The labour market is a critical component of any economy, as it is the engine that drives growth and development. A well-functioning labour market ensures that there is a skilled and productive workforce, which in turn increases the efficiency and competitiveness of businesses. In Nigeria, the labour market has been a subject of concern for many years, with various issues affecting its functioning.

challenges facing the labour Market

One of the main challenges facing the Nigerian labour market is unemployment. The country has one of the highest unemployment rates in the world, with the latest figures showing that the rate stood at 33.3% in the fourth quarter of 2020. This high level of unemployment is a reflection of the weak economy and the failure of policies to stimulate job creation.

The informal sector is a significant employer in Nigeria, with many individuals engaging in activities such as street vending, petty trading, and artisanal services. While this sector provides employment opportunities, it is also characterized by low productivity and low wages. Many of these jobs are not formalized, meaning that they do not come with benefits such as pensions, healthcare, and social security.

Another issue affecting the Nigerian labour market is the skills mismatch. There is a disconnect between the skills possessed by the workforce and those demanded by the labour market. This skills gap is a result of the poor quality of education and training, which has failed to equip graduates with the skills required by employers.

In addition, there is a lack of diversity in the Nigerian labour market, with certain groups, such as women, youth, and people with disabilities, facing significant barriers to employment. Discrimination and bias also hinder the entry of these groups into the workforce.

how to solve the Nigerian labour market

To address these challenges, the Nigerian government needs to prioritize policies that stimulate economic growth and job creation. This includes investments in infrastructure, education, and training, which will increase productivity and competitiveness. The government also needs to create an enabling environment for businesses to thrive, through policies that reduce the cost of doing business and improve the ease of doing business.

To address the skills mismatch, there is a need for a reorientation of the education system towards skills acquisition and practical training. This can be achieved through partnerships between educational institutions and the private sector, which will ensure that the skills taught are relevant to the labour market.

To promote diversity and inclusivity in the labour market, the government needs to enforce laws and policies that prohibit discrimination and bias. This can be achieved through the creation of affirmative action programs that promote the entry of underrepresented groups into the workforce.

In conclusion, the Nigerian labour market is facing significant challenges, which require urgent attention from the government and other stakeholders. Addressing these challenges will require a multifaceted approach that prioritizes job creation, skills development, and inclusivity. By doing so, the Nigerian economy can unlock the potential of its workforce and achieve sustainable growth and development.

  • Identify the factors that influence the supply and the demand for labour
  • Distinguish between the factors that shift the supply and demand curves for labour and those that affect their slopes.
  •  Demonstrate the process of market determination of the equilibrium wage rate using supply and demand curves of labour.
  •  Explain the role of the institutions like labour unions in a dual wage determination.
  • Explain the concept of unemployment and identify its various forms, causes and solutions.

 Demand for labour may be defined as the total number of workers employers are willing and ready to employ or hire at a particular time and at a given wage rate.

The demand for labour is a derived demand, because labour is not required for its own sake but for what it can help to produce.

Factors Affecting the Demand for Labour
  •  The size of the market: The size of the market for goods and services produced determines the demand for labour.
  • The larger the market, i.e. the greater the production of goods and services, the higher the demand for labour to produce the required goods and services.
  •  Number of industries: The higher the number of industries that produce the needed goods and services, the higher demand for labour.
  • Wage rate or price of labour: demand for labour by employers de on the price at which labour is of offered for sale (by workers). If labour is willing to take a low wage rate, the demand for labour will be high
  • Availability of other factors production: If other factors production such as land and capital available in large quantities to produce required goods and services, there be a correspondingly high demand for labour
  • The efficiency of labour: If the efficiency of labour is high, there would be the propensity for employers to engage labour and vice versa.
  • Demand for goods and services: demand for goods and services in a country can stimulate an increase in demand for labour.
  • Nature of industries: The nature of industries – whether it is capital-intensive or labour-intensive will determine the demand for labour. The labour-intensive industries will lead to high demand for labour.
  • State of employment: The state of employment determines the demand for labour. If the economy
    • has reached full employment, there will be little or no demand for labour but if it is employment,
    • there will be a need demand for more labour.


Definition: Supply of labour may be defined as the number of people of working age employed at a particular time and wage rate. In other words, the supply of labour can be referred to as the services of available in the labour market.

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