process. As per the latest report presented by the Ministry of
Labour, the unemployment in Bahrain was 3.7% in 2017,
previously it was 4.0% in 2016, which shows the reduction
in unemployment rate, which may be due to government
policies (Alrayes and Abu Wadi 2018).
While in 2006, Bahrain’s government has established
Tamkeen, as essential microenterprises development tool.
This semi-government body focuses on encouraging the
formation of new SMEs and providing support to existing
ones, in order to strengthen the SMEs sector. It has spent
around BD 51 m ($120 m) in guarantee payments and
profits, so the SMEs factor can grow. After the success of
Tamkeen, the government initiated the enterprise support
program, to offer experience building through foreign
placements of employees, to get international exposure
(Oxford Business Group 2018).
The purpose of this paper is to provide an overview of the
microenterprises sector of Bahrain, along with its role in
eliminating unemployment. This paper also contributes to
build up nascent research study and literature on Bahraini
SMEs.
2 Research Methodology
This paper is mostly based on secondary data; including
reviewing literature systematically, organized into three
stages including planning, executing, and reporting. Published literature from indexed journals was selected to
evaluate concepts, such as unemployment, microenterprises,
role of microenterprises in alleviating unemployment, and
challenges faced by microenterprises in Bahrain. Ten to 18
papers were reviewed and keeping in view recent published
literature. The search was conducted on the renowned scientific paper database including Google Scholar, which is
properly cited and referenced.
3 Literature Review
Unemployment is not a severe problem in Bahrain because
research data revealed that the unemployment rate in the
underlying country in May and June 2012 was 4.5% and
4.8%, respectively, but it has reduced in December 2012 to
3.9% (International Labor Organization 2017).
Unemployment is a technical term to describe. Several
times it is simply thought to be lack of job vacancy whereas
there are people who have an ability to work and are still not
counted as unemployed such as students in secondary and
tertiary phases. The International Labor Organization categorizes Unemployed persons aging from 16 to 59 years of
age without work, actively seeking employment, and these
unemployed persons have taken specific steps to search for
paid work (Juwei 2003).
Microenterprises or Small and Medium Enterprises
(SMEs) play an important role in most of the economies of
the world, particularly in developing economies. As per
report issued by World Bank in 2017, SMEs contribute
around 60% of total employment and 40% of total national
Income (GDP) in most of the emerging economies. The
figures are higher, after including the informal SMEs. Also,
as per its estimation, almost 600 million jobs will be required
to cater the upcoming global workforce, which requires
further development of the SME sector (World Bank 2017).
A study was conducted by the Organization for Economic
Cooperation and Development (OECD) on the importance
of microenterprises’ role in alleviating unemployment. It
describes that microenterprises are the predominant form of
enterprise, which provides main source of employment—
almost 70% average—and also are major contributors in
value creation (OECD 2017). In emerging economies like
Bahrain, SMEs can contribute up to 45% of total employment and 33% of GDP.
A study by the Edinburgh Group, also explored the role
of micro or small enterprises in economic growth. According
to it, SMEs play a significant role in world economy and
contribute a major portion of income, output, and employment. However, some recent global financial crisis created
tough climate for SMEs, but it is now improving with time
(Edinburgh Group 2018).
According to Cravey et al. micro and small-scale enterprises play an important role in boosting economic growth
and generating job opportunities. He discovered that
microeconomic setups sustain well in changing economic
environment. They are flexible about adjusting to change
since it is easier to introduce a reform and manage it in a
small setting. Small-scale enterprises also promote regional
development and help in the export market expansion (Alia
2014).
The definition of micro and small enterprises varies significantly across different regions of the world. What may be
considered a microenterprise in developed countries may
actually be classified as a small enterprise in developing
countries. This variation is mainly due to the amount of the
workforce deployed and the capital invested, plus the level
of technological sophistication is diverse in different
countries.
The Bolton Committee designed a definition encompassing economic and statistical aspects and it defines micro
and small enterprises as an independent company, which has
a small fraction of market share and is run by the owner
themselves, lacking a proper organizational structure and
management. Size, input to GDP, job opportunities, exports,
and overall contribution to the economy are all considered,
36
H. Alawsi
Labour, the unemployment in Bahrain was 3.7% in 2017,
previously it was 4.0% in 2016, which shows the reduction
in unemployment rate, which may be due to government
policies (Alrayes and Abu Wadi 2018).
While in 2006, Bahrain’s government has established
Tamkeen, as essential microenterprises development tool.
This semi-government body focuses on encouraging the
formation of new SMEs and providing support to existing
ones, in order to strengthen the SMEs sector. It has spent
around BD 51 m ($120 m) in guarantee payments and
profits, so the SMEs factor can grow. After the success of
Tamkeen, the government initiated the enterprise support
program, to offer experience building through foreign
placements of employees, to get international exposure
(Oxford Business Group 2018).
The purpose of this paper is to provide an overview of the
microenterprises sector of Bahrain, along with its role in
eliminating unemployment. This paper also contributes to
build up nascent research study and literature on Bahraini
SMEs.
2 Research Methodology
This paper is mostly based on secondary data; including
reviewing literature systematically, organized into three
stages including planning, executing, and reporting. Published literature from indexed journals was selected to
evaluate concepts, such as unemployment, microenterprises,
role of microenterprises in alleviating unemployment, and
challenges faced by microenterprises in Bahrain. Ten to 18
papers were reviewed and keeping in view recent published
literature. The search was conducted on the renowned scientific paper database including Google Scholar, which is
properly cited and referenced.
3 Literature Review
Unemployment is not a severe problem in Bahrain because
research data revealed that the unemployment rate in the
underlying country in May and June 2012 was 4.5% and
4.8%, respectively, but it has reduced in December 2012 to
3.9% (International Labor Organization 2017).
Unemployment is a technical term to describe. Several
times it is simply thought to be lack of job vacancy whereas
there are people who have an ability to work and are still not
counted as unemployed such as students in secondary and
tertiary phases. The International Labor Organization categorizes Unemployed persons aging from 16 to 59 years of
age without work, actively seeking employment, and these
unemployed persons have taken specific steps to search for
paid work (Juwei 2003).
Microenterprises or Small and Medium Enterprises
(SMEs) play an important role in most of the economies of
the world, particularly in developing economies. As per
report issued by World Bank in 2017, SMEs contribute
around 60% of total employment and 40% of total national
Income (GDP) in most of the emerging economies. The
figures are higher, after including the informal SMEs. Also,
as per its estimation, almost 600 million jobs will be required
to cater the upcoming global workforce, which requires
further development of the SME sector (World Bank 2017).
A study was conducted by the Organization for Economic
Cooperation and Development (OECD) on the importance
of microenterprises’ role in alleviating unemployment. It
describes that microenterprises are the predominant form of
enterprise, which provides main source of employment—
almost 70% average—and also are major contributors in
value creation (OECD 2017). In emerging economies like
Bahrain, SMEs can contribute up to 45% of total employment and 33% of GDP.
A study by the Edinburgh Group, also explored the role
of micro or small enterprises in economic growth. According
to it, SMEs play a significant role in world economy and
contribute a major portion of income, output, and employment. However, some recent global financial crisis created
tough climate for SMEs, but it is now improving with time
(Edinburgh Group 2018).
According to Cravey et al. micro and small-scale enterprises play an important role in boosting economic growth
and generating job opportunities. He discovered that
microeconomic setups sustain well in changing economic
environment. They are flexible about adjusting to change
since it is easier to introduce a reform and manage it in a
small setting. Small-scale enterprises also promote regional
development and help in the export market expansion (Alia
2014).
The definition of micro and small enterprises varies significantly across different regions of the world. What may be
considered a microenterprise in developed countries may
actually be classified as a small enterprise in developing
countries. This variation is mainly due to the amount of the
workforce deployed and the capital invested, plus the level
of technological sophistication is diverse in different
countries.
The Bolton Committee designed a definition encompassing economic and statistical aspects and it defines micro
and small enterprises as an independent company, which has
a small fraction of market share and is run by the owner
themselves, lacking a proper organizational structure and
management. Size, input to GDP, job opportunities, exports,
and overall contribution to the economy are all considered,
36
H. Alawsi