Unemployment is the situation where the country is not making full use of its resources.
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.
Unemployment is measured annually as the percent of the labor force that cannot find a job. The labor force comprises adults who want to work. Uncounted are those who do not seek employment, or who have become discouraged enough to stop looking.
Classification of Unemployment
Unemployment is classified into three categories.
- Frictional unemployment (workers who are simply moving between jobs)
- Structural unemployment (workers who are in regions or industries that are in persistent slump)
- Cyclical unemployment (workers who laid off when the overall economy suffers a downturn. In Pakistan unemployment is of structural and cyclical nature.
Understanding the sources of unemployment has proved one of the major challenges of modern macroeconomics. Voluntary unemployment may be or when qualified people chose not to work out the going wage rate unemployment occur. The key element in understanding involuntary unemployment is the inflexibility of wages in the face of economic shocks. The same situation is in Pakistan, inflexibility arises because of costs involved in administering the compensation system.
The upward creep in the natural rate arises mainly because of demographic trends particularly the higher proportion of teenagers in the labour force. In addition, government policies are also increasing unemployment rate i.e. Golden Shake Hand, ban on jobs increasing unemployment rate.
Unemployment in Pakistan
In Pakistan labour force include all persons who are of ten years and above, and during the period are without work, currently available for work and seeking for work. On the basis of the existing population of 142.87 millions with Labour force participation rate of 27.46 percent, the total labour force comes to 39.24 million. According to this about 2.4 million persons of labour force were estimated as unemployed in 1999, as construction and transport sectors have absorbed 11.2 percent, 6.8 percent and 5.7 percent, compared to 10.5 percent, 7.2 percent and 5.0 percent respectively in 1994-95.
Economies are powered by consumer spending and savings investment. Unemployed workers earn no wages; they spend little and save less. Economies with high levels of unemployment are stalled economies
Population
The estimated population of Pakistan for the year 2005 is said to be 162,419,946 million
At the time of independence, it was only 32.5 million, but 116 million people were added during the last 57 years
The population growth rate is 2.03% (2005 est.)
Population below poverty line: 32% (FY00/01 est.)
Unemployment Rate
The unemployment rate of Pakistan is 8.3% plus substantial underemployment (2004 est.)
Labor Force : On the basis of the estimated population of 148.72 million and the participation rate of 29.61 percent, in accordance with the Labor Force Survey 2001-02, the total labor force is estimated at 45.05 million.
Unemployed labor force : 3.72 million
Labor force - by occupation: agriculture 42%, industry 20%, services 38% (2004 est.)
Unemployment Rate in Rural And Urban Areas
Often it is perceived that unemployment rate of rural areas is greater because in rural areas there are less chances of employment as compared to urban areas where there are more chances of employment due to more industries
It is obvious from the above table that in Pakistan unemployment rate is increasing in both rural and urban areas in absolute as well as in percentage terms. Unemployment rate in rural areas is greater as compared to Urban areas. Because of industries there are more chances of employment in Urban areas. In Rural areas businessmen are setting up industries due to which now rural people seek Manufacturing sector for employment . As in rural areas there is no proper source of earnings due to which unemployment rate is increasing. As agriculture sector is not absorbing them due to adaptation of mechanical instruments and bad conditions. Small scale industries are not working efficiently due to worse economic conditions. So Rural people are not finding proper source of earning. It is clear from Percentage distribution of employed persons by major industries division.
Present Situation
Unemployment is a growing problem of every nation. Pakistan has reached a critical stage and joblessness is increasing daily. Moreover, downsizing in many government offices and within the private sector have exacerbated the problem.
Causes of Unemployment
The major causes for unemployment among the poor in Pakistan include a lack of technical skills, little or no education, low income worsened by indebtedness to moneylenders, no career guidance, lack of awareness regarding available jobs, high expectations without commensurate experience, little understanding of work ethics and the weak economy. Low income can be improved by small enterprise development (SED) activities, entrepreneurial and technical skills, increased financial resources and management skills, and increased participation of women in economic activities providing more income for the family as compared to a single breadwinner.
