In Ethiopia, urban unemployment is one of the challenges of urban population including Dire Dawa City where significant number of population is suffering from. According to the CSA (2018) employment- unemployment statistical survey report, the urban unemployment rate in Dire Dawa city is 25.3 percent. The unemployment rate among females is higher than males which accounts 33.5 percent and 17.6 percent respectively. The study has the major objective assessing the urban unemployment in Dire Dawa City. Data was basically drawn from secondary sources. It employed the annual statistical report of urban employment- unemployment survey (2018) by Ethiopian Central Statistics Agency. The study reveals that the rate of urban unemployment in Dire Dawa city is the highest in Ethiopia and far from the national unemployment rate which 19.0 percent. The survey report was supported with interview of individuals working in Dire Dawa economic bureau to triangulate the collected data. The unemployed population wants to work any available job to relief from their family assistance and support themselves and their families. Surprisingly, more than one third of unemployed population want to establish their own business, though still they did not do because of different constraints mainly shortage of finance, lack of training and finance and lack of place of working. Besides, the illiterate and trained urban population is more unemployed than that of the illiterate one which implies education doesn’t guarantee for employment. The study also focused on the challenges of this high rate urban unemployment on urban governance. Accordingly, the urban unemployment has challenges in many aspects including but not limited develops anti-social behaviors, tension and conflict, creation of Hoodlums in the city, etc. These factors have a direct effect on the implementation of urban governance in Dire Dawa City as it is a challenge for coordinating the various actors in the city (government, private sector and community). In order to solve these problems, the government should create suitable working environments for those who want to establish their own business including provision of financial credit without any collateral, working place and continuous training on entrepreneurship concepts with the collaboration of nearby higher institutions. In addition, the Dire Dawa City should consider this problem and take a serious measure to minimize the unemployed population and should focus on labour-intensive investments that can employ huge man-power at a time. Finally, these persistent unemployment is not only affected the individual life but its effect is a major challenge to the urban governance in terms of increasing the anti-social behaviors, tension and conflicts, etc.
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