Project – Youth Unemployment and Participation in Informal Economic Activities: A Sociological Study of Young Adults in selected Communities in Benin City, Edo State

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Youth unemployment has become one of the most significant socioeconomic challenges confronting developing countries, particularly countries with large and rapidly growing young populations. Employment is not only an economic activity through which individuals earn income; it is also an important mechanism for social integration, identity formation, independence and participation in community life. For young people, access to productive and decent employment is particularly important because the transition from education to work represents a major stage in the movement toward adulthood and economic independence. When this transition is delayed or unsuccessful, young people may experience financial dependence, social exclusion, frustration and vulnerability to various forms of precarious livelihood activities. The International Labour Organization (ILO, 2024) observes that although global youth unemployment has improved from the disruptions associated with the COVID-19 pandemic, young people continue to face significant challenges relating to job insecurity, inadequate opportunities and transitions into decent work.

The problem is particularly important in developing economies where formal employment opportunities are unable to absorb the growing labour force. Nigeria provides a significant example of this situation. The country’s large youthful population constitutes an important potential source of economic productivity, innovation and social development. However, the inability of the formal economy to generate sufficient employment opportunities has created a difficult transition from education to stable employment for many young people. O’Higgins et al. (2024), in the ILO’s Nigeria Youth Country Brief, identify youth labour-market challenges, school-to-work transitions and inadequate employment opportunities as continuing concerns in Nigeria.

Youth unemployment should, however, not be examined only in terms of whether young people have jobs. In the Nigerian context, an important sociological issue is the nature and quality of the employment available to young people. A young person may be classified as employed because he or she works for a few hours or engages in an economic activity, while still experiencing inadequate income, unstable working conditions or a strong desire for more work. The Nigeria Labour Force Survey (NLFS) illustrates this complexity. The National Bureau of Statistics (NBS, 2023) reported that the unemployment rate among young people aged 15–24 years increased from 7.2% in the second quarter of 2023 to 8.6% in the third quarter. At the same time, informal employment accounted for 92.3% of total employment in Q3 2023, while approximately 87.3% of employed persons were self-employed.

The high level of informality indicates that the Nigerian labour market is characterised by a strong dependence on self-employment, small-scale businesses, casual work and other forms of economic activity outside conventional formal employment structures. Earlier NBS data also showed that 92.6% of employed Nigerians were engaged in informal employment in Q1 2023, while only 11.8% were in wage employment. Most workers operated their own businesses or participated in farming activities. This situation raises an important sociological question: to what extent does unemployment or difficulty in accessing formal employment encourage young people to participate in informal economic activities?

The informal economy encompasses a wide range of economic activities that operate wholly or partly outside formal regulatory, taxation, labour protection and social-security arrangements. Such activities may include petty trading, street vending, commercial transportation, repair services, hairdressing and barbing, food preparation and sales, fashion and tailoring, phone and electronic services, small-scale manufacturing, artisan work, online trading, domestic services and other forms of self-employment. The ILO (2023) explains that informal employment includes forms of work that lack adequate legal or social protection and that informality remains a major feature of labour markets in developing regions.

For many young Nigerians, participation in the informal economy may therefore represent a survival strategy rather than a preferred occupational choice. Where formal employment opportunities are limited, young people may turn to whatever economic activities are accessible with their existing skills, social networks and limited financial resources. This does not necessarily mean that all informal economic activities are undesirable. Informal enterprises can provide income, entrepreneurship opportunities, vocational learning and employment for people who might otherwise remain without any economic activity. Indeed, Olajuwon (2023) argues that apprenticeship and informal-sector activities have considerable potential for addressing youth unemployment in Nigeria when appropriately supported and modernised.

Historically, the informal economy has played an important role in absorbing labour in Nigerian cities. Okojie (1990), in an empirical study covering urban centres including Benin City, found that the informal sector absorbed substantial numbers of workers and provided important economic opportunities, although earnings were generally lower and working hours longer in informal activities. The study is particularly relevant to the present research because Benin City itself was among the urban centres examined, demonstrating that informal economic participation has long been part of the city’s socioeconomic structure.

Benin City, the capital of Edo State, provides an important setting for examining the relationship between youth unemployment and informal economic participation. As a major urban centre, the city has a diverse population and a wide range of commercial, educational, transport, service and small-business activities. The city’s economic environment provides opportunities for young people to engage in petty trading, transport-related activities, repair services, food businesses, fashion, beauty services, digital activities, apprenticeships and other forms of informal employment. At the same time, competition for formal employment can be considerable because young graduates, school leavers and other job seekers compete for a relatively limited number of stable jobs.

The sociological significance of the issue extends beyond income generation. Employment status influences how young people relate to their families, peers and wider communities. A young person without stable employment may remain economically dependent on parents or relatives for longer periods. Such dependence may influence household relationships, marriage decisions, residential mobility and participation in community activities. Conversely, participation in informal economic activities may provide young people with some degree of independence and social recognition even where earnings remain low or unstable.

Youth unemployment can also have broader implications for social stability. Okafor (2011) argues that persistent youth unemployment in Nigeria has implications for social and political stability because prolonged exclusion from meaningful economic participation can contribute to frustration, marginalisation and vulnerability to antisocial activities. The issue should therefore not be reduced to an economic statistic; it is also a social problem involving social integration, inequality, aspirations and access to opportunities.

Another important dimension concerns education and skills. Educational attainment does not automatically guarantee formal employment in Nigeria. Although education can improve an individual’s prospects of securing wage employment, structural limitations in the labour market can constrain the ability of educated young people to obtain jobs that correspond with their qualifications. An ILO analysis of Nigeria indicates that wage employment increases substantially with education, while informal employment remains overwhelmingly dominant across the labour market. Consequently, some young graduates may participate in informal businesses or temporary activities while waiting for formal employment opportunities.

The transition from education to work is therefore a central issue in understanding youth participation in informal economic activities. Young people may move between unemployment, temporary employment, self-employment, apprenticeships and informal businesses rather than following a straightforward transition from school into permanent formal employment. O’Higgins et al. (2024) emphasise the importance of understanding the school-to-work transition when examining youth labour-market outcomes in Nigeria.

The COVID-19 pandemic and subsequent economic pressures have also intensified discussions about the vulnerability of young workers. Globally, young people were particularly exposed to employment disruptions during the pandemic, while recovery has not eliminated problems associated with insecure work. The ILO (2024) notes that temporary employment and self-employment are strongly associated with informal employment, which can expose workers to disadvantages relating to income, working hours, occupational safety and legal protection.

Recent Nigerian labour statistics reinforce the importance of examining informal employment alongside unemployment. NBS reported that informal employment remained exceptionally high at 93.0% of total employment in Q2 2024, compared with 92.7% in Q1 2024. This suggests that informal economic participation is not a marginal phenomenon but a central component of the Nigerian labour market.

However, high informal employment does not necessarily mean that unemployment has disappeared. Rather, it demonstrates the complexity of employment in a developing economy. Some young people may be technically employed but remain economically vulnerable because their activities generate inadequate income, lack stability or provide limited opportunities for advancement. Consequently, studying the relationship between unemployment and informal economic participation requires attention to both employment access and employment quality.

From a sociological perspective, the decision of young people to participate in informal economic activities can be understood through several interconnected factors. These include family socioeconomic conditions, educational attainment, possession of vocational skills, availability of start-up capital, social networks, gender, previous work experience, migration, perceived availability of formal employment and individual aspirations. Family and peer networks may provide the financial or social resources necessary to establish small businesses, while limited access to formal employment may push young people toward activities requiring little capital.

Social networks are particularly important in informal economies because recruitment, apprenticeship and access to customers may depend heavily on relationships. Young people may learn trades from relatives, friends or master craftsmen and women. Others may obtain information about business opportunities through peer networks. Such processes demonstrate that informal economic participation is embedded within social relationships rather than being purely an individual economic decision.

Gender also shapes experiences of unemployment and informal employment. The ILO has noted that women are disproportionately represented in informal employment in many contexts because of occupational segregation, unequal access to resources and care responsibilities. In Nigeria, the ILO reports that informal employment is particularly high among women, with young women experiencing especially high levels of informality. Therefore, a sociological examination of youth participation in informal economic activities should consider how gender affects both access to opportunities and the kinds of informal activities available.

The persistence of informal economic activity also raises questions about government employment policies. Nigeria has implemented various youth employment, entrepreneurship, vocational training and skills-development programmes over the years. However, the persistence of youth unemployment and very high informal employment suggests that policy interventions have not fully resolved the structural challenges facing young people. Recent scholarship similarly identifies the need for more coherent and sustainable approaches to youth employment rather than relying primarily on isolated or short-term interventions.

The present study therefore focuses on Youth Unemployment and Participation in Informal Economic Activities among Young Adults in Selected Communities in Benin City, Edo State. The study is premised on the view that informal economic activities may serve simultaneously as a coping mechanism for unemployed young people and as a potential pathway to self-employment and economic independence. Understanding which of these roles is dominant among young adults in selected communities is important for designing policies and interventions that respond to the actual socioeconomic experiences of young people.

The study will specifically investigate whether unemployment significantly influences young adults’ participation in informal economic activities, the major forms of informal activities in which they participate, the factors encouraging such participation, and the socioeconomic implications of participation. By concentrating on selected communities in Benin City, the study seeks to provide a context-specific sociological understanding of the interaction between labour-market exclusion and informal economic participation.

1.2 Statement of the Problem

Youth unemployment remains a major socioeconomic and sociological concern in Nigeria despite various government and private-sector efforts aimed at employment creation, entrepreneurship development and skills acquisition. The challenge is not simply that young people lack jobs; it is also that many of those who work do so under conditions that may be unstable, poorly remunerated and inadequately protected. The NBS Labour Force Survey shows that Nigeria’s labour market is overwhelmingly informal, with informal employment accounting for 92.3% of employment in Q3 2023 and 93.0% in Q2 2024.

The coexistence of youth unemployment and extensive informal employment creates a significant research problem. On one hand, some young people remain unemployed because they cannot secure formal employment. On the other hand, many others enter informal economic activities as a means of generating income. It is therefore difficult to understand youth unemployment solely through conventional measures that distinguish between employed and unemployed persons. A young person selling goods on the street, repairing mobile phones, working as an apprentice, operating a small food business or providing casual services may be classified as employed while still experiencing considerable economic insecurity.

The problem becomes more important when the quality of informal employment is considered. Informal activities can provide immediate income and prevent complete economic exclusion, but they may also be characterised by irregular earnings, long working hours, lack of social protection, limited access to credit, inadequate occupational safety and weak opportunities for career advancement. The ILO (2024) identifies informal work as being associated with disadvantages in income, working hours, safety and legal protection. Thus, participation in informal activities may reduce the incidence of complete unemployment without necessarily resolving the underlying problem of decent and sustainable employment.

Another dimension of the problem is the increasing number of young people entering the labour market with educational qualifications but encountering difficulties in obtaining formal employment. The Nigerian labour market has limited capacity to provide wage employment for all job seekers. NBS reported that only 12.7% of employed persons were wage employees in Q3 2023, while 87.3% were self-employed. This raises concerns about whether self-employment and informal economic activities represent genuine entrepreneurial choices or forced responses to the absence of formal employment.

There is also a concern regarding the socioeconomic consequences of prolonged unemployment among young adults. Without reliable income, young people may experience prolonged dependence on parents and relatives, delayed family formation, inability to pursue further education, migration pressures and reduced participation in mainstream economic and social institutions. Okafor (2011) further links persistent youth unemployment with social instability and vulnerability to various antisocial behaviours.

In Benin City, the presence of numerous small-scale businesses, trading activities, transport services, artisan occupations, apprenticeships and other informal enterprises suggests that the informal economy plays an important role in absorbing labour. However, the existence of these activities does not adequately explain why young people participate in them, whether unemployment is a major motivating factor, or whether participation is driven by entrepreneurship, family tradition, skills, social networks or lack of alternatives.

There is consequently a gap in context-specific understanding of the relationship between youth unemployment and informal economic participation among young adults in selected communities in Benin City. National statistics provide important information about unemployment, self-employment and informality, but national-level figures cannot fully explain the social experiences and motivations of young adults within particular urban communities. This study seeks to address this gap by examining the relationship between youth unemployment and participation in informal economic activities in selected communities in Benin City, Edo State.

1.3 Aim of the Study

The main aim of this study is to examine the relationship between youth unemployment and participation in informal economic activities among young adults in selected communities in Benin City, Edo State.

1.4 Objectives of the Study

The specific objectives are to:

1. examine the major causes and experiences of youth unemployment among young adults in selected communities in Benin City;
2. identify the major types of informal economic activities in which young adults participate in the study area;
3. examine the relationship between youth unemployment and participation in informal economic activities among young adults;
4. determine the major socioeconomic factors influencing young adults’ participation in informal economic activities

1.5 Research Questions

The study will answer the following questions:

1. What are the major causes and experiences of youth unemployment among young adults in selected communities in Benin City?
2. What types of informal economic activities do young adults participate in within the study area?
3. What relationship exists between youth unemployment and participation in informal economic activities among young adults?
4. What socioeconomic factors influence young adults’ participation in informal economic activities?

1.6 Research Hypothesis

The study will test the following null hypothesis:

H₀: There is no significant relationship between youth unemployment and participation in informal economic activities among young adults in selected communities in Benin City, Edo State.

1.7 Significance of the Study

This study will be significant to several groups.

Government and Policymakers

The findings will provide evidence that may assist federal, state and local government authorities in understanding the relationship between unemployment and informal economic participation among young adults. The study may assist policymakers in developing employment policies that move beyond job creation figures to consider the quality, stability and sustainability of employment.

Edo State Government

The study will provide information that may be useful to the Edo State Government in designing youth employment, entrepreneurship, vocational training and small-business support programmes. Understanding the specific reasons why young people enter informal economic activities can help government agencies develop interventions that respond to actual needs.

Young Adults

The study may contribute to a better understanding of the opportunities and challenges associated with informal economic activities. It may also draw attention to the importance of skills development, access to finance, entrepreneurship and social protection.

Researchers and Students

The study will contribute to the literature on youth unemployment, informal employment, urban sociology and socioeconomic adaptation in Nigeria. It may also provide a foundation for future studies on employment transitions among young people in Edo State and other Nigerian urban centres.

Community Leaders and Organisations

Community development organisations, youth associations and local leaders may use the findings to identify areas in which young people require support, particularly in relation to vocational skills, entrepreneurship, access to finance and employment information.

Policy and Development Organisations

The findings may also be relevant to organisations concerned with youth development, poverty reduction, employment promotion and decent work. The ILO’s continuing emphasis on youth labour-market transitions and decent employment demonstrates the importance of context-specific evidence for employment policy.

1.8 Scope of the Study

The study focuses on youth unemployment and participation in informal economic activities among young adults in selected communities in Benin City, Edo State.

Content Scope

The study will focus on:

• the causes and experiences of youth unemployment;
• the nature and types of informal economic activities;
• factors influencing participation in informal economic activities;
• the relationship between unemployment and informal economic participation; and
• the socioeconomic implications of informal economic participation.

Geographical Scope

The study will be conducted in selected communities within Benin City, Edo State, Nigeria. The selection of communities will be determined by the researcher based on accessibility, population characteristics and the presence of substantial numbers of young adults engaged in informal economic activities.

Population Scope

The study will focus on young adults within the selected communities who fall within the age range adopted by the researcher for the study and who are either unemployed, formerly unemployed or participating in informal economic activities.

1.9 Operational Definition of Terms

Youth Unemployment

Youth unemployment refers to a situation in which young persons who are available for work and actively seeking employment are unable to secure employment. In this study, the concept also includes the broader experience of difficulty accessing stable and productive employment.

Informal Economic Activities

Informal economic activities refer to income-generating activities that operate outside, or with limited coverage by, formal regulatory, taxation, labour-protection and social-security systems. Examples include petty trading, street vending, small-scale services, artisan work, casual employment and certain forms of self-employment.

Informal Economy

The informal economy refers to the range of economic activities and workers that are not adequately covered by formal institutional arrangements and regulatory systems.

Young Adults

Young adults refer to young persons within the age range specified for the study who are transitioning into or participating in the labour market.

Participation

Participation refers to the involvement of young adults in informal economic activities as owners, operators, workers, apprentices, casual workers or other participants who derive income or economic benefits from such activities.

Self-Employment

Self-employment refers to working for oneself rather than receiving a wage or salary from an employer. In the Nigerian labour market, self-employment constitutes a substantial share of employment. NBS reported that 87.3% of employed persons were self-employed in Q3 2023.

Socioeconomic Implications

Socioeconomic implications refer to the effects of informal economic participation on income, economic independence, household welfare, social status, living conditions, career development and social relationships.

Project – Youth Unemployment and Participation in Informal Economic Activities: A Sociological Study of Young Adults in selected Communities in Benin City, Edo State