Mudharabah: Solution to Unemployment

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Mudharabah : Islamic Solution to Unemployment Crisis

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Islamic Solution to the Unemployment Crisis
Ezry Fahmy Bin Eddy Yusof International Islamic University of Malaysia (IIUM)

Economics in the Qur’an and the Sunnah

Mudharabah : Islamic Solution to Unemployment Crisis

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1.0 INTRODUCTION
The whole world is now in the grip of a financial crisis which is far more serious than any experienced since the Great Depression. It has taken more than $3 trillion of bailout and liquidity injections by a number of industrial countries to abate somewhat the intensity of the crisis. Nevertheless, there are fears that this crisis may have exposed the world economy to a long period of economic slowdown. There is, hence, a call for a new architecture that would help minimise the frequency and severity of such crises in the future.

As the scholars in Islamic economics mostly sees from the macro perspective, from this assignment we will look it from a micro perspective where we chose unemployment that has increase tremendously as the topic of discussion. We choose some of the latest news in the unemployment matters that reported by the Economist magazine to be our literature review.

Later we will propose some solution to overcome the problem that faced by the global because of the current crisis. We believe that the financial crisis has widened the global appeal of Islamic finance and therefore the opportunity must be use wisely. It may sound idealistic, but we believe that fourty years ago no one haven’t thought that Islamic financial system could become such phenomenon like nowadays. We also believe that based on a proper understanding of the Maqasid Al-Shariah (Shariah objectives) is needed to be included in Islamic finance practically in order to achive justice in the society.

Thus, this paper is made as suggestions to the current crisis that sooner or later will affect the Malaysia economy. The suggestions will focus directly to the institutions or organizations that we feel have a potential in strengthening our ideas. We hope through Islamic financial system the investment organisations are committed to enhance the economic wealth of the community in particular and contribute towards the growth and prosperity of the nation for the benefit of Malaysians.

Economics in the Qur’an and the Sunnah

Mudharabah : Islamic Solution to Unemployment Crisis

3

2.0 ARTICLE REVIEW
It seems that the economic downturn has hit the employment sector so hard especially the one in U.S. According to Kelly Evans and Kris Maher, the employment rate in U.S has climbed up to 7.2% and brought the total number of job lost last year to just 2.5 million, the worst since 1945. The latest update by CNN shows that by February, the rate is still increasing up to 76%, a 1% higher than what the economist has been expected. It is recorded that January’s job loss of 540000 jobs was worse than expected. However, this alarming percentage of unemployment is the beginning. Sung Won Sohn, economics professor at Cal State University-Channel Islands has forecast that by the end of the year, the rate of unemployment will rise up to 9% while monthly job losses will climb to 800 000 soon.

According

to

Economist’s,

an

economic

collapse on this scale is bound to hit jobs hard. In the latest quarterly survey Manpower, an employmentservices firm, finds that in 23 of the 33 countries it covers, companies’ hiring intentions are the weakest on record (see chart 1). Because changes in unemployment lag behind those in output, jobless rates would rise further even if economies stopped contracting today. But there is little hope of that. And several features of this recession look especially harmful.

Furthermore, output has shrunk even faster in countries dependent on exports (such as Germany, Japan and several emerging Asian economies) or foreign finance (notably central and eastern Europe). The IMF said this week that global output...
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