ANALYSIS OF GLOBAL FINANCIAL CRISIS AND ITS EFFECTS ON JOB INSECURITY IN NIGERIA

ANALYSIS OF GLOBAL FINANCIAL CRISIS AND ITS EFFECTS ON JOB INSECURITY IN NIGERIA

BACKGROUND OF THE STUDY

Nigeria is inextricably tied to the global financial system. The global financial crisis began in the United States in 2007, expanded to other major economies throughout the world in 2008, and was then transmitted to less developed nations, including the Nigerian economy, that same year. The global financial crisis further destabilised Nigeria's economy, which was already plagued by issues such as economic insecurity, inconsistency in government policies, a lack of transparency in financial markets, corruption, political instability, high rates of poverty, and unemployment, among others. Until now, the government has been dealing with the impact of the global financial crisis on the domestic economy. Nigeria, being a component of the global economy, is likely to suffer the micro and macroeconomic consequences of the global financial crisis.

Stiglitz (2018) asserts that the global financial crisis began with a series of errors in financial markets, which led to credit and liquidity crises, resulting in the failure of numerous large financial institutions and a loss of trust in the banking industry. The crisis moved to the real sectors, resulting in a drop in aggregate demand, economic slowdown, and job losses. The rapid spread of the crisis to other nations, regardless of their degree of development, has led to the use of terms such as "global financial meltdown," "global economic catastrophe," "global credit crunch," and so on.

A credit crunch is a common element of a financial crisis, which entails a disorderly decrease in money supply and wealth creation. A credit crunch happens when players in an economy lose confidence in making new loans or recalling current ones. The Great Depression happened following a massive increase in debt and money supply in the 1920s. Then, from 1929 and 1933, a contraction occurred when debt was defaulted on, resulting in a significant decrease in the amount of money.

 

According to Obadan (2018), the global financial crisis may be traced back to fast hazardous debt buildup. The worldwide transmission of the crisis is owing to the fact that the world economy has grown increasingly interconnected as a consequence of globalisation forces functioning via the network of global economic and social links. Three markets connect the local economy to the rest of the international economy: the product market, the factor market, and the assets market (money and capital markets). These three marketplaces connect the rest of the world and the home economy to the global economy. Although the global financial crisis was caused by a credit crunch in the United States, it has spread to almost all countries' economies through trade and financial linkages, and the consequences, such as job insecurity and retrenchment, reductions in foreign development and overseas development assistance, increased impoverishment, and decreased revenue, among others, have been found to be uniform in the economies affected by this crisis.

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