Unemployment is defined when an person is actively seeking the for the occupation but is unable to happen the work ( Solow, 1980 ) . This paper attempts to research assorted unemployment theories and so happen the best suited theory to use to the UAE economic system. Advantages and disadvantages of the chosen theory will besides be discussed in the paper. Recommendations will be provided to cut down the unemployment in the UAE. The paper is organized as follows: following subdivision defines and discusses five unemployment theories, while the best suitable theory/theories will be discussed in the 3rd subdivision. The 4th subdivision will be composed of the schemes to be employed to cut down unemployment in the UAE. Recommendation and decision will be provided in the last subdivision.

Unemployment theories:

Since the great recession in December 2007, many states whether developed or development has experienced a high rate of unemployment. There are different types of unemployment. In this subdivision, following five types of unemployment are discussed with mention to the empirical grounds.

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Frictional unemployment:

A shift or passage between the occupations is called as a frictional employment. The passage between the occupation can be for many grounds which include: looking for a better-paid occupation, migration from one province to another, from portion clip to full clip employment or the frailty versa. If a individual who seeks a occupation, gets harmonizing to his demand or desires within a hebdomad will non be counted as a frictional unemployment, but this is non possible in a existent life state of affairs. Monetary and financial policy can besides non convey the frictional unemployment down without seting an excess inflationary force per unit area on the economic system ( Bruce and Marshal, 1976 ) .

Structural unemployment

A mismatch between the sort of the occupation and the handiness of the accomplishment causes a structural unemployment in a state ( Peter, 1969 ) . It is the instance with most of the states that employers do non happen the needed accomplishment and the labour does non happen the needed or an interested occupation ( Peter, 1969 ) . So, the workers do non take the occupations which are non extremely paid or for which they do non hold an involvement, which increases the unemployment in the state. On the other manus, companies besides do non engage persons who do non possess the right accomplishments and needed expertness, so a structural unemployment takes topographic point.

Technological unemployment

Boinovasky and Trautwein ( 2010 ) discussed the technological unemployment in their research paper and focused on the Schemputer ‘s authorship on unemployment from 1908 to 1954. Shumpter ( 1926, 1928, and 1931 ) . Schumpeter concluded that all frictional, structural, and cyclical unemployed can be summed into one unemployment type which we may name as a technological unemployment. Harmonizing to Neiser ( 1942 ) a technological unemployment is the stepchild of economic scientific discipline and hence can non be avoided.

Regional unemployment

Unemployment due to the regional differences is called a regional unemployment. Therefore, a structural unemployment occurs in the local or regional country it is called regional unemployment. For illustration, an unemployment in the New York alternatively of the USA is known as a regional unemployment.

Seasonal unemployment

Unemployment due to seasonal alterations is called seasonal unemployment. Many persons get unemployed in utmost hot season in UAE and in utmost winter in the UK.

Best unemployment theories for UAE ( 200 )

Chart 1: UAE unemployment rate Historical Data Chart

The unemployment in the UAE is presented in the chart 1. United Arab Emirates faced an addition in the unemployment Rate from 4.3 in 2010 to 4.6 in 2011 ( Central Bank of UAE, 2011 ) . Since 1985 boulder clay 2011, a high unemployment rate was observed in 2011, which was 4.6. Ann unemployment has increased well over the last six old ages and it jumped from 2.17 % in 2007 to 4.6 % in January 2012. The definition of fan unemployment in the UAE is the same as in other states ; a individual looking actively for the occupation but unable to happen the work is called an unemployment.

Technological unemployment best identifies the UAE economic system. The major grounds behind an addition in the technological unemployment in the UAE are listed below:

Addition in the population which is unskilled or non technologically advanced.

Technological promotion has substituted human with machines and capital.

An addition in the migrators from other states in the UAE has increased the competition. So there is an addition in the technological unemployment.

Few other causes have been identified in the study TANMIA ( 2011 ) , which is presented in the chart 2 below.

Beginning: TANMIA, 2011

How to cut down unemployment in the UAE


To use the occupants and citizens of the state in a meaningful and efficient manner by the authorities is called an emiratisation. This is a really active plan in the UAE. It fundamentally promotes the state ‘s human resource in an optimum mode to acquire employed and promote the multinationals to trust on the states ‘ ain human resource.


Below is the list of advantages of the Emiratisation:

It adds to the growing and sustainability of the companies and makers when they have to trust to a great extent on the local occupants of the state.

The UAE civilization will be promoted and spread.

It supports and contributes to the growing and acquisition of the UAE subjects for the improvement and benefits of the human capital development.

Disadvantages of Emiratization

The major disadvantage of the Emiratization is the forced trust on the employment of the UAE subjects. The private sector is still dawdling behind the public sector and the UAE national are non willing to work in the private sector.

Decision and Recommendation

The study presents an overview of different unemployment theories with mention to the academic literature. The major theories discussed in this study include structural, regional, seasonal, frictional, and the technological unemployment. The analysis of these theories reveals that UAE is largely suffered without the technological unemployment. As, the state is one of the freest economic system in the universe with the lowest revenue enhancement rates, so it is the centre of all large multinationals to set-up their workss in the UAE. After holding installed their workss and machinery, now their employers seek for extremely proficient and skilled employee.

To get the better of the unemployment in the UAE, the authorities will hold to take the undermentioned actions:

It should originate active and effectual labour market plans which should aim at least 5000 occupation searchers per annum to take down the unemployment in the part.

Khalifa fund should be established for amortisation authorization, which will heighten the domestic labour force demand.

Government should concentrate on the foreign labour policy to curtail the occupations for them and better an employment rate for the UAE subjects. Government should besides better the engagement rate in the private sector which will assist take down the unemployment rate due to technological promotion.