

Here is the research hypothesis relevant to this study

H0: There is no significant relationship between economic downturn and under-employment in Nigeria.

H1: There is significant relationship between economic downturn and under-employment in Nigeria.

Significance of the Study

The significance of the study on an examination of the relationship between economic downturn and unemployment in Nigeria (evidence from the Tinubu administration), will contribute to the body of literature when it comes to understanding the economic realities in Nigeria.

This study will also shed more on the economic realities Nigerians face as the economy dwindles.

This research study will further proffer relevant solutions necessary for improving the Nigerian economy under the Tinubu administration.

The result from this study will contributes immensely to the body of academic knowledge with regards to the economic downturn as it affects the employment rate in Nigeri under the Tinubu administration.

Scope of the Study

This study focuses on an examination of the relationship between economic downturn and unemployment in Nigeria (evidence from the Tinubu administration), empirically, this study will determine whether there is a significant relationship between economic downturn and poor job creation in Nigeria, determine whether there is a significant relationship between economic downturn and under-employment in Nigeria, determine whether there is a significant relationship between economic downturn and job losses in Nigeria, and also, proffer practical recommendations for boosting Nigerian economy and employment opportunities.

This study would be carried out in Nigeria.

Limitation of the Study

The study may not be carried out for an extensive period of time to critically examine the relationship between economic downturn and unemployment in Nigeria (evidence from the Tinubu administration). The sample size is also limited to the current administration which may not reflect the overall role past administration has played in the current economic downturn and unemployment issues facing Nigeria.

The study relies of self-reported data, which is subject to biases, errors and inaccuracies. 

Definition of Term

Economic downturn:  An economic downturn is a period of slowed economic activity marked by declining GDP, reduced global demand, sluggish job growth, increased borrowing costs, and reduced credit availability.

Inflation: It is a situation of rising prices in the economy.

Administration: Administration in government refers to the management of a government or large institution. In American usage, the term generally refers to the executive branch under a specific president or the term of a particular executive. It can also refer to the period when a President is in office. Administration can also refer to the people who are in government.

Unemployment: Unemployment is a situation where someone of working age is not able to get a job but would like to be in full-time employment1. Unemployment is a measure of the health of the economy. There are different types and theories of unemployment, such as cyclical, frictional, structural, and classical. Unemployment means that the economy is not making full use of the workers that are available, and may affect the growth and activity of businesses.