In labour economics, unemployment is a term used to refer to a situation whereby skilled, semi-skilled or unskilled individuals that are without jobs (paid employment) and have been actively looking for a job within the past two weeks (duration varies from country to country) are unable to secure one. It is important to point out here that those who are covered by this situation are those who are willing to sell their labour for a regular payment hourly, weekly, monthly or other special arrangement. Entrepreneurs do not fall into this category and can therefore not be referred to as unemployed even when their businesses fail and they are left with nothing to do or without income. They will only be referred to as “unemployed” when they start looking for a job instead of starting all over. That is why entrepreneurs are said to be “self-employed” and not just “employed”.

Now that we have some understanding of what unemployment is, let us talk about the categories of unemployment. There are at least four categories:

1. Ivoluntary Unemployment:

When you are jobless and actively searching for a job and you can’t find ANY JOB whatsoever. Most of the people that are uneducated, unskilled (hard or soft) and physically unfit are usually the victim of this category of unemployment.

2. Voluntary unemployment:

When you are jobless and actively looking for a job but only willing to settle for the kind of job that meets your personal preferences. Your preferences could bother on safety, remuneration, etc.

3. Structural unemployment:

Location is a critical factor for business and employment opportunities. Structural unemployment occurs when you are settled at a particular location with little or no job opportunities while most of the job opportunities are elsewhere and far away. Most immigrants in developed countries migrated to tackle structural unemployment.

4. Frictional unemployment:

Employers prefer to place round pegs in round holes. Frictional unemployment is the situation where jobs are available but only very few to nobody is qualified to pick up those jobs. This happens everywhere even in Nigeria. That is why some multinational companies bring in expatriates or even repeat vacancy advert helplessly with no one applying.


From the categorization above, we can infer that those suffering from involuntary employment may actually be the truly unemployed in the real sense of it, if their circumstances are as a result of their lack of education and useful skill(s).

Now let’s look at the second category. Most unemployed graduates in Nigeria fall into this category- voluntary unemployment. Most graduates have personal preferences or minimum expectation when it comes to picking up a job. These preferences or expectations are usually influenced by peer pressure, social, religious and cultural factors. It is common to hear words like: “I can’t be found doing that kind of dirty job”… “When will I buy my own car with that kind of meager salary?”… “My mates are getting married and I need to follow suit urgently. That salary can’t sustain me and my prospective family”… “I don’t want to work where there is no job security”… and so on.

What exactly encourages excuses like this apart from the factors mentioned earlier? It is what labour economists refer to as the “reserve wage” or better put “reserve salary”.
The reserve salary is the salary you “earn” when you are jobless. Let’s admit it, no one really want to work. Laboring is not easy. That is why almost every winner of a jackpot quit their jobs. What forces man to work are his needs as arranged in a hierarchy by Ahraham Maslow. In Abraham Maslow’s hierarchy of needs, physiological and safety needs are the fundamental or basic needs of man; security, food, clothe and shelter. These basic needs are not free. We buy foods, clothes, pay rents and tax to government that provide security. Now the interesting twist is that most voluntarily unemployed graduates enjoy these basic needs for “free”. Whereas, they are actually not free because someone is paying for them. The amount that person is paying for those needs is being paid to such graduates indirectly as a “reserve wage” or “reserve salary”. Put differently, whatever money you “earn” (directly or indirectly) regularly, to fulfill your basic needs (mostly from family, friends, acquaintances etc.) by not actually working for the giver is your “reserve salary”. Similarly, your reserve salary could be from your previous savings. That’s why you begin to get on your toes when such savings are depleting and no preferred job is forthcoming.

Most unemployed graduates will not accept a job offer if the salary is below their reserve salary, that is if the remuneration of the job is barely enough to meet their basic needs. That is why a N30,000 salary may mean the whole world to an involuntarily unemployed person and mean nothing to a voluntarily unemployed graduate. This also explains why most people born into a rich family rarely work because they find it hard to secure a job paying above their reserve salary (usually very high because of their luxurious lifestyle). Therefore most voluntarily unemployed graduates may be forced to drop their ego and pick up a job within two weeks if their reserve salaries seize flowing (when thrown out by parents or family members for example with no fall back).

The last two categories of unemployment often lead to underemployment. Underemployment happens when an employee’s earning potential or skills are not optimized or fully utilized. Most civil servants in Nigeria for example are underemployed. Same is also true for more than half of employees in the private sector. Graduates who read this and decide to dump voluntary unemployment and pick up the next available job are most likely to be underemployed. Underemployment is therefore a more serious issue in Nigeria compared to involuntary and voluntary unemployment and it is the major reason behind economic migration.

Government therefore needs to create enabling environment for existing businesses to thrive and attraction of foreign investments. Revamping infrastructure will tackle structural unemployment as a high speed train reducing traveling from Lagos to Ibadan to 30minutes can eliminate structural unemployment between the two cities. Also, reviewing curriculum of tertiary institutions will go a long way in tackling frictional unemployment.

Front page material. Moderator please do the needful.
OP I enjoyed your educative post. I think there are more under-employed people in Nigeria than there are unemployed people. Most unemployed people in Nigeria, particularly graduates fall in the voluntary unemployment category.

Government should do more in addressing under-employment in Nigeria especially in the private sector- where employees are used and dumped without a fall back.

If you will pay the right amount, I can even work in sambisa forest, But you can't expect me to relocate to lagos for a 30k job. Until I start earning atleast 500k - million naira monthly, I don't consider my self an entrepreneur. Am still unemployed


Lalasticlala or mynd44 should do the needful abeg, the op made real sense, let's share it with our unemployed brethren

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