By Emeka Okolo
One of the vital indices for measuring the robustness of an economy is the level of unemployment therein. Is it of a tolerable level? What is however tolerable has been a contentious issue. Many economists have conventionally regarded as sound and robust, an economy that has unemployment rate of 3% and below. However, it has been a tall order getting many economies to observe this threshold.
Globally, unemployment is the issue today but the intensity of the scourge varies amongst economies. While an economy like the U.S.A. has put off ‘tapering’ with the quantitative easing until unemployment level hits 7% – a level it feels tolerable -, most in Europe with the possible exception of Germany and France are still at wits end on how to stave off the scourge. Those in emerging economies with the exception of China and few others are not faring better than the latter group.
In Nigeria, the percentage of the unemployed is largely guesswork due to paucity of credible statistics. Whereas an economy like America can at any point in time determine the percentage of unemployment through such means as those coming forward every month to claim unemployment benefits, Nigeria has no such programme and cannot boast of any list of unemployed people any where.
Having a problem is one thing and possessing the clues to tackle such is an entirely different issue. Whilst one can see the seriousness with which majority of other economies having challenges of unemployment are rising to the occasion, the same cannot be confidently be ascribed to the Nigerian situation. From government (i.e. different levels of government) posturing, one gets the impression that the solution lies in ‘youths being self employed’ without a roadmap on how to actualize that.
Save for the Federal Government’s “You Win Programme” and few sparkles from few state governments, there is nothing on ground to suggest that the country is aware of the enormity of the problem that unemployment poses, let alone means of caging it. Yet governments all over the world are known as large employers of labour (directly and indirectly) and facilitators of employment through well thought out and synergistic policies.
Yes, the power sector has been privatized and a lot of potentials would be unleashed thereof, but in the interim, what deliberate policies should be put in place to make sure that expectations from the fallout of the privatization are maximized beyond mouthing the cliché that youths should strive to be self employed?
The starting point that will have domino effect is to harmonize policies of government institutions and agencies that have bearing on job creation in the country. An institution like the Central Bank of Nigeria (CBN) for instance, should not be rigid about its primary mandate, which is to maintain price stability, translating in simple terms to fighting inflation. It should emulate other central banks in the world like the Federal Reserve in America, European Central Bank that are now incorporating unemployment reduction as part of their mandates. The world is dynamic and Nigeria should be part of the global players.
There is no way an economy can be successful by merely concentrating on fighting inflation alone or unemployment exclusively. There must be deliberate need to strike a balance. This is what the famous economist, Albert William Housego Phillips, espoused in his ‘Phillips Curve’ that every economy needs some levels of inflation and unemployment to thrive. An economy cannot fight one solely to the detriment of the other. In simple terms: if you desire to reduce unemployment, be prepared to live with some level of inflation and vice versa. The trade-off must be real!
The situation with unemployment in Nigeria today calls for pragmatic and concerted actions from all stakeholders. The Federal Government in particular should pursue some deliberate expansionary policies through its two vital organs: the Ministry of Finance and the Central Bank. The same approach should be replicated in states and local governments across the country.
With more people in gainful employment and earning incomes and spending same in the economy, the multiplier effect is assured; providers of goods and services will be sure of constant patronage and more employment would be generated. Social vices would be reduced to barest minimum and the economy would be the best for it. Any break in the cycle will always be deleterious to the economy as is being witnessed today.
*Emeka Okolo, is Lagos based Management Consultant and Chartered Stockbroker