Unemployment Rate in Pakistan remained unchanged at 5.90 percent in 2017 from 5.

90
percent in 2016. Unemployment Rate in Pakistan averaged 5.49 percent from 1985 until
2017, reaching an all time high of 7.80 percent in 2002 and a record low of 3.10 percent in
1987.

1Y 5Y 10Y MAX

Pakistan Labour Last Previous Highest Lowest Unit

Unemployment Rate 5.90 5.90 7.80 3.10 percent [+]

Unemployed Persons 3790.00 3620.00 3790.00 903.00 Thousand [+]

Employed Persons 62230.00 58530.00 62230.00 5580.00 Thousand [+]

Population 200.16 207.77 207.77 45.85 Million [+]

Living Wage Family 29700.00 29500.00 29700.00 26000.00 PKR/Month [+]

Living Wage Individual 13500.00 13400.00 13500.00 11200.00 PKR/Month [+]

Wages High Skilled 51400.00 49200.00 51400.00 41000.00 PKR/Month [+]

Wages Low Skilled 28700.00 21700.00 28700.00 21700.00 PKR/Month [+]

Pakistan Unemployment Rate

In Pakistan, the unemployment rate measures the number of people actively looking for a job as a percentage of
the labour force. This page provides - Pakistan Unemployment Rate - actual values, historical data, forecast, chart,
statistics, economic calendar and news. Pakistan Unemployment Rate - actual data, historical chart and calendar of
releases - was last updated on May of 2019.

Actual Previous Highest Lowest Dates Unit Frequency

 Actual Previous Highest Lowest Dates Unit Frequency

5.90 5.90 7.80 3.10 1985 - 2017 percent Yearly

G20
Country Last Previous Range

South Africa 27.60 Mar/19 27.1 31.2 : 21.5 %

Spain 14.70 Mar/19 14.45 26.94 : 4.41 %

Turkey 14.70 Feb/19 14.7 14.8 : 7.3 %

Brazil 12.70 Mar/19 12.4 13.7 : 6.2 %

Italy 10.20 Mar/19 10.5 13.1 : 5.8 %

Argentina 9.10 Dec/18 9 20.8 : 5.9 %

France 8.70 Mar/19 8.8 10.7 : 7.2 %

Euro Area 7.70 Mar/19 7.8 12.1 : 7.3 %

Saudi Arabia 6.00 Dec/18 6 6.3 : 4.35 %

Canada 5.70 Apr/19 5.8 13.1 : 2.9 %

Australia 5.20 Apr/19 5.1 11.2 : 4 %

Indonesia 5.01 Mar/19 5.34 11.24 : 2 %

Russia 4.70 Mar/19 4.9 14.1 : 4.5 %

South Korea 4.10 Apr/19 3.8 7.1 : 3 %

United Kingdom 3.80 Mar/19 3.9 12 : 3.4 %

China 3.67 Mar/19 3.8 4.3 : 3.67 %

United States 3.60 Apr/19 3.8 10.8 : 2.5 %

India 3.53 Dec/18 3.52 8.3 : 3.41 %

Netherlands 3.30 Apr/19 3.3 7.9 : 3.3 %

Germany 3.20 Mar/19 3.2 11.5 : 0.4 %

Mexico 3.20 Mar/19 3.3 6.42 : 2.22 %

Japan 2.50 Mar/19 2.3 5.5 : 1 %

Switzerland 2.40 Apr/19 2.5 5.7 : 1.5 %

Country Last Previous Range

Singapore 2.20 Mar/19 2.2 6 : 1.4 %

Introduction
Unemployment is a common word nowadays. we may have noticed that in spite of education, there
are many people that are without jobs. widespread and persistent unemployment is one of the
serious macroeconomic problems, both developing and developed countries in the world.
Unemployment brings a large number of socio-economic problems in many divers’ ways. The
negative crash of unemployment is divers and delicate. In addition if the output of income is low its
leads to the rising income inequality, ill health and mortality, loss of human capital and skills,
migration, loss of human capital relation, loss of motivation for future works and social life. for that
reason it is very important to be aware of the nature and effects of unemployment. We should also
have to design suitable policies and programmers to contest it. In this component that will be
introduced to the perception classification, and measurement of unemployment. From this a person
will be able to analyze the tendency and consequence of unemployment, and evaluate effectiveness
of different programs and policies that are initiate by state and central government to reduce the
unemployment in economy.

Definition of unemployment
We might have listen to about unemployment from our friend and relative might not have got the
job even after being effectively educated.

To most, the word unemployed means remain without work. Unemployment basically is define as ”
The condition of having no job or being out of work or proportion of people which are able to work
actively searching jobs but they are unable to find it.”

IMF report (1998) define as:-

‘unemployment is measured annually as percentage of labor force that can’t find a job’.
Unemployment also refers to the number or proportion of people in the working population that are
unemployed.

Unemployment is basically a persistent challenge that is facing Pakistan since its inception and it is
one of the biggest problems of Pakistan.. An unemployed person is one who is an active member of
the labor force and he is able to and looks for work, but is unable to find work during a precise
reference period that might be a week or a month or a year.

According to current situation in Pakistan more than 30 lack people are unemployed and
unemployment ratio is more than 12%.

The unemployment issue of Pakistan is increasing more in rural areas where almost 70% of the
Population is living. There livelihoods depend on rural economy. They have lack of basic necessities
such as primary health care, education, job opportunities, social services and some other issues due
to unemployment increasing day by day. . The biggest reason of unemployment in Pakistan is
concerned with the backwardness of agriculture sector. Agriculture sector is the largest sector of
Pakistan economy it contributes 20.9% to GDP and 44% people directly or indirectly get jobs
opportunities from this sector. Unemployment in agriculture sector arises from two sides.

First reasons are due to the adoption of latest machinery and capital intensive technology. Due to
this reasons, demand for labor has been decreased. Second is the backwardness of agriculture sector.
There is less availability of quality seeds, pesticides, and fertilizers, absence of land reforms and lack
of agriculture education. Due to all these factors agriculture sector is not expanding or flourishing
and due to these problems there is general and disguised unemployment in the economy.

Industrial sector is the second largest sector of our economy and it contributes 19% to national
income of economy. A large number of labor employed by this sectors. But due to backwardness in
industrial sectors a small number of people are employing. Due to electricity breakdown it already
established industry is deteriorating, resulting is the prevailing unemployment ratio. In Pakistan
education system is very defective. There is no proper educational planning. There is lack of technical
and vocational institutions. Public attitude towards education is no serious, they want to get their
degrees in general and arts subjects. Nobody is ready to set up his own business without technical
education. In Pakistan majority of the businessmen are less educated and unskilled. They don’t have
proper knowledge and they don’t know how to run their businesses properly and effectively. So they
become bankrupt in a country. This factor and reasons generates unemployment on a massive level.

Increase in unemployment can be stated the change in demographic structure, women participation
in labor force, immigration from rural areas to town, economic crises in a society and technological
unemployment. On the other hand unemployment is not only an economic problem but it is also a
social problem and that may cause crimes and deform social fabric. The struggle against
unemployment is not limited the unemployment rate in the economy but also to take a consideration
into the relationship with macro economic variables such as we can take the example of economic
growth, exchange rate and inflation natural unemployment In the economy can be summarized as
change in demographic structure, oil crises, increase in Capitan intensive production, labor unions,
loss of power, increase in productivity, productive growth, decrease in wages rise, firm structure and
structure of policies that regulating in labor market are imbalances in rural as well as in urban areas.
Inflation is another factor that may affect unemployment. In the past 20year the rapid and wide
spread diffusion of computer information technology at a work place is one of the most important
and notable trend. This development has prompted both a great concern that its effects the
employment and enhance the job skill requirement that increase the economic inequality and great
deal of excitement that information technology serve as engine of economic growth.

Types of unemployment
Comprise studied the meaning of unemployment, now let us talk about the different types of
unemployment. Generally, unemployment can be separated into two types: voluntary, and
involuntary, unemployment.

Voluntary and involuntary unemployment

Voluntary unemployment occur due to motive that are explicit to an individual, whereas involuntary
unemployment is foundation by a large number of socio-economic factors for example level and
composition of aggregate demand, structure of the market, government intervention, and so on.
Therefore, the Unemployment has different kinds depending on the nature, origin, and period of
unemployment. Let us now talk about various types of unemployment. Unemployment is broadly
classified in following group.

There are different types of unemployment we can define them in five categories such as frictional
unemployment, structural unemployment, cyclical unemployment, classical unemployment and
demand deficit etc.

Frictional unemployment
Frictional unemployment includes those people that are unable to do work plus the stock of people
moving between jobs. it occurs because of a discrepancy in the timing due to this people leave one
job and starts another job. Frictional unemployment pass on to a conversion period of looking for a
new job, for different reason, such as looking for a better job, being passionate from a current job, or
having voluntarily quit a current job. The period of time between the current to a new job is referred
to known as frictional unemployment.

Seasonal unemployment
The other type of unemployment is Seasonal unemployment that is a type of frictional
unemployment, it occurs in a definite activities or profession which is characterized by seasonal work.
An example of seasonal unemployment is the joblessness through non-cultivation in rural areas.

Structural unemployment
Structural unemployment occurs when there is the long-term changes happened in the patterns of
production and demand within an economy This kind of unemployment takes place when there is
several transform in consumer demand and technology in the economy. For example, when
computers were initiate many workers were displacing because of a divergence between the
accessible skills of the workers and the obligation of the job. Though jobs were accessible, there was
a demand for a new category of skill and qualification. So, persons with old skills did not get
employment in the changed economic domination and stay unemployed. This is known a structural
unemployment.

Cyclical unemployment
In cyclical unemployment includes those workers who lay off when the overall economy suffers a
downturn. When there is an economy is broad decline in aggregate demand for goods and services,
employment declines and unemployment in the same way increases. as a result it is sometime
referred to as ‘demand lacking unemployment’. For example during the current global slowdown, in
late 2008, many workers in the region of the globe vanished their jobs.

Natural rate of unemployment

Natural rate of unemployment is the sum total of frictional and structural unemployment that is
referred as the natural rate of unemployment of economy .Open unemployment happen when a
person is voluntarily or Involuntarily and keeps himself out of deliberation for definite jobs. For
example In1980s there was a rapid decline in the steel and coal industries in the UK. That’s caused a
large number increased in structural unemployment in those areas such as South Wales sun-set
industries etc.

All the developing countries, including India endure from structural unemployment, which survive
both in open and disguised structure. The problem in developing countries can better be review as
underemployment a fractional lack of work, low employment income, and under utilization of skills,
underutilization of natural resources or low productivity, slightly issue of unemployment as argue
above. Thus, underemployment explain the condition of those person who are able to do work at
part time because full time jobs is unavailable or employed one full time foundation but the services
they turn into may actually be much less than full time as known as disguised underemployment and
those who are employed in profession have need of lower levels of skills than they are qualified for ,
that a name is hidden underemployment. A related concept is that of working poor those who are
actually work for long hours but they earn only at low income beneath the poverty line. In other
words, working poor is definite as situation when the individuals or households, in spite of being
employed, stay put in comparative poverty due to low levels of wages and earnings.

It is essential to note that the kinds and nature of unemployment fluctuate extensively in developing
and developed countries. Unemployment in developed countries occurs due to the lack of required
effective demand or economic slowdown, such as recession, or depression. In developing countries,
unemployment happens largely because of a lower demand for labor or inadequate employment
opportunity in the economy. Such a situation occurs due to the survival nature of agriculture, a low
industrial base and the small size of the tertiary sector of economy. Let us now discuss the different
concepts of unemployment that are related to developing countries, including India. A low income
below the poverty line. In other words, working poor is defined as a Situation when individuals or
households, in spite of being employed, remain in relative poverty due to low levels of wages and
earnings.

Classical unemployment
Classical unemployment is the view of unemployment that put forward by classical economists. It
occurs when the real wage is too high. Real variables take account of the price level, nominal
variables do not do so. According to classical framework, wages and prices are perfectly flexible so as
to keep the economy at full-employment.

Demand-Deficient Unemployment
Demand-Deficient Unemployment refers to unemployment within the framework of Keynesian,
where the aggregate demand level is below that necessary to achieve full-employment.

In Pakistan unemployment is of structural and cyclical nature. Unemployment is a central problem

because when unemployment is high, resources are wasted and people’s incomes are depressed;
during such periods, economic distress also spills over to affect people’s emotions and family lives.
There are a number of causes of unemployment occurs in Pakistan. There are deferent causes of
unemployment. Some of the causes of unemployment that are usually aware, the main problem is
that there are over population and lack of work. Some of the important causes of unemployment are:
the high rate of population growth and the subsequent increase in labor force; low velocity of
economic growth, need of sufficient employment opportunities in non-agricultural activities and
creation of seasonal employment, or need of full time employment in agriculture; low labor
incorporation capacities in industrialized and tertiary activities; shifting from labor-intensive to
capital, Skill-intensive production technique and expansion in education system, and so on.

Let us now we will briefly elaborate these causes. Low and unpredictable levels of economic growth
do not generate sufficient employment opportunities, as desired. in addition, rates the sectorial
composition of growth is also an most important determinant of unemployment. extreme
dependence on agriculture sector and slow growth of non-farm activities is the cause of limit
employment generation. utilization of capital-intensive technique and production practice not only
dislocate presently employed persons, but also measured down the generation of new employment
opportunities. There is the need of a clear and glowing developed human resource policy and
manpower policy, may show the way to a disparity between the need and accessibility of appropriate
skills and training, which outcome is unemployment, mainly of youth and educated ,speedy growth in
population, deficiency of employability due to poor health and nourishment that also show the way
to unemployment. deficiency of investment and infrastructure development are factors that do not
produce sufficient levels of employment in the economy, and as a result unemployment rises in
economy.

Insufficient accessibility of unemployment insurance and public employment programmers also

source a rise in unemployment. Large scale smuggling which has flooded the market with cheaper
goods poses a serious threat to the development of local industry. Tight bureaucratic control on the
economy, inadequate credit facilities and complex tax system are also some important factors that
are creating hurdles in the way of private sector investment in industrial projects.

Now we will discuss the problem of under employment and working poor.

Underemployment problem might acquire different forms, such as partial lack of work, low
employment income, and underutilization of skills or low productivity. In other words, the
underemployed are those persons who look for and are accessible for alternative work, moreover
because the quantum of current work is not sufficient, or not remunerative sufficient In this section,
we will talk about two important component of underemployment, that is. first, the incidence of
working poor by type of employment and extensive sector, and second, insufficient accessibility of
work.

The working poor might be depict like individuals and families who preserve regular Employment but
residued in relative poverty because of low levels of wage and earning Approximately one fourth of
the total workforce functions at income level, which is below the predetermine levels of MPCE that
are used to define the poverty line in India. It is significant to note that the frequency of working poor
is highest among the workers who work informal The occurrence of working poor is too high for the
self employed workers. The extent of working poor is more in urban areas as contrast to rural areas
for all category of employment. There are momentous variations in the proportion of working poor in
broad sectors .A larger proportion of primary sector that is agriculture workers are poor contrast to
workers in secondary and tertiary sectors. yet again, in urban areas the occurrence of working poor is
larger than that of rural areas in all three wide sectors.

Youth unemployment
Youth unemployment is also a very serious problem with much socio-economic implication.
Unemployment surrounded by the youth is not only a social cost in stipulations of potential loss of
skill and training, but also it is protracted, it will generate unrest Among the youth and capacity that
go ahead to family argument, alcohol, drug, suicide and abuse, For expediency, in this unit, we have
distinct ‘youth’ as persons old 15 to29 years. In stipulations of all the four measures of
unemployment, the unemployment rates are maximum for persons old 20 to 24 years. The
unemployment rates are higher for urban persons at unreliable age groups. The unemployment rates
have amplified for persons of different age groups during 1993-9412004-05. Thus, the occurrence of
youth unemployment has an increasing tendency and it is more delicate in urban areas. Special
employment policies and programmers need to be prepare

to address the problem of youth unemployment.

The level of education is an significant correlate of unemployment. There is a universal belief that
levels of education and unemployment rates are inversely related with each other. The level of
education is an imperative associate to unemployment. There is a common certainty that levels of
education and unemployment rates are inversely related with each other , the illiteracy rate in 1993-
94 rural male and female was 1.8 and 2.2 respectively, in 1999-00 was 3.0 and 2.7 and in 2004-05 was
2.7 and 2.5 respectively. And in urban areas illiteracy rate in 1993-94 of 2.2 of male as well as female,
in 199-00 was 3.1 of male and 2.0 of female and fanly in 2004-05 2.8 of males and 2.5 women were
illiterate. But, Unemployment rates are higher for the educated workers. This is true for both male
and female workers, with in rural and urban areas. Illiterate person or workers through low level of
education that do not has sufficient employment options. Consequently, they cannot meet the
expense of to wait for a better employment opportunity. On the divergent educated and trained
workers in the favor to keep on unemployed till they obtain appropriate employment of their choice.
Therefore, at higher levels of education, the rates of unemployment are also higher. In addition the
potential of changing jobs are also advanced for educated workers. The conversion period between
the present job and new job is also a magic charm of unemployment, that might be referred to as
frictional unemployment. Consequently now the question is that what is the main reason of the rise
in educated unemployment? Earliest, in excess of the years, there has been considerable expansion of
the education sector. as a result when educated workers entered into the market labor force has
increased, but the economy has unsuccessful to create equivalent employment opportunities on
behalf of these workers.

In other words, there is a inequality between the supply of and demand for educated Workers in the
economy. It may also be discuss that the existing education system is has unsuccessful to provide the
right kind of skills, opportunities and technical propensity. The skills and capability of these educated
workers that are do not match the necessities of various of kinds of work and activities That are
available. For example, in India in educational system, most of the workers having ten years of
schooling and they do not attain any vocational training, and therefore they are not appropriate for
any skilled jobs.

Unemployment and poverty are two imperative problems of all developing countries and they are
interconnected with each other .Unemployment and poverty coexist at a time, but it is not always
positively connected with each other.. But unemployment and remain in underemployment are most
important causes of poverty and, as a result, the provisioning of profitable employment will be
fundamental for poverty reduction in economy. in view of the fact that in the Indian statistical system,
poverty is considered on the foundation of Monthly Per Capita Expenditure (MPCE), accede to us
now investigate the behavior of unemployment rates on varying levels of MPCE in rural and urban
areas of India. Many African countries also facing the problem of unemployment in African countries
the Growth is essential not only for growing the levels of income but also for put down the
groundwork for sustainable poverty reduction policies, improving human welfare and enhancing the
overall development in economy. Growth facilitates countries to enhance the accessibility and
allotment of basic life supporting goods and services for example food, shelter, health, shield and
protection. It also permits countries to produce more jobs and better education slandered, in that
way growing the assortment of economic and social choices obtainable to individuals. For the
considerate how to attain growth and how we can maintain it at high levels is the solution to
understanding that how we can increase the living standard of individuals and recover poverty on the
continent so that people can live happily.

From the time when the occurrence of the global crises in Africa, the GDP growth has trended
downwards, even though showing some flexibility as evaluate to preceding episodes of economic
recession. with the intention of growth rate was 4.9 per cent in 2008 and 1.6 per cent in 2009
outstanding mainly the demand of commodity was low and prices and a spiky fall in domestic
demand specially private investment, exterior capital inflows and tourism receipts. Projected growth
improvement in Africa is about 4.3 per cent in 2010 will another time rely mostly on the health of the
global economy and its craving for Africa’s commodity that are exported, which will increase export
prices and revenue generation.

The economic crash of the global economic recession on African countries is because of that its
depended more on their economic structures. The Africans Countries that are seriously dependent on
mineral resources and undiversified export intention that were affected the most because of lower
prices of commodity and their demand. The disaster also has an impact on social conditions of the
countries, as a result there is declining in living standards of the people, particularly in that place
where social protection is not well-developed. The prolonged decelerate in the world of economy
that reason to transmittal, job creation, tourism and ODA start decline and as a result the
unemployment to increase.

In economic theory the linear positive relationship between economic growth and employment can
be supposed. There is not a common thinking related to this issue between the economist. Some
suggested that there is a positive relationship between employment and economic growth and this
economist are not agree with the jobless growth. But in few recent years it is observed that
unemployment problem cant be solved by economic growth alone.in economic theory the
relationship between unemployment and the economic growth is explained by using Okun’s Law.

Okun’s Law
Okun’s Law described an enduring empirical observation that firstly made by Arthur Okun in 1962 he
observed that in the postwar periods the unemployment rate was on the average, each extra
percentage is above than four percent and that can be associated with about a three percent in real
GNP. Because Okun’s empirical finding is well heldup during the ensuing decade, the ratio was 3:1 in
trade off between the real GNP growth and unemployment rate that becomes to known as Okun’s
Law.

Now we will explain the relationship of unemployment and inflation. In economic journalism there
are many different accounts of labor market theory. All labor market effect have been clarify by
theoretical point of view with the help of three major forces that are the market forces of demand
and supply ,sociological factors such as cultures, customs, class, and family background and
institutional forces in the form of government union etc. With this framework there are different
schools of thought exist in which includes the classical, the neoclassical, and the institutional schools
that are come into view in labor economics journalism. That is foundation on relative importance and
the working of these forces to express about specific labor market effect.

The neoclassical school of thought paying attention on the primarily operation of market forces in
influencing the wages and distribution of labor, and measured other institutional and social factors as
mention. On the divergent, the institutional school highlights the role of institutional forces, for
instance internal labor markets and unions, and sociological factors, such as class and intolerance
segmentation, in addition to stratification Unemployment in the labor market. The institutional school
consequently, situates emphasis on the exclusive features of the labor market, and explains that how
these forces fade away the role of market forces hence, known about the different theories and
school of thoughts in labor economics journalism how would one explain the problem of
unemployment?

Unconventional theoretical explanations on the problem of unemployment have been locate ahead
by different schools of thought. Of economic .Keynesian economic thoughts center of attention on
lack of effective demand for goods and services which foundation is unemployment in an economy,
and discuss those government policies, mutually monetary and fiscal, might be used to increase
aggregate demand, therefore, increasing economic activity and sinking the unemployment and
deflation. On the divergent, the Classical and Neoclassica1 Schools of thought have paying attention
on labor market inflexibility, for instance minimum wage and additional regulations as clarification for
unemployment in economy. But this clarification may not be sufficient enough to explain the
problem of unemployment known the heterogeneity of this problem in expressions of nature, pattern
magnitude, reason of unemployment, and their impact in the economy. on the other hand in this
perspective it is attractive to understand an important theoretical description of the relationship
between unemployment and inflation revealed by A. W. Phillips. He predicts an inverse relationship
between unemployment and inflation, presenting a downward sloped curve, popularly known as the
Phillips curve (see the diagram). He clarify the tradeoff between unemployment and inflation, and
show that how any attempt by governments is helpful to reduce unemployment was liable to source
increased inflation.

There are different theories related to unemployment. Different economists distinguish between
various types of and theories of unemployment, including structural unemployment, cyclical or
Keynesian unemployment frictional unemployment, and classical unemployment.

Cyclical or Keynesian unemployment is also known as deficient-demand unemployment, it occurs

when those who wants to do work but jobs are not provided by them due to the lack of aggregate
demand in the economy. Demand for most good and services fall down, less production is needed
and consequently a fewer work are needed for these goods and wages are sticky that do not fall to
the meet the equilibrium level in the economy, and result is the mass unemployment . this type of
unemployment occurs during the great depression of the 1930s. in cyclical unemployment the
number of unemployed workers the number of existing job vacancies , so that even in full
employment were attained and mostly open jobs were file due to this some workers still remained
unemployed. cyclical unemployment is associated with frictional unemployment at some extent
because the factor that cause to create frictional unemployment are partially caused by cyclical
variables. For example , a decrease in the supply of money surprise may shock rational economic
factors in the economy and suddenly inhabit the aggregate demand.
Classical economist reject the conception of cyclical unemployment and gives the alternatively
suggestion that is invisible hand of free market would response quickly to unemployment and
underutilization of resources by a fall in wages result is rise in employment.

Keynesian economist on the other hand result is the lack of demand for jobs are potentially resolved
by the govt intervention. Keynesian other suggested interventions involves deficit spending to boost
employment and demand. Another intervention involves expansionary monetary policy that increases
the demands of money that reduced the interest rates that leads the increase in non government
spending.

Next theory is Marxist theory of unemployment this theory is presented by Karl Marx, unemployment
is inherent within the unstable capitalist system and periodic crises of mass unemployment are to
expected. Proletariat function within capitalist system provides “reserve army of labour” that create a
downward pressure in wages. That accomplished by dividing the proletariat into surplus of labor and
under employment. Reserve army of labor basically fights among themselves for the purpose of
scaring jobs at lower and lower wages. At first point, unemployment seems to be inefficient since the
profit of unemployed worker do not increase. However, unemployment is considered profitable
within the global capitalist system because unemployment at lower wages which is the cost from the
perspective of the owners and from this perspectives low wages provide the benefit of the system of
reducing economic rents. Yet it does not provide benefits for workers. The capitalist system
manipulates the market for labor unfairly by perpetuating unemployment which lowers laborers and
demand for fair wages.

According to Marx, to eliminate the unemployment permanently there is only one way that would be
to abolish the capitalism system in the economy and the system of forced competition for wages and
then it shift to a socialist economic system. According to Marxists, existence of persistent
unemployment is proof of the inability of capitalism that ensure the full employment in the economy.