Busines

s
Econom
ics

Final
project
Report

Submitte
d to: Sir
Talha Bin
Ayzaz
Submitte
d by:
Mariam
Aamir
Zohaib
Tahir
Khan &
Hussnain
Umer

Table Of Contents
Introduction...............................................................................................................................................3
Unemployment condition in Pakistan..................................................................................................3
Definitions..........................................................................................................................................4
According to Samuelson................................................................................................................4
Types of Unemployment............................................................................................................................4
Frictional Unemployment.....................................................................................................................4
Seasonal unemployment....................................................................................................................4
Structural Unemployment.............................................................................................................4
Reasons of unemployment........................................................................................................................5
Minimum Wage.....................................................................................................................................5
Labor Unions.....................................................................................................................................5
Measurement of unemployment...............................................................................................................5
Causes of Unemployment..........................................................................................................................6
Growth of population............................................................................................................................6
POOR EDUCATION SYSTEM.......................................................................................................6
VIOLENCE AND TERROR ACTIVITIES.................................................................................6
EFFECTS OF UNEMPLOYMENT.........................................................................................................9
Effects on economy..................................................................................................................................10
Unemployment financial costs............................................................................................................10
Spending power................................................................................................................................10
Reduced spending power of the employed.................................................................................10
Social effects.............................................................................................................................................10
Crime and violence..............................................................................................................................10
Social outing.....................................................................................................................................10
Standard of leaving......................................................................................................................11
Psychological effects................................................................................................................................11
Health diseases.....................................................................................................................................11
Tension over taxes rise.....................................................................................................................11
Tension at home............................................................................................................................11
RECOMMENDATION FOR UNEMPLOYMENT IN PAKISTAN............................................13

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UNEMPLOYMENT IN PAKISTAN
(Causes, Effects & Recommendations)
Introduction
The foremost problem world is facing today is unemployment. Pakistan has plenty
of problems in these days and unemployment is one of those. Unemployment in
Pakistan is increasing with the passage of time. It is the worst problem in Pakistan.
in Pakistan people are suffering from the depression name Unemployment. It cause
numerous problems for the people of Pakistan. Pakistan has countless natural
resources but problem is that resources are being wasted since the independence of
Pakistan in 1947. You may find many graduated, masters, IT experts, engineers
and doctors wondering about for job opportunities due to bad employment system.
The people of Pakistan are considered highly talented and hardworking in the
world and there is no value of talent in Pakistan therefore, it is the reason many of
engineers, doctors, Scientifics, technicians and accountants travel in foreign
countries for earn their livelihood. Labor class is also affected by the
unemployment. Due to unemployment the living standard of Pakistanis is going
down with the passage of time. People are lacking from their basic needs. Pakistani
people are considered very talented and intelligent in all over the world. Dr, Abdul
Qadeer Khan, Irfah Kareem and Mlala Yousaf are bright examples to show the best
caliber of Pakistan before the world. But mostly people are unemployed they do
not find any proper framework to utilized their skills for the progress of
the country that is why the huge amount of talent is lost.

Unemployment condition in Pakistan

The population of Pakistan is increasing at a rate of 2.1 %. Due to this high rate
about two million people enter into the labor market each year. Such huge labor
force cannot be provided jobs due to backward economic condition. Illiteracy and
literacy both are the causes of unemployment in Pakistan.
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Definitions
Unemployment is a situation where people of a country are willing to work, able to
work but cannot find jobs.

According to Samuelson
Unemployment occurs if there are qualified workers who would be willing to work
at prevailing wages but cannot find jobs.

Types of Unemployment
There are four types of unemployment

Frictional Unemployment
Seasonal Unemployment
Structural Unemployment
Cyclical Unemployment
Frictional Unemployment
Frictional unemployment is the time period between jobs when a worker
is searching for, or transitioning from one job to another. It is sometimes called
search unemployment and can be voluntary based on the circumstances of the
unemployed individual.

Seasonal unemployment
Seasonal unemployment is a type of unemployment which occurs, in certain period
of time, in certain industry.

Structural Unemployment
This type of unemployment occurs due to changes in industry and technology.

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Cyclic Unemployment
Cyclic unemployment occurs in certain phases of economic activities

Reasons of unemployment
There are following three reasons of unemployment
Minimum Wage
Labor Unions
Efficiency Wage

Minimum Wage
Minimum wage is decided by the government. If the minimum wage exceeds the
equilibrium point, quantity supplied by labor will exceeds the quantity demanded.
which will lead to the surplus of labor force and it will result in unemployment.

Labor Unions
A labor union is an organization intended to represent the collective interests of
workers in negotiations with employers over wages, hours, benefits and working
conditions. Labor unions are often industry-specific and tend to be more common
in manufacturing, mining, construction, transportation and the public sector

Efficiency wage
In this theory high wages increase workers productivity. The increased productivity
justifies the cost of paying above equilibrium wages.

Measurement of unemployment
The unemployment rate is expressed as a percentage, and is calculated as follows:

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Causes of Unemployment
Growth of population
One of the major cause of unemployment in Pakistan is over rated population. The
population of Pakistan is increasing at very high rate this time. The population of
Pakistan is increasing at the rate of 2.2%. there are plenty of factors responsible for
over population e.g. early marriages, illiteracy, desire for sons, lack of awareness.
It has been noticed that the growth of population is larger in rural areas from urban
areas. The education system in Pakistan is not up to mark therefore increase in
population means bringing uneducated people in field. And it will create
difficulties for Government to provide jobs to this huge amount of uneducated
people. It has been noticed that growth of population is relatively common ruler
area.

POOR EDUCATION SYSTEM

Pakistans education system has been really poor from the very first day.
Unfortunately since independence, any government didnt take any serious actions
regarding education how we improve our education system to reduce the ratio of
such talented students who left their studies due to the injustice of this system. In
Pakistan, mostly institutions provides bookish knowledge to their students rather
than they provide practical skills to the students. You will observe many technical
educational colleges and private technical institutions are being found which are
only selling degrees because technical education which is being given in these
institutions has no value, therefore people are wondering about for jobs due to lack
of experience and skills.

VIOLENCE AND TERROR ACTIVITIES

As all we know that Law & Order situation in Pakistan is very bad from last 10
years due to which most of the businessman shifted their business in other
countries. On other side of the picture, foreigners are also frightened to invest in
Pakistan due to the bad situation of Law & Order. So when there is no investor is
ready to invest then how can job or earning opportunities are being created?
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ENERGY CRISIS
Energy crisis also become the cause of unemployment in Pakistan. Could you
believe country with plenty of natural resources and atomic power is lacking of
energy crisis? There are many sources of producing of energy in Pakistan but due
to lack of proper planning and efforts Pakistan is having problem of energy crisis.
The government of Pakistan is unable to provide electricity to residential areas in
Pakistan than how can energy or electricity can be provided to factories and
industries. Therefore factories and industries that are required energy are
transferring their business in other Asian countries like Bangladesh, India and as
well as Sri Lanka. As of this result a huge number of labors are becoming the
victims of unemployment.

Low Industrial Growth Rate

As all we know that due to bad Law & Order situation and energy crisis in
Pakistan, mostly businessman shifted their businesses in other countries like
Bangladesh. So number of industries is not increasing in Pakistan. Low industrial
growth rate is 1.7 % in Pakistan. Lack of industries means less opportunities of
employment.

Use of Advanced Technology

A poor country uses backward techniques of production and labor intensive
technologies. But when they shifted towards advanced technology it spread more
unemployment in the country.

Mechanization of Agriculture
Due to mechanization of agriculture there is less use of labor in agricultural sector.
These unemployed persons move to cities to find jobs at less wage rate.
Accordingly, use of modern techniques in agricultural sector is also a further cause
of unemployment and under employment.

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Use of Capital Intensive Techniques

Capital intensive techniques mean use of more capital and less labor in the
production process. Population is very much in Pakistan, due to use of capital
intensive techniques of production they remains unemployed.

Low Rate of Capital Formation

Deficiency of capital is an important cause of unemployment in Pakistan. Low
saving leads to low investments that result in low capital formation. If capital
formation is low its result is in unemployment. Rate of capital formation is only 5
% in Pakistan.

Lack of Employment Opportunities

Today, literacy rate is 57.7 %. There are various technical educational institutes in
Pakistan. Number of students of every field especially of commerce, are so large
but employment opportunities for them are few. So, only a few vacancies in
Pakistan are unable to adjust these students.

Trade Cycle
Trade cycle refers to the fluctuations in economic activities of a country and world.
Unemployment may also take place due to international economic depression. As
in 1930, there was great depression and unemployment all over the world.

Reduction in Foreign Employment

Due to illiteracy, ill training and lack of skill & efficiency demand for our labor in
foreign market is decreasing. It also creates
problem of unemployment.

Rural-Urban Migration
There is rural-urban migration due to farm mechanization. there is already
unemployment in cities these workers create more unemployment and under
employment in cities.

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Only Particular Job

Another reason for unemployment is that the educated persons need and wish to
get only particular type of jobs. If those jobs are very few then only few persons
get job.

Political Instability
There is political instability in Pakistan, which creates less attraction for foreign
investment. Due to political instability investor hesitates to invest. It creates less
opportunity of employment and results in unemployment.

Afghan Refugees
Afghan refugees are an additional cause of unemployment. They create a bad
effect on our labor market. They are ready to work more at less wage rate. It
caused unemployment and under-employment.

Re-employment
Re-employment of higher rank civil and especially armed forces officers has
decline the jobs for qualified young men in Pakistan. And this will lose the
confidence level of young men.

EFFECTS OF UNEMPLOYMENT
Following are the some effects of Unemployment:
Economic effects
Psychological effects
Social effects

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Effects on economy
Unemployment financial costs
The government and the nation suffer. In many countries the government has to
pay the unemployed some benefits. The greater the number of the unemployed or
the longer they are without work the more money the government has to shell out.
Therefore, the nation not only has to deal with the lost income and decreased
production but also with additional cost.

Spending power
The spending power of an unemployed person and his/her family decreases
drastically and they would rather save than spend their money, which in turn
affects the economy adversely.

Reduced spending power of the employed

Increased taxes and the insecurity about their own work may affect the spending
power of the working people as well and they too may start to spend less than
before thus affecting the economy and also the society in a negative manner.

Recession
With the increase rates of unemployment other economy factors are significantly
affected, such as: the income per person, health costs, quality of health-care,
standard of leaving and poverty.

Social effects
Crime and violence
When People are unemployed and they are unable to make their both ends meet
they adopt bad things to fulfill their needs and wants which will increase in the rate
of crime.

Social outing
Unemployment may bring a decrease in social outings and interactions with other
people, including friends.

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Standard of leaving
In times of unemployment the competition for jobs and the negotiation power of
the individual decreases and thus also the living standard of people with the
salaries packages and income reduced.

Lose of skills usage

The unemployed is not able to put his/her skills to use. And in a situation where it
goes on for too long the person may have to lose some of his/her skills.

Insecurity amongst employees

The prevailing unemployment and the plight of the unemployed people and their
families may create fear and insecurity even in the currently employed people.

Political issues
Loss of trust in administration and the government which may lead to political
instability

Psychological effects
Health diseases
The unemployment overall tension can increase dramatically general health issues
of individuals.

Tension over taxes rise

Unemployment also brings up discontent and frustration amongst the taxpaying
citizens. In order to meet the demands of the unemployment fund the government
many a times may have to increase the taxes thus giving way to restlessness
amongst the taxpaying citizens.

Tension at home
When there no source of income then quarrels and arguments at home which may
lead to tension and increased numbers of divorces etc.

Mental health
The mental health problems like: Law self-confidence, feeling unworthy,
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depression and hopelessness. With the lost income and the frustration involved in
it, the recently unemployed may develop negative attitudes toward common things
in life and may feel that all sense of purpose is lost. Frequent emotions could be
low self-esteem, inadequateness and feeling dejected and hopeless.

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RECOMMENDATION FOR
UNEMPLOYMENT IN PAKISTAN
It is very tough task for the government to solve one of the major problems of
Pakistan Unemployment due to huge population. But still we have given some
solutions to reduce the unemployment in Pakistan and we are hopeful by following
these solutions the ratio of unemployment in Pakistan can be reduced or decreased.
The first thing to do to reduce unemployment in Pakistan is the proper
planning by the government of Pakistan.
The education system of Pakistan should be equal and well managed.
Well recognized training and technical institutions are need to be established
where skills programs are offered.
The age of retirement should be at least 55 years.
Remove energy crisis so that investor comes to Pakistan thus job placement
will automatically be created.
There should be peace across the country so foreigners will not hesitate to
invest in Pakistan.
The agriculture sector should be developed.
Jobs should be given purely on merits.
Encourage multinational companies to business in Pakistan.
Family planning centers should be opened to control the flow of over
population.

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