Experts chart path to job creation through economic diversification

Until indices that drive the economy and expand employment are prioritized, the rate of unemployment in the country will continue to rise, economic experts have said.

They argued that what drives employment is consumer demand and if the consumer demand is high, investors, producers and manufacturers would expand their capacities which would in turn create massive jobs.

The recent report by the Nigerian Bureau of Statistics (NBS) that Nigeria’s unemployment rate has worsened from 16.2 per cent in the second quarter of 2017 to 18.8 per cent in the third quarter of the same year also projected that Nigeria is likely going to experience an increased unemployment rate in 2018.

Even as the data released by the NBS showed that the rise was occasioned by the economic recession that saw the nation’s growth decelerate until September 2017 when Nigeria finally exited recession, the experts further argued that so far there is adequate rise and increase in consumer demand, which is determined by its purchasing power, job employments would be on the increase.

They submitted that the combined forces of double-digit inflation, high unemployment rate and a fragile Gross Domestic Product (GDP) growth which is still below the rate of population growth may conspire to prevent any significant economic improvement.

To curtail the rising crime wave across the country, the experts called on the government to fast-track its diversification strategy as encapsulated in the Economic Recovery and Growth Plan (ERGP) by supporting growth in income enhancing and job creating sectors, such as Small and Medium Enterprises (SMEs), mining and agriculture.

An economist, Henry Boyo, said that so long as inflation is in double digit, it will be inappropriate to say there will be increase in the rate of employment possibilities in 2018 or in any year, because where inflation is in one or two per cent, it conserves and protects consumers’ demand.

He cited an instance when there is a high demand for bread, stating that if there is no consumer demand for bread, there would be no baker but as a result of rising inflation, if the whole of Nigeria could buy a 100 loaf of bread before but has made it possible that the whole of Nigeria can only buy a loaf of bread, it means that half of the bakeries in Nigeria would have to close up.           

In essence, it means there must be a demand for an item to be produced in the first place before producers and manufacturers can employ.

According to Boyo, people don’t employ workers just to pay them, rather they employ them so that they can work and produce something.

He explained: “If you have adequate and increasing consumer demand, forget about rise in employment. What determines consumer demand is purchasing power. If you have a situation where you are losing up to 20 per cent of your income every year as a result of inflation, it means you are going to be buying less bread, which translates that you will have less and less people being employed. This is basic.

“On the other hand, even if there is consumer demand and investors wants to invest and yet the cost of borrowing money, build factories, buy raw materials, if the cost is 20 or 25 per cent on interest, then of course the goods that are produced from those factories will become very expensive and there won’t be competitive against import that are being smuggled across the borders. In fact, the rate of smuggling will increase.

“With these indices, it will be inappropriate to say there will be increase in the rate of employment possibilities in 2018 or in any year for that matter so long as inflation is in double digit when it should be one or two per cent, because where inflation is in one or two per cent, you conserve and protect consumer’s demand. When you protect consumer demand, the producers and manufacturers who have been meeting this demand would consistently meet those demands, will feel confident to keep producing and retooling their factories in order to be able to meet demand.”

Boyo mentioned that for investors and manufacturers, who have to borrow at 55 per cent, knowing fully well that they are competing against imports that are coming into the country and are being sponsored from a home country at maybe two or three per cent interest rate, the greatest poison is to have a low consumer demand which happens as a result of inflation.

“With these two indices out of gear, anybody who tells you there would be increased in employment is deceiving you, especially when the issue of exchange rate, fuel scarcity and fuel pricing is taken into consideration,” Boyo aadded.

On his part, a retired Federal Permanent Secretary, Chief Philip Asiodu, who at a forum recently spoke on, ‘Unemployment, youth restiveness and development challenges’, lamented the rate of youth unemployment prevalent in the country.

He observed that about three quarter of crime in the world is committed by young men who are jobless and become readily disposed to social vices. He described the involvement of thousands who perish at the Mediterranean Sea and the traumatized youths returning from Libya as disgraceful and a national embarrassment.

Corroborating Asiodu, the Chairman of the Nigeria Labour Congress (NLC), Lagos State Council, Idowu Adelakan, also attributed the high rate of crime in the country to the high level of unemployment, especially among youths.

He said the rate of crime, which has snowballed in recent times, was the result of unemployed graduates roaming the streets and causing insecurity.