Unemployment in Pakistan

Unemployment in Pakistan

Assignment of International Economics

Submitted By: Manzoor Ahmed Memon

Subitted to: Sir, Javed Rasool

Class: BBA-VI (B)

Sukkur Institute of Business Administration


TABLE OF CONTENTS

Topics Page #

Definition…………………………………………………….3

Types of Unemployment……………………………………3-4

Unemployment in Pakistan…………………………………..4

Role of Government…………………………………………………..5

Effects of Unemployment……………………………………………5-7

Reasons of Unemployment in Pakistan………………………………7-8

Solutions of Unemployment in Pakistan……………………………..8

Advantages and Disadvantages of Unemployment in Pakistan…….8-9

Conclusion…………………………………………………………..9

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Unemployment in PakistanDefination: Unemployment is a condition when the citizen of a country actively seeking for job also able for a job and can’t find any job.

Now a day’s Pakistan is suffering from many problems, Unemployment is one of them, because of this People are victim of poverty and dying, The current example of this is THAR, where hundreds of childs die because of inadequate food, this is because Poverty, and poverty is because of Unemployment, People are unemployed so they can’t fulfill even their basic needs.

Let’s talk about the types of unemployment.

Types of Unemployment.

There can be so many types of unemployment; some of types are given below.

I. Cyclical UnemploymentUnemployment that is created because, there is not enough aggregate demand for the labor.Labor Demand < Labor SupplyThis happened because the consumption decrease so production needs to be lower that’s why companies or industries require less labor, and ther remaining will be unemployed.

II. Frictional UnemploymentWhen a worker shift from one job to another, the time that he invest in finding new job and remain unemployed is said to be Frictional unemployment. So this is a temporary unemployment.Frictional unemployment is created because both jobs can be heterogeneous and worker’s skills can be mismatched with the new job, so that unemployment is called Frictional unemployment.

III. Technological UnemploymentTechnological unemployment is caused when workers are replaced by machine or any other advanced technology.It is because for manual work industries need more workers but when they use technology or any machine so they only use the worker who has to operate that machine only, remaining workers will be unemployed.

IV. Seasonal UnemploymentThere are certain industries for those the demand for their product is seasonal, or their production is seasonal.So workers are employed in one season and unemployed in other season.

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People who are suffering from unemployment no matter which type of unemployment is that, because the main point is that he is unemployed and in trouble.

Unemployment rate

Unemployment rate tells us about the ration of unemployed workers to the total Labor force.

Unemployment rate = (unemployed workers/ Total labor Force) * 100


We have discussed generally that what is Unemployment and what are the different types of unemployment now let’s talk about the Unemployment in Pakistan, and what are the causes and solutions of unemployment in Pakistan, also we look at what are the economical and social impacts of unemployment.

If we talk about Pakistan so the labor force in Pakistan includes the entire persons above ten years, according to Labor force survey of Pakistan in two different time, first in 1994-95 other was in 1996-97, unemployment increased in first research they came to know that unemployment rate was 5.4%, but in later research conducted with the difference of two years unemployment rate increased to 6.1%, it is also seen in current decade that unemployment is increasing with high rate, according to 2012 survey, unemployment rate in Pakistan is 6.5%.

If we talk about the division of population living in Rural areas and urban areas, so the unemployment in rural areas is high, it is because very low number of industries, even if there are certain industries in rural areas so they do not prefer workers from local areas, this largely happened in the case of Sindh, I want to quote an example of Ghotki District, there are so many industries and companies are operating in the district but they are not preferring to local people, the two big companies like Engro Fertilizers (Daharki), and Fauji Fertilizers (Mirupur Mathelo), if this will happen so people from rural areas will remain unemployed and this will effect on their upcoming generation as well as this is happening most of the rural area people are unemployed and they can’t educate their Childs and this will also happen with the Childs of their Childs.

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Role of Government:

It is responsibility of Government of any country to solve certain issues like unemployment if there is high level of unemployment so they should start development projects and give employment to the unemployed, or Government should compensate unemployed person, they should start such programs in which unemployed will be given subsidies, etc.

Currently Government is not taking any action to remove this problem, they should take certain measures, in the later discussion I will be mentioning some solutions of this issue which government should focus on.

Although Government has taken certain steps to remove this problem, currently Prime ministers youth Development program is being introduced, which is a good initiative but because of corruption, problems are not solved.

Effects of Unemployment:

1. Individual

Unemployed people are unable to gain cash to meet fiscal commitments. Disappointment to pay contract installments or to pay rent may prompt homelessness through abandonment or expulsion. Over the United States the developing positions of individuals made homeless in the abandonment emergency are producing makeshift camps. Unemployment increments powerlessness, disease, mental anxiety, and misfortune of respect toward oneself, prompting despondency. As stated by a study distributed in Social Indicator Research, even the individuals who have a tendency to be hopeful think that it troublesome to look on the brilliant side of things when unemployed. Utilizing meetings and information from German members matured 16 to 94 – incorporating people adapting to the hassles of genuine and not only a volunteering understudy populace – the scientists established that even positive thinkers battled with being unemployed. dr. M. Brenner led a study in 1979 on the "Impact of the Social Environment on Psychology." Brenner found that for each 10% increment in the amount of unemployed there is an expansion of 1.2% in aggregate mortality, a 1.7% increment in cardiovascular sickness, 1.3% more cirrhosis cases, 1.7% more suicides, 4.0% more captures, and 0.8% more ambushes appeared for the police.[86] A later concentrate on by Christopher Ruhm[87]on the impact of subsidence on wellbeing found that few measures of wellbeing really enhance throughout retreats. Concerning the effect of a monetary downturn on wrongdoing, throughout the Great Depression the wrongdoing rate did not diminish. Since unemployment protection in the U.s. regularly does not reinstate half of the pay one gained at work (and one can't accept it everlastingly), the unemployed frequently wind up tapping welfare projects, for example, Food Stamps or gathering debt.not everybody

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experiences just as unemployment. In a prospective investigation of 9570 people in excess of four years, profoundly scruples individuals endured more than twice as much on the off chance that they got to be unemployed.[88] The creators proposed this may be because of upright individuals making distinctive attributions concerning why they got unemployed, or through encountering stronger responses emulating disappointment. Some hold that a large number of the low-salary occupations are not by any means a finer option than unemployment with a welfare state (with its unemployment insurance profits). In any case since it is troublesome or difficult to get unemployment protection profits without having worked in the past, these employments and unemployment are more correlative than they are substitutes. (These occupations are frequently held short-term, either by understudies or by those attempting to increase experience; turnover in most low-paying employments is high.) another cost for the unemployed is that the mix of unemployment, absence of fiscal assets, and social obligations may push unemployed laborers to take employments that don't fit their aptitudes or allow them to utilize their abilities.

2. Social

An economy with high unemployment is not utilizing the sum of the resources, specifically the labor, accessible to it. Since it is working underneath its production plausibility boondocks, it could have higher yield if the entire workforce were helpfully utilized. Nonetheless, there is an exchange off between economic effectiveness and unemployment: if the frictionally unemployed accepted the first employment they were offered, they might be prone to be operating at underneath their ability level, lessening the economy's efficiency.[89]during a long time of unemployment, laborers can lose their skills, causing a misfortune of human capital. Being unemployed can likewise decrease the life anticipation of laborers by about 7 years [90]high unemployment can energize xenophobia and protectionism as workers expect that outsiders are taking their jobs. Efforts to preserve existing occupations of domesticated and local specialists incorporate lawful boundaries against "outsiders" who need employments, hindrances to movement, and/or duties and similar exchange obstructions against remote competitors high unemployment can additionally cause social issues, for example, wrongdoing; if individuals don't have to the extent that wage as in the recent past, then it is very likely that wrongdoing levels inside the economy will expand.

3. Socio PoliticalAbnormal amounts of unemployment might be reason for civil turmoil, in a few

cases prompting transformation, and especially totalitarianism. The fall of the Weimar Republic in 1933 and Adolf Hitler's ascent to power, which built up and finally finished in World War II and the passing of many millions and the demolition of a great part of the physical capital of Europe, is ascribed to the poor budgetary conditions in Germany at the time, outstandingly a high unemployment rate[92] of over 20%; see Great Depression

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in Central Europe for details note that the hyperinflation in the Weimar republic is not straightforwardly rebuked for the Nazi climb – the Inflation in the Weimar Republic happened basically in the period 1921–23, which was contemporary with Hitler's Beer Hall Putsch of 1923, and is reprimanded for harming the validity of just organizations, yet the Nazi party just expected government in 1933, 10 years after the hyperinflation however amidst high unemployment

Reasons of Unemployment in Pakistan:

Industrial sector of Pakistan is so backward so the increasing number of population is more than the growth of industrial sector

Because of limited number of technical, vocational and professional institutions, the people of Pakistan remain unemployed.

Some private investors shift their investment (capital) to the other countries. Unemployment also increased because of the past government’s policies like Golden

Shake hand, and also they imposed ban on jobs etc. Another major cause of increasing unemployment rate is Increasing population,

Population is increasing with very high rate. Because the major chunk of population of Pakistan is unskilled so this is also the cause

that they are unemployed. Majority of population of Pakistan have little or no education. There is little or no any career counseling or guidance. Majority of population even don’t know about the available jobs, so lack of awareness

about available jobs is one of the cause of unemployment. Less number of small enterprises. Bad employment system One people hold two, or three jobs at a time and there is no any action. Energy crisis is also one of the causes of unemployment in Pakistan, most of industries

are shifting to Bangladesh, India, Srilanka, because of energy crisis in Pakistan.

Some other Reasons of Unemployment in Pakistan. Adaption of new technology is also one of the reasons of unemployment in Pakistan, as

Pakistan adapt new technology so they required less number of labors, this is not a serious issue because Pakistan is for behind in technology as compare to other countries.

There is high cost and low quality of Agriculture as well as industrial products of Pakistan, that’s why there is low demand international as well as domestic, that’s why producers are losing their interest in the production.

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Majority of Businessmen in Pakistan are uneducated so they went bankrupt which creates unemployment in the country.

Tax system is very bad in Pakistan due to this they cannot collect enough amount from taxes so they can start development projects.

There can be so many causes of Unemployment in Pakistan but according to me these above are the major causes of Unemployment in Pakistan. Let’s talk about some of the solutions of Unemployment in Pakistan.

Solutions of Unemployment in Pakistan:It is very difficult for Government to overcome this problem (Unemployment), but according to me some steps that Government should have to take, or simply we can say that the solutions of unemployment in Pakistan are:

The first thing that Government should have to do, in order to reduce unemployment is to do proper planning regarding jobs.

There should be equality in the education system of Pakistan, copy culture should not be promoted and strict actions should be taken.

Institutions for training and technical skills should be established, where people should be offered skilled program.

Retirement age should be decreased. Energy crisis problem should be removed as the investors will come in Pakistan to invest,

as investment will be increased so job opportunities will automatically increased There should not be any favoritism or nepotism in giving jobs. Employment system

should be built. Encourage small and medium enterprises (SME’s) to invest. Encourage multinational companies to invest in the country. Increasing Population should be controlled.

Advantages and Disadvantages of Unemployment in Pakistan:To the individual who is suffering from unemployment, it is tragedy and

government should do something for that. But for the economist who is looking at the big picture, unemployment is necessary, and certain amount of unemployment should be there to sustain the health of economy.

The disadvantages of unemployment is very clear, even to the person who has not read about the economic theories that because of unemployment people will be not be having money to spend and their consumption will be less, means less demand so there will be less production ultimately it will effect again on employment.

Economic theories also tells us that, unemployment is not as worse that it will effect only on that individual and his/her family members who are depending upon him, rather it will effect on the whole economy. Unemployment is not only problem to those who are unemployed but it’s

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also the problem for those who are employed it is because, when there is less number of people who are working so burden of taxes etc. will be clearly on them who are working, so they also will be having less money to spend.

If we see Unemployment in the perspective of Employer so high unemployment is good for him, because when he will be advertising for job so more number of applicants will be coming to get that job even on low salary, Low salary because there will be Labor surplus, Labor Supply will be greater than Labor Demand. If we see the opposite of this if there is low unemployment so there will be Labor Shortage, Labor Demand will be greater than Labor Supply, so in this condition Labors will be paid high,and the product cost will be increased which is again a bad condition for the economy, so economists suggest that both very high and very low unemployment rate is not beneficial for the country, it will effect on the performance of Country, so they suggest there should be unemployment but in the middle of High and Low.

One of the major advantage that economist consider for the unemployment that, unemployment causes self employment, because of unemployment people turn towards their own business which is very beneficial for the country, but as the whole we can say that there are more disadvantages of unemployment that effect the country’s performance.

Conclusion:Thousands of Graduates of Pakistan are unemployed, Thousands of unemployed workers

are unable to complete their basic needs, country’s production is also suffered by the problem of Large scale unemployment. Moreover Pakistan’s Population has drastically increased and steps has to be taken against it, if not the problem will become worst. It is concluded that there are two important elements that can reduce unemployment, 1) To use Labor intensive industries more and 2) Adapting the Self-Reliance policies. Country’s Prosperity and Progress is not possible without the reduction in the unemployment.

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Economy & Finance

Unemployment in Pakistan