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Despite the sustained increase in global wealth over the past two decades, inequality persists as per capita wealth declined or stagnated in most low-income countries across various income brackets.
Economic disparity is a global reality. According to United Kingdom-based Oxfam International, the 26 richest people on earth in 2018 had the same net worth as the poorest half of the world’s population, some 3.8 billion.
The issue is prevalent in low-income and emerging economy like Nigeria where less than 8 percent of the populace, the few rich, controls the bulk of the country’s resources.
Economic inequality in Nigeria has reached extreme level despite the country’s abundant human capital that could lift millions out of poverty. Last year, Nigeria ranked 157 out of 157 nations, in Oxfam Reducing Inequality Index, reflecting government’s weak commitment to reduce the gap between the rich and poor.
The country’s unemployment figure of 23.1 percent is the 10th highest in the world, according to Abuja-based National Bureau of Statistics (NBS). Sadly, youth unemployment rate (15-34 years) of 29.72 percent outpaces the general unemployment figure, an indication that unemployed individuals in Nigeria comprise mostly the youth.
In a bid to ascertain the causes and proffer solutions to high-income inequality and mass unemployment in low-income and emerging economies, the Washington-based International Monetary Fund (IMF) conducted a research across 71 low-income countries and discovered that the solution to inequality lies in youth employment.
“We look at the impact of good and bad economic times on inequality through unemployment, access to finance and government spending. We found that in low-income and emerging market countries, unemployment, especially among young people, is an important driver of inequality,” said analysts at IMF in their policy document.
In good times, which signifies periods when a country has positive output per capita growth, their findings revealed that lower general unemployment accounts for 41 percent in inequality reduction in low income and emerging economies. However, youth employment explains more than 35 percent of that reduction, according to them.
In bad times, which typifies periods when output per capita growth is negative, youth unemployment is associated with 28 percent rise in income inequality.
The logic is based on the fact that in the time of boom, young people working help reduce inequality, but when growth slows down and jobs are lost, more young people will be out of jobs, which would consequently raise income disparity.
The case is slightly different in emerging economies where youth unemployment explains less rising inequality, as fewer jobs are lost in bad times compared to low-income countries due to higher level of informal sector in the latter.
Nigeria have so much to worry about, with over 60 percent of its population comprise young people below the age of 35, it seems government at all levels are not taking cognizance of this fact.
About 75 percent to 80 percent of youth are either unemployed or underemployed, which has made many to predict that Nigerian youthful population is like a time bomb waiting to explode.
Emmanuel Noko, chief economist at Lagos-based M&C Consulting Limited, maintains that addressing the issue of youth unemployment in Nigeria falls back to the need to restructure national curriculum to meet the demand of corporates.
“We have heard many private establishments saying young graduates are not employable because they lack necessary skills expected of them. I think this is as a result of the mismatch between school’s knowledge and industry expectations,” Noko said, saying bridging this gap would improve the employability of young individuals.
Michael Nicholas-Mandla, a Yaba College of Technology graduate, argued that tertiary institutions were not fully engaging students to the practical aspects of their respective discipline.
“I agree that youth employment is fundamental to inequality reduction. But government need to create a body that would develop students after graduation to acquire vital employability skills,” he said, saying theoretical knowledge had nothing to offer.
The findings of IMF reveal that bulk of the effect of growth on inequality stems from youth unemployment, underscoring the need for Buhari-led government to design policies to elevate the employability of young workers and reduce their vulnerability in economic downturn.
Nigeria’s high inequality can be reduced to the barest minimum if the government prioritise job creation and come up with policies that support employment of young persons, given the fact that youth unemployment accounts for more than a third in inequality.
Also, reforms aimed to accelerate productivity need to factor in policies that will reduce big differences in income distribution.
Noah Ojewoye, a Lagos-based public policy analyst, hinges massive investment in human capital, as the panacea to inequality and dampened social welfare. His words, “Investing in human capital revolves around providing job opportunities for youths to help unlock their potentials and make them self-reliant.”