Introduction
Unemployment is one of the main problems facing many economies in many parts of the world. Unemployment has affected many countries in the Middle East region. Saudi Arabia is one of the places where the level of unemployment has reached devastating levels.
This is as a result of over reliance on oil as the main activity in the economy. However, this problem can be solved by increasing the number of SMEs in the region in order to create employment opportunities for Saudis.
The main objective of this study is to examine the role of SMEs in creating job opportunities at Saudi Arabia economy. The findings of this study will be of great importance in making appropriate policies to suppress unemployment in the country. This study will therefore be necessary in promoting the efforts to bring about economic stability.
Background of the Study
Over the recent past, the economy of Saudi Arabia has been going through a difficult time. As already noted, one of the main problems in the economy is unemployment. The number of unemployed individuals has been increasing with time. The problem is even made worse by the relation that exists between employment and inflation. The two problems are usually difficult to manage since correcting one leads to worsening of the other.
In order to overcome the problem of unemployment, it will therefore be necessary to come up with the appropriate measures to generate job opportunities.
One of the main ways through which this can be done is through SMEs. In Saudi Arabia, SMEs plays a major role in creating job opportunities in the country. Most of the SMEs do not require very large amounts of starting capital. As a result, they have helped in suppressing the problem in the economy.
This study seeks to investigate the role of SMEs in creating jobs in Saudi Arabia. This study will help in understanding how the problem of unemployment can be solved through the SMEs. Therefore, this study will be useful in guiding various policies concerning the economy.
According to Nicola (2009), SMEs are becoming increasingly important to the Middle East economies. For instance, they are playing a pivotal role in promoting diversification of economies while creating job opportunities at the same time. SMEs are important in promoting stability in an economy.
The SMEs has also become an important part of the private sector development in the emerging markets in Middle East and the major components of most economies in the region. For instance, they have been contributing up to between 45 and 67 per cent of the GDP (Ramady 2010). This implies that SMEs are important in determining the stability of any economy.
Over the past years, Saudi Arabia has been relying on Hydrocarbon sector as the main economic activity. The economy relied heavily on oil where it contributed to over 80 per cent of the government revenue (Nicola 2009). This has posed a major risk in the country especially due to the fluctuating oil prices.
As a result, the government has recognized the need for diversification in order to suppress these risks. One of the ways through which this has been achieved is by boosting and developing SMEs in order to achieve a diversified economy.
Objectives
The main objective of this study is to understand the major roles of the SMEs in generating employment in Saudi Arabia. This understanding will be of great importance in revealing the best ways through which the level of unemployment can be lowered in the country.
Another objective of this study is to give policy recommendations. This will be based on the findings of the study. These recommendations will be of great significance to the policy makers in making appropriate decisions in the effort to solve the issue of unemployment in the country.
It will require a critical understanding of the problem at hand in order to understand the issue of unemployment. The recommendations proposed will be of great significance in solving the problem of unemployment in the country.
Literature Review
The issue of unemployment has been discussed by several people over the past. Many people have conducted research in an attempt to solve the problem in the economy. There has been intensive research that has been conducted in an effort to solve the problem in the economy.
SMEs play a significant role in lowering the level of unemployment in every economy. SMEs accounts between 60 to 70 per cent of the majority of OECD countries (Nicola 2009).
Most of the countries which have recorded good performance in their employment rates have been using SMEs to generate employment. For instance, SMEs accounts for a disproportionately large share of new jobs in the United States and Netherlands.
As small firm mature with time, the need for human resource and innovation increases significantly (Radwan & Speechley 2011). For instance, since small business usually expands fast, they will be required to employ more people in order to accommodate its increasing capacity.
This contributes in generating employment. Similarly, the need for an organization to innovate increases, an organization will need to attract unique skills from the work force. As a result, it will need to absorb more employees in order to meet their goals. As a result, the company will generate employment.
According to Ba-isa (2011), the growth of SMEs has significantly contributed in creating more jobs especially the youths in Saudi Arabia. Most of the business in the kingdom is composed of SMEs. For instance, it is noted that SMEs contributed between 80 and 90 per cent of the employment opportunities for the Saudis (Ba-isa 2011).
This presents a relatively higher fraction compared with the United States where SMEs contributes to about 65 per cent of the total employment in the country. This reveals the importance of SMEs in solving the problem of unemployment in Saudi Arabia.
In the Middle East, most SMEs are mostly in the services sector (Harvie and Lee 2002). Most of the job opportunities are from the trading and services sectors because they are usually labor intensive. They therefore generate more job opportunities especially for the youth. This has helped in reducing the rates of unemployment in the society.
By recognizing the importance of SMEs in generating employment in the country, the government has put up strategies to promote growth of this sector in order to provide employment opportunities for the youth. In connection to this, the government have guaranteed up to 80 percent of the loans provided by the local banks (Ba-isa 2011).
All these efforts are directed towards boosting the SMEs in the country in order to solve the problem of unemployment in the country. The Saudi Arabia government have also emphasized on clear identification of those SMEs that will generate employment so as to avoid misuse of the funds purposely aimed at generating employment.
Research Methodology and Research Methods
In this study, the data collected will be both qualitative. The data will be collected using structured questionnaires. These will be sent to the respondents who will be required to fill the questionnaires and then send them back. The subjects of the study will come from various SMEs from the country and various government leaders involved in policy making.
The people will be helpful in provision of the necessary information which will help in understanding whether and how SMEs has contributed in creating employment. The government officials will also be significant in providing the necessary information in this study. This group will be important in provision of the necessary information in understanding the issue at hand.
In this study, both primary as well as the secondary sources will be collected. This will include visiting the SMEs and interrogating the leaders and collecting useful statistics on employment. The information given by the respondents will then be recoded. This process will be very important as it gives an opportunity to get first hand information. It will also be important in enhancing the reliability of the data collected first hand.
Important information will also be retrieved from the official documents containing various economic statistics including employment. This data will be of great significant in understanding the issue at hand. As already noted, structured questionnaires will be useful in collection of the necessary data.
This method of data collection will be very helpful especially in collecting qualitative data from the selected sample from the population. However, this will be done with a lot care to avoid any negative feedback.
Since the respondents will be required to fill the questionnaires without interviews, the questions will be structured clearly in such a way that the respondents does not get hard time in filling the questionnaires.
There are several methods which will be applied in data analysis. This analysis will include a precise documentation of the field data. In this case, the researcher will collect data from various sources. Then this data will be compiled and then compared. It is therefore advisable to ensure that the data collected is precise.
The data collected from interviews and various government publications will also be examined at this stage. In this process, certain patterns will be identified as well as connections and similarities. This analysis will also identify any deviation from what is expected. In this case, the interviewer will be in a position to understand the contribution of the SMEs in creating employment in Saudi Arabia.
Problems or Opportunities
This study is very important in clomping up with appropriate policy recommendations in the economy. For instance, it will lead to a better understanding of the issue of unemployment and how this can be solved through SMEs.
Therefore, there is a great opportunity for the policy makers as the opportunity provides them with adequate information that will assist them in coming up with best policies in eliminating unemployment in an economy.
In conducting this study, there are several problems that the researcher is likely to0 face. For instance, the secondary data which plays a significant role in this study may not be found in the correct form. This is because it was not collected for the purpose of the issue at hand. Therefore, kit will require a critical analysis and comparison in order to collect useful information in this case.
As already noted, the questionnaire will be sent to the respondents who are expected to fill and then send the questionnaires back. The respondents may give false information. For instance, leaders in a certain SMEs may be tempted to give false information on employment statistics. In such a case, there are high risks of coming up with wrong conclusions. In other words, the study will be biased.
Despite of these problems associated with this study, there are several opportunities. For instance, the secondary data on employment is readily available in government publications. It is easy to find the data for different past years. This data will be useful in analyzing the trend over the time.
Limitations in the Work
Although this study provides vital information in solving the issue of unemployment in Saudi Arabia, the study has not investigated the reasons for poor performance of SMEs in Saudi Arabia.
There is therefore a need to have further study on this area in order to come up with the recommendations through which the performance of SMEs can be improved in Saudi Arabia. This will also provide important information on how to develop more SMEs in order to generate more and more jobs in the region.
A timescale / Gantt chart
This study will take about nine weeks. The main activities will be distributed as shown below.
Reference List
Ba-isa, M. 2011. Growth of SMEs is Essential to Create More Job Opportunities for Saudi Youth Web.
Harvie, C. and Lee, B. 2002. The role of SMEs in National Economies in East Asia. UK: Edward Elgar Publishing.
Nicola, M. 2009. Middle East – The Rising Importance of SMEs. Special Report (Standard Chartered Bank, Dubai), Mary Nicola, +971 4508 3627
Radwan, H. and Speechley, T. 2011. SME Sector: Vital Source of Economic Stability Web.
Ramady, M. 2010. The Saudi Arabian Economy: Policies, Achievements, and Challenges. London, Springer.