The Effect of Global Financial Crisis on Job Insecurity in Nigeria (A Case Study of Eco Bank PLC)
Chapter One
Objective of the Study
General objective of the study
The general objective of the study is ascertaining the effect of Global financial crises on Job insecurity and then suggesting some pointing and related recommendations under the sample period.
Specific objective of the study
- The specific objectives of the study, which answers the intended research questions of the study, are to:
- Identify and analyze whether the Global financial crises have strong correlation with Job insecurity in Eco Bank PLC
- Identify whether the effect is positively or negatively.
CHAPTER TWO
LITERATURE REVIEW
Youth unemployment and global financial crises
As regards youth labour market analysis, we specify at the outset that, although official statistics tend to focus on the 15-24 age group, there is considerable debate about the pros and cons of various definitions of youth and their consequences in the study of labour market performance and dynamics (see e.g. Lefresne, 2003; O’Higgins, 1997)[3].
In many countries of the world, youth unemployment is much higher than adult unemployment. For the world as a whole, the corresponding figures for the 2010 YUR are 13.1 vs 4.8 per cent for adults (see International Labor Organization (ILO), 2010b). While the lowest values can be found in the Far East, the highest figures – apart from North Africa and the Middle East – are recorded in central south eastern Europe and CIS (20.2 vs 8.2 per cent) and in developed economies and the EU.
If we focus our attention on the EU, which is one of the most affected areas in the world, we can analyse the recent evolution of the YUR (for young people in the 15-24 age group) and disentangle the peculiarities of individual countries. According to Eurostat data, for the EU-27 aggregate over the period 1998-2009 (see Table AI), we can see that there was a steady situation until 2005, then an improvement in 2006-2007 – prior to the global crisis – and finally a jump in 2009 to the highest level of 78 the whole decade (19.6 per cent; see also Figure A1). Higher than average figures are shown by different groups of countries: some Mediterranean countries (Spain, Italy, Greece) plus France and Belgium; many Nordic countries (Sweden, Finland, the Baltic states); some NMS (Poland, Hungary, Slovakia); on the other hand, in Romania and Bulgaria the situation improved over time[4] (and now the two countries are close to or below the EU average). The crisis has caused a serious worsening – from 2008 to 2009 – in the Baltic states, in Spain and Greece, in Hungary and Slovakia, but also in Sweden, Finland, France and Italy. And the pattern further deteriorated in 2010.
A possible question that now arises is whether the increased YUR reflect the general bad economic situation – as shown by the total unemployment rates – or instead a peculiar negative movement among young people. If we look at the ratios between YUR and total UR, a first observation is that – for the EU as a whole – there has been no improvement in the relative position of young people in the last decade despite the European Employment Strategy and the Lisbon Agenda goals, since the ratio has been pretty close to 2 and was slightly deteriorating even before the crisis. In other words, young people are twice as likely to be unemployed compared to the general population. The real figure is probably higher, because the “discouraged worker effect”[5] is more likely for the young, who can opt to continue their education or simply to live with their families, avoiding implementing robust search efforts if unable to find a job (making up the so-called neither in employment, nor in education or training (NEET) group). In addition to this overall and EU-wide YUR problem, in particular countries the labour market exhibits even greater problems concerning young people (with youth/total ratios around or close to 3): Italy, Greece, some NMS, Belgium-Luxembourg-France and, rather surprisingly, also Sweden and the UK. On the other hand, the countries that have best coped with the labour market problems, in general, and kept the rise of youth unemployment under control, in particular, are localized in central Europe: Germany, Austria, the Netherlands and Denmark.
Theories on the key determinants of youth unemployment
As shown in the previous section, the YUR is generally much higher than the adult unemployment rate. The main reason for the generally worse youth labour market performance with respect to adults is related to the lower level (and/or different quality) of human capital (and productivity), which – ceteris paribus – makes employers prefer adults to young people.
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
Research Design
In ascertaining the effect of Global financial crises on Job insecurity in Eco bank, the study entirely uses secondary time series data. In dealing with the problem, the researcher considers descriptive analysis methods by using different ratios, graphical and tabulation descriptions. In the process of hindering spurious regression, the study considers some pre-estimation techniques such as identifying the problem of non-stationary, co-integration, and multicollinear. Finally, by using corresponding econometric analysis methods, the study investigates the effect of government expenditure and tax revenue on Job insecurity rate.
Type and source of data
The study uses time series secondary data of the variables that are under consideration. The intention of the study, which emphasizes on the effect of fiscal policy instruments for about 30 years sample period, encourages the researcher in using secondary data.
Accordingly, government expenditure collected from ministry of finance, tax revenue from ministry of revenues and unemployment rate from central statistical agency of Nigeria. After comparing with CSA record, unemployment rate data is used from international labor organization (ILO) modeled annual estimate. In addition, all the variables that are under consideration are accessed and crosschecked with the record of Central bank of Nigeria, international monetary fund (IMF), world development indicators (WDI) and world bank (WB).
CHAPTER FOUR
FINDINGS AND INTERPRETATION OF THE STUDY
Descriptive Analysis and Interpretation
The unemployment rate data used in this study is used from the modeled ILO annual estimate after comparing with the Nigerian national labor force survey data. However, unemployment rate can be estimated as follows:
Where, unemployed is the number of persons without work being ready and searching actively the available jobs in the economy while labor force-the number of economically active population or the sum of employed and unemployed persons.
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary and Conclusions
Mainly the study investigated the effect of Global financial crisis by emphasizing on the effect of general government expenditure and tax revenue on Job insecurity rate under the sample period of 1990 to 2019 G.C and hence forwarded pointing recommendations.
To undertake the study, the researcher has used both descriptive and econometric analysis methods. Accordingly, descriptive analysis using different ratios, graphical and tabulation descriptions strengths that general government expenditure is the dominant determinant of unemployment rate as compared to tax revenue. Both the Nigerian general government expenditure and tax revenue shows an increasing trend while Job insecurity in Eco Bank PLC shows a decreasing trend. Similarly, under the sample period, the country’s participation rate and employment to adult population ratio also shows relatively an increasing trend.
Unit root, co-integration and multi-collinearity tests are also applied. As a result, all the variables those are under consideration become stationary at their level having greater absolute value of t-statistic than t-critical at 5% significance level. The problem of multi-collinearity has dealt with and the correlation coefficient test resulted in perfect collinear. In addition, the value of VIF is very high which is greater than tolerable level. As a result, the study used simple regression model.
The OLS regression resulted that both government expenditure and tax revenue are significant determinant of unemployment rate. As expected by the researcher, both have a negative effect on Job insecurity rate. The significant intercept with positive sign has described by relating to the assumption of natural unemployment rate.
Recommendations
After investigating the effect of government expenditure and tax revenue on Job insecurity rate, the study forwards the following recommendations:
- Strategic expansion of general government expenditure can helps in controlling and minimizing Job insecurity in Eco Bank PLC
- Mobilizing the country’s tax revenue can minimizes the level unemployment rate since tax revenue has a significant negative effect on unemployment rate
- A significant positive intercept implies that care should be taken to the conditions and magnitude of government expenditure and tax revenue in the strategy of controlling unemployment rate
- In the strategy of controlling unemployment rate, both government expenditure and tax revenue can be used separately for a single effect and simultaneously for a double effect since both has the same sign and almost the same a unit effect
- Finally, the researcher suggests additional studies on area of the problem since there are no as such studies undertaken either using primary and/or secondary data
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