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TOPIC TO BE COVEREDDefinition UMeasurement N Unemployment Rate ETypes Of Unemployment MVoluntary Unemployment PInvoluntary Unemployment L • Fractional Unemployment O Y • Structural Unemployment M • Cyclical Unemployment E • Seasonal Unemployment N • Regional Unemployment T • Classical Unemployment
Unemployment Unemployment (or joblessness) occurs when people are without work and actively seeking workA SITUATION WHERE SOME PEOPLE ARE WILLING AND ABLE TO WORK ,BUT ARE UNABLE TO FIND PAID EMPLOYMENT Unemployment
DEFINITION ACCORDING TO ILO• ILO (International Labor Organization)• Unemployment as defined by the ILO occurs when people are without job and they have actively looked for work with in the past four weeks• SOME REALITY BASE FACTS• This incidence is much higher in urban then rural area• Unemployment rates for women are higher then those for men.
EFFECTS OF UNEMPLOYMENT• Effect of unemployment (at individual level)• Mantel stress• Loss of self esteem• Directly linked to poverty and Malnutrition• Effect of unemployment (at social level)• Civil unrest• Law an order problems• Trade barriers
UNEMPLOYMENT RATEUnemployment Formula ( unemployment labor force /total labor force )*100Unemployment Rate In Pakistan Unemployment Rate in Pakistan decreased to 5.70 percent in the second quarter of 2011 from 6.10 percent in the first quarter of 2011
VOLUNTARY UNEMPLOYMENT• Voluntary unemployment is defined as a situation when workers choose not to work at the current equilibrium wage rate. For one reason or another, workers may elect not to participate in the labor market.• Voluntary unemployment is likely to occur when the equilibrium wage rate is below the wage necessary to encourage individuals to supply their labor.
Classical UnemploymentClassical unemployment is caused when wages are ‘too’ high.when workers themselves were blamed for not accepting lowerwages, or for asking for too high wages. Classical unemploymentis also called real wage unemployment. INVOLUNTARY UNEMPLOYMENT • When workers are prepared to work at the going wage rate but cannot find jobs.
FRICTIONAL UNEMPLOYMENTFrictional (Search) Unemployment• Frictional unemployment, also called search unemployment, occurs when workers lose their current job and are in the process of finding another one. This suggests that full employment is impossible at any one time because some workers will always be in the process of changing jobs.• For example, college graduates that have never been in the labor force before are considered frictionally unemployed until they manage to find a job or a person has given exams of CSS and waiting for a high job.
STRUCTURAL UNEMPLOYMENT Structural Unemployment• Structural unemployment occurs when certain industries decline because of long term changes in market conditions.• Arises from the mismatch of skills and job opportunities as the pattern of labor demand in the economy changes.• Often involves long-term unemployment .• Prevalent in regions where industries go into long-term decline.• Good example include industries such as mining , engineering and textiles.• Occupational immobility of labor.
THERE ARE THREE TYPES OF LABOR IMMOBILITY:Geographical immobilityGeographical immobility occurs when workers are not willing or able to movefrom region to region, or town to town.Other factors also contribute to geographical immobility, such as strong socialand family ties,and parents being unwilling to disrupt their children’s education by changingschools.Industrial immobilityIndustrial immobility occurs when workers do not movebetween industries, such as moving from employment in motor industry toemployment in the insurance industry. Industrial immobility has affected theUK, and many other industrial countries, as the growth of serviceindustries, and the decline of manufacturing industries, has increased the needfor mobility.
THERE ARE THREE TYPES OF LABOR IMMOBILITY:• Occupational immobility• Occupational immobility occurs when workers find it difficult to change jobs within an industry. For example, it may be very difficult for a doctor to retrain to be a dentist.• Industrial and occupation immobility are most likely to happen when skills are not transferable between industry and job.
SEASONAL UNEMPLOYMENT• Seasonal Unemployment• Seasonal unemployment exists because certain industries only produce or distribute their products at certain times of the year. Industries where seasonal unemployment is common include farming, tourism, and construction.• Regular seasonal changes in employment/labor demand.• Affects certain industries more than others.• Catering and leisure.• Construction.• Retailing.• Tourism.• Agriculture.
CYCLICAL UNEMPLOYMENT• Cyclical unemployment exists when individuals lose their jobs as a result of a downturn in aggregate demand• If the decline in aggregate demand is persistent, and the unemployment long-term, it is called cyclical or Keynesian unemployment.• Caused by a fall in aggregate demand leading to a loss of real national output and employment .
DISGUISED UNEMPLOYMENT:• Disguised Unemployment:• When persons are working as a labor just to help and engage busy, so a labor does not help in production increment. When more people are engaged in some activity than the number of person required for that, this is called disguised unemployment.• Examples:• In a farm, two kids are working as a labor to help their father and to engage busy. Here, two persons are unemployed and that is disguised unemployment.
• Regional Unemployment• When structural unemployment affects local areas of an economy, it is called ‘regional’ unemployment. For example, unemployed coal miners in Baluchistan Area’s and ship workers in the Karachi add to regional unemployment in these areas.
MAJOR CAUSES OF UNEMPLOYMENT: IN PAKISTAN • Employment in the private sector absolutely stopped because they shifted their capital to other countries because of nationalization of industrial units badly affected the investment industrial sector. • The higher growth rate of population is the major cause of unemployment in Pakistan. • Karachi is the biggest industrial base of Pakistan, but investors are reluctant to invest there because of unrest and violence. • Our educational system is also responsible for increasing unemployment rate among the educated youth. The attitude of our youth towards the choice of a career is unrealistic and unproductive
MAJOR CAUSES OF UNEMPLOYMENT: IN PAKISTAN• Lack of enough industries to employ ever increasing number of graduate in Pakistan• The government is not involving in capital expenditures which create more jobs.• Main issue of unemployment in our country is that when ever a new technology comes as software or hardware then all the people starts studying about that. Then at the end, you will see ten thousand students of a particular field about 5 to 10 job vacancies.• Lack of infrastructure and facilities in the field of energy, telecommunication and transportation also prevent the industrialist from setting up new industries.
SUGGESTIONS:• 1) Govt. should make efforts to push economic growth process. For this purpose Economic Revival Package should announce for the revival of industries sector, to stimulate production and investment.• 2) Govt. should seriously try to boost exports by lowering tariffs.• 3) Govt. should announce a package for the development of agriculture sector.• 4) Beside this a number of fiscal and monetary measures should take to attract industrialists and particularly foreign investment.• 5) More Technical and Vocational training facilities should be provided. In this way unemployed people will get the chance to enhance their skills and become able to earn reasonable income.• 6) With a view to reduce educate unemployment; self-employment scheme should be encouraged in true manners.
INFLATION• Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.
TYPES OF INFLATION:1. DEMAND-PULL INFLATION2. COST-PUSH-INFLATION3. BUILT-IN INFLATION4. IMPORTED INFLATION5. INCOME INFLATION6. DIFICIT INFLATION
1. DEMAND-PULL INFLATION:• Demand-pull inflation is generated when aggregate demand for goods for all purposes- consumption, investment and government exceeds the supply of goods at current prices.
FACTORS OF DEMAND PULL INFLATION:• Demand for non-development expenditures: The governments in Pakistan since 1947 have not been able to curb the non-development expenditures.
• Increase in worker remittances: During the last three years there is a rapid increase in the flow of worker remittances in the country .• Increase in Wages: The rise in wages , salaries ,dearness allowances, bonuses in the annual budget increase the purchasing power of the employees.
• Foreign Economic assistance: For rapid economic development, Pakistan has been receiving foreign assistance.• Construction of houses: Since 1970 the unproductive expenditure on the construction of houses, plazas etc. has also contributed to the rising trend in prices.
o Population explosion:The population is increasing at the rate of about 1.9% in Pakistan.
COST-PUSH INFLATION:• The rise in the general price level is also caused by the rising costs of the factors of production.
• Increase in Wages: The increase in wages and the rise in prices are chasing each other at a rapid speed causing personal rise in the level of prices.• Rising prices of imported goods: The import prices of POL chemicals, fertilizers, non-electrical machinery etc have gone up in the world market.
• Increase in Indirect taxes: The increase in the indirect taxes every year has given the general price level .• Rise in POL, Gas, and Excise Duty: The multiplier effect of the rise in POL, gas prices, and sales tax on a number of items has greatly contributed to the cost push effect.
• Sick Industrial Units: The increase in number of sick industrial units, fall in industrial production due to strikes, electricity breakdown cause decrease in production.
• Rise in support price of agriculture crops: The Government raises the support prices of cotton, wheat, sugar cane to protect the interests of farmers.
Built-in inflation:Inflation caused by the expectation of inflationoccurring. For example, employees expect thatinflation will happen, and so they negotiate forwage increases.
Imported inflation Open Inflation : “Government takes no steps to control price rice”It is due to increase in importedgoods cost.
Income Inflation• Increase in income , causes increase the money supply in the country that leads to income inflation…
Deficit inflation• Government has to borrow from banks and non-banks & internal and external resources in case of deficit financing…
Positive Effect Negative Effect Increase in production Decrease the purchasing power and saving Increase employment opportunity Increase the interest rate Enhance Economic development Create lot of social evils Increase the profit of producers Effect the existing creditors Benefit the cartels Effect the business cycle Benefits the inflator hording
Monetary policy is the process by which the government, central bank, Monetary policy is the process by which the or monetary authority of a country controls supply and availability of money.government, central bank of a country controls supply and
Open market operations High interest rates… Reduction in monetary expansion
Fiscal policy:Fiscal policy is changes in the taxing andspending of the federal government forpurposes of expanding or contracting thelevel of aggregate demand.
Fiscal policy: Highly increasing unproductive expenditures must be control Control on population
Fiscal policy: Import and export… Developments of agricultural and industrial sectors…
Fiscal policy: Increase in the growth rate of output Effective tax system will be helpful Improvement in balance of payment
DEGRREOF INFLATION: Moderate Inflation Range 1% to 20% Galloping Inflation Range 20% to 1000% Hyper Inflation Above 1000%