The Unemployment in the Gulf Countries

Background

According to International Labor Organization, unemployment is defined as having a population without jobs; for a workforce to qualify as unemployment, it must have been looking for a job in the past four weeks in vain. The unemployment rate in a country is measured as a percentage of unemployed over the total work force is interpolated; mathematically the percentage is calculated as

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Unemployment rate

The world is recovering from world financial crisis that started in 2007; countries are continually facing challenges providing full employment to their population. The six Arabs Gulf states for the past ten years have been facing an increasing number of unemployment (Pissarides 56). This paper analysis the unemployment trends in the Gulf States.

The most dominant forms of unemployment the country is facing is frictional and structural unemployment. Structural unemployment occurs when an economy cannot provide jobs to population, though there may be jobs but the available situation offers a mismatch between the jobs. This may be in form of skills required, which the unemployed people do not have. Gulf States are undergoing a massive technological improvement rendering some people services as unwanted. In most cases if one is suffering structural unemployment, it is because of improvement in a certain area, or a change in the way things are done. It is appreciated that there are jobs, but the people are not fit for the jobs. If one improves his skills, he is likely to get his job back.

Fictional unemployment occurs when workers are moving from one employer to another; a period when they remains temporary shortly. It is also referred to as vocational unemployment. When an employee loses his job to a robot, he is not losing it shortly so this is not fictional unemployment, then form of unemployment is structural unemployment.

Unemployment Statistics in Gulf States

An article by AL-DHAFIRY, Abdel Wahhab Mohamed, published in the “Applied Econometrics and International Development. AEEADE” journal 2003, blamed the current fast development in the Gulf States as the major causes of unemployment in the country. The article further suggested that with intergovernmental co-operation and cooperative council for the Gulf States, the countries government has been able to overcome some of the major problems they had been facing, however unemployment has proved a challenge to the governments (Soren)

Between 1999 and 2003, the Arab workers rose by 3% annually, this was not matched by an increase in jobs at the same rate thus some people were rendered jobless. In 1999, the country was missing an incremental 30,000,000 job opportunities to cover for the 89,000,000 labor force in the country. During the year, 12,500,000 were fully unemployed totally; unemployed while 22,000,000 were in partial unemployed. The above statistic was an increase from 11.7 million unemployed work force that was experienced in 1997, the greatest population of the unemployed fall in the category of 18-m 24 years (UNDP, Arab Fund for Economic and Social Development & Arab Gulf Program for United Nations Development Organizations 12).

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Through different countries in the Gulf, state region has difference in the rate of unemployment, the trend in the sector is the same; there is an increasing number of unemployment. In 2007, in Qatar, only 10% of the work force was considered as jobless; according to GCC Unemployment: Sustainable Economies, the population of the country that was not in stable employment accounted for 8.8% of the population in the Gulf States in 2009, the rate had been expected to rise to 10.5% in 2010. The rate of increased unemployment has been attributed to the global financial crisis of 2007 (Indian Express.com)

Causes of unemployment in Gulf States

Despite fast economic development experienced in the economy and great diversity of regional economies, some appearing problems that have continuously been leading to unemployment in the Gulf States they include,

Oil dependence

Gulf States depend on oil markets for their developments; their main source of resources is the fuel industry in the international market. When other world economies are not performing well, then the demand for the precious commodity reduces leading to a decrease in labor demands. The sector is the driving force of the economy thus its stability affects the countries; of rate the cost of fuel barrel has reduced drastically leading to a slower rate of economic development in the states thus unemployment.

Of late the countries are facing a third Gulf War, were the prices of oil have drastically reduced leading to a decrease in the cost of fuel.

Centralized economies

Gulf States government has a large control of their economies and has the largest employment rates; in 2007, for instance 90 % of Qataris were employed by the government, while 84% of Kuwaitis 50% of Saudis, and 86% of Emiratis were states employees. The structure of the economy has limited the rate of job expansion in the economies.

Overspending and Massive subsidization

The government has being blamed for overspending in importation in the drive to feed its growing economy: the overspending has resulted to reduced developmental funds (International Organization for Migration 72).

Population growth rate and globalization

The Gulf States are experiencing an increased population growth rate; the population is coming from the developing countries and as a multiple of the country’s population. This has increased an increased work force than the countries can handle with their employment growth rate (ECONOMIC AND SOCIAL COMMISSION FOR WESTERN ASIA 1-12).

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Consequences of unemployment

When a higher population is facing unemployment, then government costs on social economies will increase an increased expenditure on social-economic factors results to an economy that is not growing deepening the situation. When people are employed, the government has a source of revenue from taxes charged, according to Arabs countries labor reports in 2000, the countries were losing US$ 115, 000, 000 because of unemployment.

When a large population of an economy is, unemployed, then the population cannot feed itself, this has resulted to an increase in social evils and vices as people look for basic commodities. The political stability of a country with high unemployment rate is threatened since people are easily swaged to support the side that offers them hope of employment.

From a positive note, unemployment is a tool to avert inflation in an economy however, a short time remedy that has negative implications (Abdel-Wahhab 79).

Solutions

To change the unemployment trend in the states, the countries should embark on massive youth empowerment through offering affordable financing services to start businesses in the economy. The economies should start looking for ways of enforcing the private sector instead of reliance in public sector to offer full employment, a major source of unemployment is an influx of international labor forces, and the government should start regulating labor movement and encourage exportation of labor force. To export labor effectively, the government need to improve the education system to meet the demand of international community.

In 2004, World Bank reports, the international organization recommended to countries to improve their education system to meet the demand of international labor markets as they offer financial and entrepreneurial training services to their population (World Bank 23), the move would lead to more job opportunities.

Unemployment is Europe

The financial crisis that hit the world in 2007 did not spare the European countries; in 2009, the countries recorded the highest unemployment rate in ten years, the numbers of unemployed were dominant in the ages of 15-23. The general rate of unemployed in 2009 was at 9.2 per cent, this was 1.9% higher than the rate that was recorded in April 2008 of 7.3 per cent. the effect is seen more in Spain that in 2009, the country had 32% of its 15-24 work forces unemployed. According to Eurostat, the percentage of unemployment in the first quarter of 2009 rose to 8.2, at the end of 2008; this was a 2% increase in the rate of unemployment; the institution went further in August 2009, to rate the number of unemployed in the 27 EU countries at 20.8 million.

in 25 countries in 2009, there was a sharp increase in the rate of unemployment with only Romania and Greece recording a marginal increase in the employment opportunities. According to a report by European Union statistics office in Luxembourg on 1st August 2010, the euro area recorded an increase in unemployment rate to over 10% in the third quarter of 2010 despite a 0.4 percent improvement in economic growth, this was a sharp increase form what had been recorded in the same period in 2009.

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The rate of unemployment in the euro area has been attributed to the ills brought about by the deterioration of the world economies and the effects of global financial crisis. The global crisis has forced companies to lay off their employees as they try to get methods of surviving in the crisis, the unemployed add to the already market of the unemployed. The Euro areas are experiencing an increasing number of fresh graduates with different courses taken in the countries or abroad; this increases the work force in an economy that is not producing employment opportunities. Although the governments of the countries are working hard to facilitate the economy to produce more employments, it has embarked on massive youth empowerment through loan advances, to facilitate them start new businesses (Pravda.Ru).

What the impact of Welfare on the unemployment in Europe

The increased unemployment rate in euro area has resulted to number of negative effects as long as the living welfare of the country is concerned. When a great number of a population is not employed, then they depend on the government for their live hood. This means that they get only basic needs; thus their living welfare standards decreases.

The high rate of unemployment has resulted to minimal funds for economic expansion as the government prioritizes provision of basic wants to the unemployed; when a country is undergoing a slowed economic, the general population living standards decline (Pravda.Ru).

Works Cited

Abdel-Wahhab, Al-Dhafiry. “UNEMPLOYMENT IN THE GULF COUNTRIES:REASONS AND REMEDIES.” Applied Econometrics and International Development 3.3 (2003):61-82.Print.

ECONOMIC AND SOCIAL COMMISSION FOR WESTERN ASIA. Women’s Control Over Economic Resources And Access To Financial Resources . 2009. Web.

Indian Express.com. Gulf unemployment to hit 10.5 pct in 2010. 2010. Web.

International Organization for Migration. Intra-regional Labour Mobility in the Arab World. Cairo: IOM Cairo, 2008.Print.

Pissarides, Christopher. Equilibrium unemployment theory. Massachusetts: MIT Press, 2000.Print.

Pravda.Ru. Unemployment in Europe is a Highly Pressing Issue. 2010. Web.

Soren, Billing. The unemployment rate among Gulf nationals is likely to rise this year as the economic downturn limits job creation in the private and public sectors, a new report by the National Bank of Kuwait (NBK) has said. 2009. Web.

UNDP, Arab Fund for Economic and Social Development & Arab Gulf Programme for United Nations Development Organizations. The Arab Human Development Report 2005: Towards the Rise of Women in the Arab World. New York: UNDP Regional Bureau for Arab State, 2006.Print.

World Bank. Gender and Development in the Middle East and North Africa: Women in the Public Sphere. Washington, DC: The International Bank for Reconstruction and Development, 2004. Print.

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