NextierElements of The Solution
By Anthonia Momoh
Despite the various interventions put in place by different government administrations over the years in response to youth unemployment, it remains a critical social and economic challenge. There is enormous untapped potential in the Nigerian youth, but they face scarce employment opportunities. While a wealth of literature and arguments exist focusing on the root causes of this issue in the country, the same cannot be said for pragmatic solutions to the problem. Thus, the question remains, what are the missing elements of the solution to youth unemployment in the country?
First of all, any solutions must directly address and resolve the root causes of the problem. There is, however, some debate on whether the determinants of the level of employment fall predominantly on the supply side or the demand side. The supply-side view holds that employment is fundamentally determined by the quality of labour and the workforce’s skills and competencies. The argument cites weak or outdated skills as the reasons behind people’s inability to find jobs and employers’ reluctance to hire. As a result, this school of thought proposes education and training as a policy priority to increase individuals’ productivity and employability.
On the opposing side, the demand side view holds that labour demand is more critical, and so, unemployment is majorly a function of the lack of this demand. This argument also reflects an aggregate demand deficiency that may result from a national economic recession or restrictive macroeconomic policies. Consequently, the proposed policy priorities are expanding economic activity, stimulating demand, and boosting private investments to increase the available job opportunities.[1] Of course, these are not absolutes, as unemployment could result from a mix of these factors and would, therefore, require a combination of supply-side and demand-side responses. This is the Nigerian case.
The economy has to create more and higher productivity jobs. Simultaneously, new entrants into the workforce should have skills that match the market demands. Thus, the government must rethink the overall policy strategy towards addressing youth unemployment. This rethink should centre around a collaborative strategy involving all levels of government across different departments and ministries. Also included must be the private sector, educational institutions, civil society and non-governmental organisations, and importantly, the youth. According to Runde, Bandura, and Hammond (2018), these players make up the employment ecosystem.
Consequently, a good first step involves bringing together these different stakeholders into a regular forum or dialogue to discuss youth employment constraints and propose potential solutions collectively. This strategy will help identify what interventions to prioritize, the success or failure of prior interventions, areas that need reform, and sectors with high job-creating potential. With support from the Think Tank Foundation, Nextier collaborated with the Centre for the Study of Economies in Africa to convene such a session in 2014 and 2018.
To start with, the private sector has an essential role in driving employment and improving the economy’s productivity. Thus, the government must first incentivize the sector by creating a business-friendly environment in which it can thrive and create jobs. This can be done through macroeconomic policy, investing in infrastructure, increasing access to credit, favourable tax and trade policies, etc. Quality infrastructure, for instance, is a significant determinant of a country’s growth and productivity. The Nigerian government must mainly focus on providing reliable electricity, broadband access, and transportation. The state of public transportation in the country is deplorable, and only 40 percent of the Nigerian population has access to the power grid (Runde et al., 2018). Broadband penetration is also low, at 21{1c02100822988c48c7b0a484ab61ac3d7f398d67c2f66594d88b2db33072d9d9} (Nevin, Adedayo, and Adedayo, 2018). This situation demonstrated the need for significant investments. In addition to boosting productivity and creating construction-related jobs, infrastructure investments will reduce the cost of business and attract investments into the country, translating into more private sector employment opportunities.
Subsequently, there is a need to identify sectors with high productivity and job-creating potential to direct programme and policy interventions at. Generally, employment elasticity estimates suggest that the services sector has the highest employment potential relative to the agriculture and manufacturing sector. Services sector jobs range from traditional services, including transportation, accommodation, food services, semi-skilled labour such as plumbers, electricians, etc. – to modern services such as Information and Communications Technology (ICT), medical services, etc. Youth intensive sectors with such job creation capacity include ICT, agriculture, hospitality, and entertainment. For instance, in agriculture, job creation for the youth includes not only farm but non-farm agriculture-dependent activities such as processing, packaging, transportation, distribution, marketing, and financial services.[2] The government should identify the challenges within these sectors and direct policy and programme interventions towards them to aid job creation.
Lastly, the private sector should be heavily involved in the planning and implementation of youth employment programmes. This is instrumental in establishing apprenticeship and internship programmes that will help the youth gain work experience and the necessary skills to drive the transition from education or unemployment to workforce opportunities.[3]
The youth are more likely than adult workers to be underemployed and found in the informal sector. Among the underemployed are highly skilled workers in low-skilled jobs, those earning below-market wages for their skill set, and part-time workers who are willing but unable to find full-time work. According to the National Bureau of Statistics (2020), the underemployment rate for young people (aged 15 – 34) in Nigeria is 28.2 percent, up from 25.7 percent in Q3, 2018. On the other hand, young entrants into the labour market often rely on the informal sector for work and income, especially the most marginalized. The sector absorbs the largest proportion of Nigeria’s workforce, accounting for 73.7 of the jobs created in 2016 (Nevin et al., 2018). These workers are economically vulnerable as they have no formal contracts and thus, no access to benefits, social protection, and insurance.[4] As a result of these two occurrences, many young people find themselves among the working poor. Data from a 2016 report by the International Labour Organisation showed that the working poverty rate among the youth in sub-Saharan Africa is nearly 70 percent.
With this in mind, the government must promote and encourage entrepreneurship among the youth. Entrepreneurship creates an avenue for some young people to create employment opportunities for themselves and generate jobs for other members of the youth. As a result, education and training in entrepreneurship are essential. Typically, these training programmes educate individuals on creating business plans, starting and running businesses locally, and developing life skills, including securing and managing finances. For an effective programme, efforts must not stop at training. They should follow through to help the youth in their business launch, link them to financial service providers and potential investors, provide mentoring opportunities and small start-up grants (United Nations, 2018).
The Columbian Young Rural Entrepreneurs Programme developed by the National Training Service represents a good example. Although open to all youth, the programme mainly targeted vulnerable groups. It helped the youth establish locally feasible and sustainable businesses in agriculture, agribusiness, service, and manufacturing activities. It provided vocational training to unemployed youth in high-demand sectors and training in entrepreneurship and business management. Prospective entrepreneurs were also supported in securing finance. A study showed that almost 75 percent of the beneficiaries had a business project to pursue after finishing the programme, and participation increased the likelihood of starting a real business by over 75 percent (United Nations, 2018).
Going further, Small and Medium Enterprises (SMEs) also play a fundamental role in job creation, especially in developing countries. According to the World Bank, they represent about 90 percent of businesses and over 50{1c02100822988c48c7b0a484ab61ac3d7f398d67c2f66594d88b2db33072d9d9} of employment worldwide. Boosting the SME sector is a critical part of tackling the youth unemployment issue. This involves addressing the constraints to the sector’s growth around regulation, financing, and access to credit. The European Commission, for instance, has an SME strategy that reduces the regulatory burden of SMEs, improves access to the market and financing, supports entrepreneurship, and provides support, information, and networking opportunities.[5]
Moreover, evidence-based research suggests that, when supported at the macro level, education and training are critical in enhancing the youth’s employability and productivity (United Nations, 2018). Thus, policy should also focus on improving the quality of education and restructuring skills development and training programmes. The educational system needs reform. Many educated Nigerians are unable to find decent work. This is, in part, due to a mismatch between the skills possessed by new entrants into the labour force and those demanded by employers. Bridging this skills gap requires collaboration between the government, the youth, job providers, quality training providers, international organizations, and other stakeholders. This collaboration also entails the use of qualitative and quantitative methods to conduct skills-gap assessments and understand the market needs. The resulting information should then inform teacher training programmes and changes to the school curricula and learning methods to align students with the market’s skill needs.
Additionally, employers seek young people with effective transferable skills. Country studies have cited some of the preferred skills to include resilience, language abilities, responsibility, creativity, etc. (Silvester, 2014). Therefore, education systems and training programmes must work jointly with the private sector to identify the market needs and restructure teaching and learning methods accordingly.
On top of that, increased focus should be placed on improving Technical and Vocational Education and Training (TVET) in the country. Effective TVET programs coordinate with the private sector, offer strong apprenticeships networks, and provide qualification frameworks typically designed to teach skills demanded by the job market (Runde, Bandura, and Hammond, 2018). The top European performers in tackling youth unemployment (Austria, Germany, the Netherlands, and Switzerland) have leveraged these programmes. They make use of a ‘dual system,’ which combines on-the-job training with formal vocational schooling, and strengthen ‘third track’ transition systems targeted at potential school dropouts (Dolado, 2015).
Finally, the government must understand that the problem of youth unemployment is not homogenous. Asides from the general root causes, the unemployed youth face different sets of barriers, further prohibiting their ease of entry into the labour market. These could be determined by disability, gender, geographic location, education level, etc. This is to say that efforts to tackle youth unemployment have to be well-targeted, adapting to the needs and peculiarities of the unemployed youths’ situation and those of the market.
The costs of youth unemployment to the economy and society are immense, spurring social tension, increasing poverty, and weakening productivity. However, an even more significant loss is in the government’s failure to tap into and harness the potential and economic ambitions of the youth. The government must lead a strategic, collaborative, multi-sectoral, and properly-targeted charge to tackle youth unemployment in the country. The time for action is now.
