The International Labour Organisation (ILO) projects the global unemployment rate to rise slightly from 5.1% in 2023 to 5.2% by the end of 2024, amounting to an additional 2 million unemployed people and pushing aggregate unemployment to 190.8 million. Young people fare badly, with the unemployment rate up to four times that of adults (3.9% versus 13.3%); as of 2022, one in four youths is neither in employment, education, nor training (NEET). High inflation and other macroeconomic imbalances will further compound the growing unemployment. This is particularly the case for Nigeria, where the unemployment level is high, and poverty is projected to affect 38.8% of the population by 2024 according to PwC; Although data from the National Bureau of Statistics showed a decline in the unemployment rate at 4.3% in Q2 2024 compared to 5.3% in Q1 2024, youth unemployment, for persons with upper secondary education, remained higher than the national average at 8.5%. Nigeria has many youths who lack employability skills, and the available jobs are way below the working-age population. Unfortunately, the economy grows slower-than-required and fails to keep the unemployment rates in check. The unemployment challenge is drifting more youth to the informal sector. About 77% of the world’s young adults are engaged in the informal sector. The statistic is higher in Africa and West Africa, where 94.9% and 97.9%, respectively, are currently employed in the informal economy. The informal economy refers to economic activities and enterprises that operate outside formal regulatory, legal, and taxation frameworks. These activities are typically unregistered, unregulated, and untaxed, often providing income and employment opportunities, especially in developing countries. Examples of the informal economy include street vending, small-scale farming, domestic work, informal transportation services like motorbike taxis, unregistered construction work, tailoring, and freelance repair services. While the informal economy often serves as a safety net for those excluded from formal employment, it can also lack social protections, stability, and benefits like healthcare or retirement plans. The challenges become obvious with a critical mass of young people on the continent employed in the informal sector. Skill mismatch is one causative factor responsible for the current trend in unemployment. Young graduates find it difficult to match their educational qualifications with the jobs available. The unreformed educational system that fails to keep up with workplace skill requirements is a major hindrance to youth employment. Given that about 63 percent of Nigerians are multi-dimensionally poor, deprived in three areas: money, education, and basic infrastructure, only a few can afford quality education outside of the current system. The economic environment has been challenging with high inflation, interest and exchange rates. The business sector finds it challenging to create enough jobs to absorb the current labour force. In addition, geographical labour mobility is fueling a high urban population density, putting pressure on existing public utilities, including education and training facilities. It is however important to note that advancements in technology are creating more jobs. This is made possible by the gig economy, which is enabled through democratisation of technology skill training and preference for flexible work schedules. Unfortunately, skill requirements for jobs change with advancements in technology. This is particularly so in “industries with rapidly evolving new technologies or practices.” The future of work is now quite unpredictable. This can be challenging for young people who may not have access to quality education and training programmes. All this suggests a rocky start for youth and young graduates. The implication of youth unemployment is significant for both youths and the economy. Unemployed youth earn little or no income and cannot save. Low savings implies low investments and low investment suggests low national income through the multiplier effect, and eventually negatively impacts businesses and slows down economic activities. Other significant negative implications are increasing income inequality, political instability, and social unrest. Unemployment has been recognized as a risk factor that stimulates 40% of people that join rebel movements and 46% of those that participate in gangs. Between 2023 and 2024, the Tinubu administration has launched youth employment initiatives, focusing on empowering young people and enhancing job creation. Notable among these is the 3 Million Technical Talent (3MTT) programme that aims to equip 3 million Nigerians with technical skills to enhance youth employability and job creation by 2025. Till date, the programme has trained 60,000 youths. Also, the government works closely with the United Nations Development Programme (UNDP) to implement The Nigerian Jubilee fellowship, a youth internship programme designed to provide 20,000 young Nigerians with valuable work experience and career development opportunities in public and private organisations. Collectively, these efforts focus on skill development, entrepreneurship, and job creation, aiming to reduce youth unemployment across Nigeria. What can Nigeria’s public and private sectors do to accelerate current efforts, reduce the unemployment crisis and help youth secure a future? In this Policy Insights we look at solving this challenge from three unique lenses: Help youth secure their first job through internships: Employability skills or soft skills are becoming more relevant today due to the increased automation of jobs. In addition to technical skills, graduates must be able to communicate, work in teams, and be innovative to support improved processes and productivity. Employers also benefit! The availability of trained graduates suggests quality, skilled workers for employers. In Singapore, the government partnered with employers to offer traineeships to recent and potential graduates in the final stage of their education. While employers recruit graduates for up to 12 months, the government funded 80% of the internship allowance. This sustained collaborative effort contributed to the low youth unemployment rate. The decrease in youth unemployment in the UK, among other factors, has been, in part, attributed to increased investment by employers in apprenticeships and internships that offer young people the opportunity to develop workplace skills and valuable experience in their career path. The Nigerian government can intensify current efforts, adopt Singapore’s model by funding or subsidizing internship in both the public and private sectors. Also, industry bodies and associations should collaborate with companies in their respective industries… Continue reading Solving Nigeria’s Youth Unemployment Crisis from Three Different Lenses