Recent achievements of robust economic growth accompanied by increasing rates of unemployment present an uncharted paradigm in the history of the Nigerian economy. Despite economic growth averaging 7 percent during 2004-2012, unemployment rose from 13.4 percent to 27.4 percent. In particular, youth unemployment rose from 29 percent to over 40 percent.

The experience becomes more paradoxical when the drivers of recent growth are brought under consideration. Over the period, non-oil sectors that are considered natural job creators – agriculture, commerce and distribution, and communications sectors – account for more than 80 percent of economic growth. While the increasing unemployment rate is in part due to expansion of the labor force due to influx of new entrants, it is more significantly a result of failure of economic growth to create substantial employment. At other times, especially during the financial crisis, economic growth was accompanied by net job destruction.

This paradox puts a dent to credibility of the “growth will create labour demand” hypothesis that has been the key doctrine of the Bretton Woods institution for decades, and has led to suggestions for rethinking labor market strategies. Realization of the need for growth to create employment and reduce poverty had given birth to the increasingly popular qualification of economic growth in terms of “inclusiveness” and “pro-poorness” in development circles. Indeed, there is a renewed emphasis on promoting growth in sectors with high rates of labor absorption, with the idea that expansion of those sectors will result in increased demand for labour, and as a consequence, increased employment rates.