CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Unemployment is defined according to Oxford Advance Dictionary as the fact of number of people without a job. Harold Goldstein (2008) defined unemployment as enforced idleness of wage earners who are able and willing to work but cannot find jobs. In societies in which most people can earn a living only by working for others, being unable to find a job is a serious problem. Because of its human costs in deprivation and a feeling of rejection and personal failure, the extent of unemployment is widely used as a measure of workers’ welfare. The proportion of workers unemployed also shows how well a nation’s human resources are used and serves as an index of economic activity. Unemployment is a global phenomenon in this 21st century. For example the rate of unemployment in Belgium stood at 8.7% (statistics institute of Belgium, 2010).United Arab Emirate rise to 12.7% (Emirate business April, 2008). United State of America is 9.8% (oice of national statistic US November, 2010). The rates of unemployment in Africa are listed below: – Ø South Africa 25.3% (statistic South Africa, 2010) Ø Nigeria 19.7% (National Bureau for statistic federal Republic of Nigeria 2009, September)
Economists have described the causes of unemployment as frictional, seasonal, structural, and cyclical. Frictional unemployment arises because workers seeking jobs do not find them immediately; while looking for work they are counted as unemployed. Friction in this case refers to the incongruity between the demand for and supply of labor. Seasonal unemployment occurs when industries have a slow season, such as construction and other outdoor work in winter. It also occurs at the end of the school year in June, when large numbers of students and graduates look for work. At its seasonal high point (January and February), Structural unemployment arises from an imbalance between the kinds of workers wanted by employers and the kinds of workers looking for jobs. The imbalances may be caused by inadequacy in skills, location, or personal characteristics. Technological developments, for example, necessitate new skills in many industries, leaving those workers who have outdated skills without a job. Cyclical unemployment results from a general lack of demand for labor. When the business cycle turns downward, demand for goods and services drops; consequently, workers are laid o. In the 19th century, the U.S. experienced depressions roughly every 20 years. However, several effort have been made to tackle unemployment globally through fund from international economic organization (like World Bank, International monetary fund, European Economic Community), Government, corporate organization, non Governmental parastatal and individual.
Attentions are driven toward creating job rather than seeking for job. Ogunleye G.A.(2004) says in the face of severe unemployment experienced by a country as Nigeria, small and medium scale is usually the way out. The experience of some developed countries like United States of America and China that SME has contributed to the growth and development of these economies, especially in terms of employment, contribution to GDP, export, etc. it is as a result of these that U.S.A currently has a small business sector that has about 22 million small sector generating more than a half of the country’s GDP, employing about 53% of the total private workforce, and is responsible for creation of all new jobs. Also in china, the number of township enterprises (as SME are called ) increase from 1.52 million in 1978 to 19 million in 1991.During this period, their employees increased from 28 million to 96 million. The same is true of rural Middle East and Asian.
