Causes, Effects & Recommendations to reduce Unemployment in

Pakistan

1) M. Haseeb Saeed 30100

2) Bismah Galib 30231
3) Uzair Shouqat 30532
Table of Contents

Page No.

Introduction 3-4

Current Unemployment rate

Long term unemployment VS Short term unemployment

Causes of unemployment 5-6

Effects of unemployment 7-8

Recommendations 9-10

Conclusion 11

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Unemployment in Pakistan

Introduction

Unemployment is a word arguable to individuals who are employable and finding for a job or
work but they did not find a new work. Also, it is those individuals in the workforce who are
accessible for work but there skills does not match their work and they are failed to do some kind
of work (Corporate finance resources). The most difficult thing of joblessness is jobless rate,
which is the number of unemployed people separated by the number of people in the workforce
(Pettinger, 2019)

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.

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

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

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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.

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

From the referenced above make many individuals accept that joblessness is uncertain and that
the joblessness rate doesn't completely speak to the genuine number of individuals who are
jobless. It is a smart thought to likewise take a gander at the expression "business," which
the Bureau of Labor Statistics describes as people matured 16 or more who have as of late
placed hours into work in the previous week, paid or something else, in view of independent
work. (MA Chaudhry, 2014)”.

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Current Unemployment rate in Pakistan

Joblessness Rank in ‘Pakistan is supposed to be 5.90 percent before the Start of this one-fourth,
as indicated by Trading Economics worldwide large scale models and investigators desires. In
the long haul, the Pakistan Unemployment Rate is anticipated to slant around 5.90 percent in
2020, as per our econometric models’ (statistic, 2019).

Long-term Unemployment vs. Short-term unemployment

Joblessness that takes more than 27 weeks regardless of whether the person has searched for
work over the most recent a month is called long haul joblessness. Its belongings are far more
awful than momentary joblessness for clear reasons, and coming up next are noted as a portion
of its belongings.’ A huge 56% of the long-term unemployed reported a decrease in their
income’.

It appears that monetary issues are not by any means the only impacts of long haul joblessness as
46% of those in such a state detailed encountering stressed family connections. The figure is
moderately higher than the 39% percent who weren't jobless for as long.

Another 43% of the long haul jobless revealed a noteworthy impact on their capacity to
accomplish their profession objectives.

Tragically, long haul joblessness prompted 38% of these people to lose their dignity and 24% to
look for proficient assistance.

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Causes of unemployment

Joblessness is caused by various reasons that come from both the interest edge or business and
the stock edge or the worker.

The interest edge, unemployment might be brought about by 5ncrease debt costs, worldwide
worsening, and monetary emergency. The stock edge, frictional joblessness and auxiliary
business assume an extraordinary job. The fundamental driver are basic and fragmentary
joblessness:

1. Structural unemployment

All people who really want to do some kind of work for increase their earning but the
competitive market didn’t give a job to those people. There is a misconception between the skills
of jobless people and the required skills that are important for the job available in the market.
Structural unemployment occur for the big reason that is technological reason. (Pettinger, 2019)

 Job-related immobility’s

There are many jobs available in the world which require different skills and specifications and
some like people have different skills to perform individual work. They are facing many
difficulties in switching or searching a job.

 Geographical immobility’s
Many people love their places where they are living for many years. This is one of the biggest
reason of geographical immobility. There are many places in the world where many jobs are
available for unemployed people but jobless people didn’t go there for adapting this opportunity
because they are attached to their current area or difficulties to buy or renting a house.

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  Scientific Transform
Technological unemployment is one of the big enemy of people who have a different skill. For
this changes, many people lost their jobs just because of advancement in new technology like
(Mechanical muscles machine and Automation).

2. Frictional Unemployment

It refers when people have no job or have to do a work but they are still searching for a job in
growing economy. For those who have a job but still they are searching for better opportunities
because many people are not satisfied with their jobs and looking for a healthier job. It is
healthier for the economy and allow markets to find a more qualified person that will be fruitful
for the economy. It might occurs when the people are not satisfied with working conditions like
“work location, job responsibilities, salary and benefits”.

3. Cyclical Unemployment

Unemployment that is created because, there is not enough aggregate demand for the labor.
Labor Demand < Labor Supply This 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.

4. Seasonal Unemployment

There 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.

Effects of unemployment

We are living in a very challenging environment in which everyone have to do some work and
improve the living standards and fulfil their basic needs. It is very dangerous for those people
who are searching a job but didn’t find a satisfied job because unemployment lead to depression,
anxiety and psychological problems that is very bad for their health. (Pettinger, 2019) (Ali Rauf,
2018)

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Exploitation of labor:

Unemployment is the enemy of people who are unemployed. Workers are forced to do any kind
of work whether of low wages or unfavorable conditions.

Societal problem:

Numerous communal shades of meanness like dishonesty, having a bet and immoral behavior
and so forth appear because of job loss It imperil lawfulness incident of the nation. It causes
social confusion in the general public.

Industrial disputes:

Contemporary debates appear on account of joblessness. It effectively affect business

representative relations. Because of modern debate, the joblessness rise

Lifeless of human resources

Because of joblessness, HR go throw away. No expensive utilization of work power is made. In

the event that HR are properly utilized, financial expansion of the nation will pay raise.

Political volatility:

There is political instability in the nation because of joblessness. Jobless people attach with
themselves in damaging exercises. They think about Governments, hopeless. Financial
upgrading gets upsetting under states of political shakiness

Increase in scarcity:

Under the situation of joblessness a man has no fountain of salary. Joblessness causes neediness.
Monetary issues rise. (Ali Rauf, 2018) ( Pdf file By Ali Rauf , Bell hooks, Reviewed by Michelle
Seidel, LLB, MBA, Published Oct 25, 2018). (Mukher, n.d.)

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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.

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  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.
 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

Recommendations to reduce unemployment

The following strategies are used to reduce unemployment in Pakistan. (Mukher, n.d.)

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.

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  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 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.
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 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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References

Ali Rauf, B. H. (2018).

MA Chaudhry, A. K. (2014).

Mukher, S. (n.d.). Economice Discussion.

Pettinger, T. (2019). unemployment. US: Cracking Economics published.

statistic, P. B. (2019). TRADING ECONOMICS. Retrieved from Pakistan Bureau of statistic:

https://tradingeconomics.com/pakistan/unemployment-rate

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