THE EFFECT OF ECONOMIC RECESSION ON NIGERIAN WORKERS (A CASE STUDY OF SELECTED PRIVATE FIRMS IN ALIMOSHO LGA LAGOS STATE)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

In economics, recession refers to business cycle contraction, a generally slowdown in economic activity (Meriam-Webster, 2008). During economic recession, many macro-economic indicators vary in a similar way. Production gross domestic product (GDP), employment, investment spending, capacity utilization, household income, business profit and inflation all fall, while bankruptcies and unemployment rate sporadically rise. The National Bureau of Economic Research (2008) defines an economic recession as a significant steady decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production and whole sale- retail sale. Economic recession also refers to an all-round slowdown or meltdown in economic activity for two sequential years. During this period of economic recession, there is often times a rejection in certain macroeconomic pointers such as GDP, employment, investment spending, capacity utilization, household income, business income, and inflation, with the attendant increase in the rate of unemployment. Naturally, if an economy has two years sequential record quarters of negative growth in real GDP, the country will be said to be in economic recession. GDP is the market value of all legitimately acknowledged final goods and services produced in the country in a given period of time, usually one year.

Nigeria workers have been in a pitiable situation as a result of economic meltdown that befell the economy. Up until now, most of them including business organizations, firms have not recovered from the effect of economic recession despite of the fact that most workers have small and medium business. The ripple effect of economic recession on Nigerian workers includes, salary downsizing, overtime for most of them in other to be more productive, delay in or no salary increment, etc. The collapse of the existing companies, firms as a result of the economic meltdown has a maximized effect on the Nigerian workers. A good number of works were relieved of their jobs, while some that were retained experienced salary downsizing. Economic recession created an unfriendly and harsh economic weather in Nigeria, especially among Nigerian workers, which is shown by high energy cost, high bank interest rate and high naira exchange to dollar and a host of others.

The issue of the economic meltdown in Nigeria and its effect on Nigerian workers has triggered much argument in modern literature. Howbeit, it is important to evaluate how the problems took most economic workers by surprise. Globally, economy have experienced the most unpleasant moments over the years. The issue on its own has been described as probably the worst financial crisis that has never been experienced since the great depression of the 1930s. When it comes to Nigerian economy, it has experienced stagnation for almost two years or more now.

One of the causes of the economic breakdown was practically as a result of fight against corruption. A number of reasons for economic breakdown have been pointed out. Hence, scholars/researchers believe that it can be attributed to a number of factors in both the housing and credit markets, which enhanced over an extended period. Some of these include: homeowners are unable to make their mortgage payments, poor judgment by the borrower and/or lender, gambling and overbuilding during the boom period, risky mortgage products, high personal and corporate debt levels, financial innovation that beget and covered existing risks, central bank policies, and regulation. Another cause of economic recession is meltdown in underwriting standards for subprime mortgages; flaws in credit rating agencies’ assessments of subprime mortgages; residential mortgage backed securities (RMBS), other complex structured credit.

An investigation from different markets suggests that the consequences of the economic recession in Nigeria are credit crunch, currency dislocations, job losses, reduction in wages, unemployment, retrenchments and falling demand.

STATEMENT OF THE GENERAL PROBLEM

The negative consequences of economic recession in Nigeria need not be overemphasized. Poverty and hunger is at the highest ebb with people especially the Nigerian workers who have been on the 18,000 naira minimum wage being the worst hit as things have skyrocketed in the market, this has by extension affected the productivity of the workers which has further diminished the production capacity of the nation.

AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine the impact of economic recession on the Nigerian workers. Other specific objectives of the study are;

1. To examine the major causes of economic recession in Nigeria.
2. To determine the impact of economic recession on Nigerian workers.
3. To examine the relationship between economic recession and Nigerian workers.
4. To recommend ways of recovering from economic recession.

RESEARCH QUESTIONS

1. What are the major causes of economic recession in Nigeria?
2. What is the impact of economic recession on Nigerian workers?
3. What is the relationship between economic recession and Nigerian workers?
4. What are the ways of recovering from economic recession?

RESEARCH HYPOTHESIS

H0: There is no significant effect of economic recession on Nigeria workers.

H1: There is a significant effect of economic recession on Nigeria workers.

SIGNIFICANCE OF THE STUDY

The study would be of immense importance to government at all levels, the Nigerian labour congress and related stakeholders as it would reveal the impact of economic recession on Nigerian workers. The study would also be of immense importance to students, researchers and scholars who are interested in developing further studies on the subject matter.

SCOPE AND LIMITATION OF THE STUDY

The study is restricted to the evaluation of economic recession in Nigeria and its impact of Nigerian workers using Lagos state as a case study.

LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.