Causes of Unemployment and How to Solve It

Unemployment is a pervasive issue affecting countries worldwide and impacting millions of individuals. It arises from various factors, making it a prominent challenge for communities. So, what are these factors, and how can they be effectively addressed?

Beyond the surface: revealing the factors of unemployment

According to Statista, a German platform specialising in market data, approximately 235 million people were unemployed worldwide in 2020. This substantial figure reflects a range of contributing factors and causes, including:

Slow-paced economic development

A frequent concern among job seekers and current employees is the poor state of the economy and its impact on job availability. When economic growth slows, the economy underperforms, leading to diminished demand for goods and services, lower investments, and weakened production. These factors collectively restrict job opportunities. In response to declining demand and production, companies often cut jobs, which in turn drives up unemployment rates.

Population growth

When discussing unemployment, a key factor is the disparity between job opportunities and a large population. No country can assure employment for every resident, particularly those with substantial populations. Thus, job openings frequently fall short of the number of job seekers, including an increasing number of graduates awaiting employment.

Seasonal influences

Seasonal fluctuations can profoundly affect employment in industries dependent on specific times of the year. For instance, tour guides and other workers in the tourism sector may face unemployment during off-peak periods when tourist activity declines.

Reduced activity during certain seasons often translates to lower demand for labour compared to peak periods, causing layoffs or a reluctance to hire additional staff. This cyclical pattern can consequently influence employment opportunities and unemployment rates.

Technological advancement

A new factor contributing to unemployment is the recent surge in technological advancements. As businesses and companies have integrated these innovations to meet market demands, the workforce has been significantly impacted. For example, artificial intelligence has led to many business owners replacing human workers with efficient machines, robots, and advanced technologies.

According to the World Economic Forum's report on the future of jobs for 2020, it is projected that machines may replace 85 million jobs by 2025. Nonetheless, new, previously nonexistent jobs may be created in response to these changes.

Expatriate labour

Many individuals contemplate relocating abroad for better financial prospects, while others consider returning to the very countries they once left. So, what impact does expatriate labour have on unemployment rates? Expatriate labour is a crucial factor in many economies globally, as people frequently pursue employment opportunities abroad to improve their financial status or take advantage of available opportunities.

Expatriates sometimes receive lower wages than local workers and are often willing to take jobs that local workers may refuse due to different financial or economic conditions in their home country. They may also bring specialised skills or training that equip them to fulfil diverse job roles. As a result, expatriate labour can impact the local job market by providing cost-effective labour and introducing a range of skills and experiences that cater to market demands and enhance workforce diversity.

Deficiency in skills

Life's perpetual changes demand adaptability and responsiveness. This involves actively developing new skills to meet the demands of the job market, which in turn expands available opportunities. Hence, a widespread lack of these skills among many individuals contributes to higher unemployment rates.

Personal decisions

Some individuals may dismiss the idea of staying in a single job for an extended period, preferring instead to seek new experiences, acquire additional skills, or achieve better financial conditions. This leads them to leave their current roles and search for new positions, which can momentarily raise unemployment rates. However, this period of unemployment is usually brief, as individuals can often secure new jobs relatively quickly due to their prior experience and skills.

Confronting the unemployment issue: possible solutions

Addressing unemployment necessitates collaboration between authorities and individuals to devise solutions, including:

New projects

Owners of capital and entrepreneurs should focus on launching projects that meet local demand, thereby creating new employment opportunities, as every new venture inevitably requires hiring employees.

Production technology

This entails adopting production methods aligned with the country's needs and resources, in addition to shifting from capital-intensive enterprises to those demanding a larger labour force.

Vocational education

Another solution is to prioritise vocational education alongside academic education, equipping individuals with the skills needed to pursue employment opportunities across diverse fields.

Job market monitoring

Monitoring involves pinpointing job market gaps and shortages in skilled labour or specific technological fields. It also includes offering innovative solutions like tailored training programmes for the unemployed and fostering entrepreneurship in regions facing labour shortages.

Population increase control

Given its potential to contribute to unemployment, it is crucial to manage population growth and encourage family planning. This approach will help align job opportunities with the country's population size.

Accepting jobs

This underscores the importance of seizing opportunities that might initially seem below one’s aspirations. Early in a career, such positions can be essential for advancing toward long-term professional objectives. They offer valuable chances to develop new skills, gain experience, and build a robust reputation in the job market.

Volunteer work

Engaging in volunteer work offers valuable experience and fosters the development of a diverse skill set, thereby broadening career opportunities in the job market.

Skill development

Ongoing skill development and remaining informed about job market trends are vital for professional growth. These efforts not only facilitate success in a dynamic work environment but also significantly enhance job prospects.

The United Arab Emirates’ efforts in combating unemployment

As part of its development efforts, the United Arab Emirates (UAE) is committed to expanding employment opportunities and fostering a robust job market. It has devised a strategic plan to enhance the Emiratisation programme, engaging multiple sectors and institutions. Several initiatives have been initiated to reduce unemployment rates to their lowest levels, including 'Absher'.

In collaboration with UAE governmental entities, this initiative aims to increase Emirati citizens' engagement in the job market and improve their employment access, thereby strengthening the nation's economic competitiveness. This is achieved through the implementation of training and development programmes designed to create job opportunities for Emiratis. 

In this context, Her Excellency Noura Al Marzouqi, Assistant Undersecretary for Policy and Strategy at the Ministry of Human Resources and Emiratisation, stated: “We have set our sights on upskilling and empowering Emirati talent so they can join the labour market efficiently, while providing job opportunities that enable them to employ their expertise across priority sectors that bolster the future economy.”

References 

[1] wallstreetmojo.com, Unemployment
[2] testbook.com, What is Unemployment? – Know Definition, Types, Causes & Measurement of Unemployment
[3] thebalancemoney.com, 7 Causes of Unemployment
[4] aicontentfy.com, Combating Unemployment through the Power of Entrepreneurship
[5] byjusexamprep.com, Explain the Measures to Solve Unemployment Problems