TheNigerianVoice Online Radio Center

SOCIAL IMPLICATIONS OF UNEMPLOYMENT

By NBF NEWS
Listen to article

The term 'economic crisis', immediately connotes problems such as scarcity of resources, job opportunities, unemployment, poor wages, delayed wages, irregular payment of wages, pay-cuts and declining pace of development, among others. One doesn't have to be an expert to surmise what the impact of economic crisis on employment would be.

It has always been part of the culture and tradition of employment in the private sector for employers to resort to squeezing their employees when their profit margin begins to narrow; they employ a few measures: increase work hours for the same pay, cut pay and benefits, increase targets and output, reduce the number of employees. These measures are applied just to maintain profit margins, even in times of economic boom. In times of economic crisis, therefore, it is to be expected that the burden on workers will increase in magnitude.

Indeed throughout history, economic down-turns have always resulted in hardships and reduced quality of life for workers, employees, low-income earners and vulnerable members of the society. The 'Great Depression' of the 1930s (said to have originated on October 29, 1930, following the crash of the American Stock exchange) resulted in dramatic socio-economic consequences not only in the United States, but worldwide, there was a sharp drop in personal income, tax revenue, prices and profits, international trade plunged by two-thirds, unemployment rose to 25% in the United States and up to 35% in some other countries; construction work was virtually grounded in many countries, rural areas and farming experienced tough times as the prices of crops dropped by as much as 60% (Wikipaedia); businesses collapsed and many people committed suicide.

The recent world economic crisis is hardly different from the 1930 depression in terms of impact on employment and the vulnerable members of society. According to the OECD Economic Outlook (No 84,November 2008), unemployment rate in OECD countries, estimated at 6.3% in 2008, is expected to reach 7.3% in the second quarter of this year(2010).This suggests an increase in the number of unemployed persons from 34 million in 2008 to more than 42 million in 2010. This is said to represent 'the most rapid rise in OECD unemployment since the early 1990s.' Those who are most affected by this rising unemployment rate are youths, low- skilled, elderly and immigrant workers, with casual workers being the most vulnerable. The rise in unemployment is, however, not evenly distributed across the OECD countries. The U.S. which was about the first to experience the economic down-turn had an unemployment rate of 6.5% in October 2008; within 12 months the number of unemployed rose to 2.8 million.

The European Union (EU) experienced a slower rise in unemployment (with the exception of Spain and Ireland, whose rise was made significant due to a decline in the construction sector. Countries like France and Germany were yet to record any significant increases in their unemployment rate. Despite this, by the end of 2008, unemployment rate was expected to rise by at least 2% more than the 2007 rate in at least six OECD countries, and by 1-2% in nine others including France.

In March 2009, the International Labour Organisation (ILO) warned that the crisis could generate up to 22million more unemployed women in 2009. The Global Employment Trend reports that of the 3 billion people employed worldwide in 2008, 1.2 billion were women. It is said that in 2009, the global unemployment rate for women could reach 7.4% compared to 7.0% for men. ILO projected that this would result in an increase of between 24 and 52 million people unemployed worldwide. The global vulnerable employment rate would range from 50.5 to 54.7% for women in 2009, compared to47.2 and 51.8% for men.

According to the ILO Bureau for Gender Equality Director, Jane Hodges:

'Women's lower employment rates, weaker control over property and resources, concentration in informal and vulnerable forms of employment with lower earnings and less social protection all place women in a weaker position than men to weather the crisis.

Data on the impact of the economic crisis in Nigeria is hard to access due to a poor culture of documentation and inept governance. In fact, erstwhile Governor of the Central Bank of Nigeria (CBN), Prof. Chukwuma Soludo caused quite an embarrassment when he declared at the onset of the global crisis that Nigeria was somewhat immuned to the impact of the crisis and would not experience a recession. Although the impact is felt more in the developed world, due to globalization it has also been felt in developing countries especially in trading places – the stock market and the business world.

In Nigeria, the crisis was expected to cause a decline in commodity prices, decline in export, fall in the equity market and decline in remittances from abroad (Adamu Abdul, Nassarawa State University 'effect of Global Financial Crisis Nigerian Economy (April 30, 2009), Available in SSRN).

We know that Nigeria witnessed a sharp drop in oil prices in the world market, resulting in decline in oil revenue and that the stock market virtually crashed. The value of the Naira has dropped and workers have been laid off in large numbers including in the banking sector. Employment vulnerability has been worsened because the majority of workers are in the informal sector of the economy where there are neither formal employment contracts nor benefits.

Social impact
The impact of economic crisis is felt, first and foremost at the individual level by the worker, who has been laid off, in some cases, the impact starts to be felt even before the worker loses his job. This is moreso in a situation where the prospect of job cuts is felt or discussed (formally and/or informally) in the work place before the actual lay-offs. There is usually palpable tension, apprehension, fear, anxiety on the part of the employees of the affected companies and their families.

The worker who loses his or her job could go through some of the following experiences:

•Anger;
•Depression;
•Anxiety, stress and distress;
•Loss of self-esteem;
•Escapist and/or other self destructive behavior used as coping mechanism e.g. excessive alcohol consumption or drug abuse;

•Dysfunctional social/emotional relationships;
•Loss of self confidence;
•III-health (as a by-product of stress e.g. high blood pressure, migraine); and

•Feeling of shame, embarrassment and inadequacy.
Impact on families
The impact could be quite devastating. The main impact is a decline in the quality of life, which depends largely on family income. This includes:

•Loss of income;
•Insecurity;
•Jeopardized educational opportunities for children;

•Jeopardized access to healthcare;
•Reduced nutritional status;
•Jeopardized access to shelter;
•Increased vulnerability especially of women, children and the elderly;

•Emotional/psychological stress/trauma;
•Tension and conflicts;
•Domestic violence;
•III-health; and
•Early death.
In the United States, the number of suicide and distress calls to hotlines have reportedly increased in places like Northern Virginia, Florida and Texas.

Impact on the society
In general, the impact is felt in the form of heightened insecurity of life, property, food and employment insecurity; access to shelter, education, health care, nutrition are drastically reduced; stress increases and life span is reduced resulting in premature deaths. In a country like Nigeria, with the problem of corruption and bad governance, the level of cynicism, apathy and despondency is palpably on the increase. Many people become increasingly individualistic and exclusively preoccupied with the problem of survival and subsistence.

Response to the crisis
The response in the developed world has been the 'bail-out' approach, with governments injecting staggering amounts of money into the banking and manufacturing sectors and articulating some new regulatory frameworks and so-called early-warning signs. In Nigeria, we have also seen attempts to increase the health of the banking sectors with a number of highly controversial reforms. The global response has been reactive (not proactive), aimed and mitigating the impact and achieving damage control.

Solution
There is the need for urgent improvement of social protection and empowerment of workers especially women and people in the informal sector, including unemployment benefits} insurance schemes that recognize vulnerabilities. But laudable as they are} these represent mere palliatives. To provide a lasting solution to the impact of economic crisis} there is the need to address root causes. The root cause of the crisis is greed and unbridled capitalism and reliance on reckless 'market forces'.

The long-term solution is a just and more equitable socio-economic system in which the majority of the populace control the bulk of the resources and wealth of the country, a regulated economy which ensures that wealth is not concentrated in the hands of a few. In the case of Nigeria, this process should begin with the institution of real, fiscal federalism, a parliamentary system of government that decentralizes power, makes government at the centre (or federal level) very small and unattractive and therefore help to check corruption and the unbridled looting of the public treasury.

On such a foundation, a good, accountable and democratic governance could be built which will prioritise development and make it possible to stimulate growth, competition by the federating units, promote trade and industrialization, create enabling environment for job security, security of lives and property and improved quality of life.