UNEMPLOYMENT: Time Bomb Blocking Way of Economic Reforms [Archives:2001/51/Business & Economy]

December 17 2001


Mahyoub Al-Kamali
For the last ten years, economic and social problems resulted from the increasing volume of unemployment, have been preoccupying authorities concerned with finding solutions to this issue.
The main important point has been how to tackle this problem properly, not only by the government but by the private sector, as well. The private sector should be urged upon to provide work opportunities for the unemployed.
Although several donor countries have been supporting the Economic Reforms Program, as well as the implementation of huge enterprises, recent studies indicate the spread of unemployment among university and vocational training graduates. According to the same studies the rate of unemployment has reached 35 percent out of the total labor force, owing to shortage of work opportunities in both the public and private sectors.
The several stages that have been carried out by the government to implement the Economic, Administrative and Financial Reforms Program have greatly helped reduce Yemens external debts. However, Yemen has been unable to increase its non-oil exports due to weakness of industrial and agricultural production. This has affected the general budget in the sense that decreasing its deficit has become bounded by the increase of oil prices in the international markets.
Economists believe that the economic policies adopted by the government have had consequences owing to the rapid growth of population, resulting in an economic crisis and reduction of the general capacity of labor market. Similarly, the percentage of the female working force fell down to 20 percent of the overall working force.
The official statistics point out that the highest rate of the working force ranges between the age of 15-65 which constitutes 65 percent of the overall working force.
Although statistics give conflicting rates of unemployment, official sources confirm that it ranges between 25-35 percent and that employment is increasing by an annual average of 4.9 percent.
The crux of the problem does not lie in estimating the volume of unemployment, but rather in its spread among the graduates of local and foreign universities and vocational training institutes whose number is 75 percent more than the available work opportunities.
In a survey among youths, particularly those looking for job opportunities, they agreed that rationing government post and the governments negligence of university graduates had helped worsen the problem of unemployment.
Economic studies attribute aggravation of unemployment to the following factors:
1- The fragile structure of economy that does not improve income and production resources and does not allow a greater margin for labor force.
2- The government’s carelessness about the agricultural sector which can be improved to provide jobs for a third of the jobless people.
Studies point out that the agricultural sector can cover 52,9 percent of the overall working force. The transportation, industrial, commercial, constructive, tourism and service sectors can cover about 47,1 percent.
3- Decreasing governmental investment in development projects.
4- Rapid population growth.
The high increase in population has greatly affected the natural and industrial resources. Demographic studies indicate that population growth rate has reached 3.7 which is one of the highest rates in the world.
5- Increasing number of universities and their graduates. Economists believe that graduates specialization is not flexible to meet the demands of the labor market.
As to solve this problem, economists think the government has to conduct field surveys on the impacts of its Reform Program. Some solutions to unemployment are listed billow:
1- Augmenting financial credits for developmental projects which should be implemented according to peoples concentration.
2- Encouraging the agricultural sector and providing loans for farmers with the aim of diversifying their agricultural production and increasing agricultural exports
3- Motivating the private sector to contribute in investment.
4- Updating the system of the government posts and controlling education to meet the needs and demands of the labor market.
5- Increasing loans to poor productive families and budgets of social care funds.
Economistsconfirm that such procedures can help the government avoid further aggravation of the problem which is considered to be a time bomb blocking the way of the Economic Reform Program.