International Islamic University Islamabad. Assignment: # 01. Submitted To: Mr. Hazir Ullah. Submitted By: Group “J”. Members of group. Syed Furqan Haider. (3045) Ali Hammad. (3053) Shehriyar Khan. (3052) Mudasir Raja. (3055) Syed Abdul Matien. (3033) Globalization & Unemployment in Pakistan.
Globalization:Globalization (or globalization) describes the process by which regional economies,societies, and cultures have become integrated through a global network of political ideasthrough communication, transportation, and trade. The term is most closely associatedwith the term economic globalization: the integration of national economies into theinternational economy through trade, foreign direct investment, capital flows, migration,the spread of technology, and military presence. However, globalization is usuallyrecognized as being driven by a combination of economic, technological, sociocultural,political, and biological factors. The term can also refer to the transnational circulationof ideas, languages, or popular culture through acculturation. An aspect of the worldwhich has gone through the process can be said to be globalised.Unemployment is a central problem because when unemployment is high, resources arewasted and people’s incomes are depressed.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 arewasted and people’s incomes are depressed; during such periods, economic distress alsospills over to affect people’s emotions and family lives.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 lay 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 ofmodern macroeconomics. Voluntary unemployment may be or when qualified peoplechose not to work out the going wage rate unemployment occur. The key element inunderstanding involuntary unemployment is the inflexibility of wages in the face ofeconomic shocks. The same situation is in Pakistan, inflexibility arises because of costsinvolved in administering the compensation system.The upward creep in the natural rate arises mainly because of demographic trendsparticularly the higher proportion of teenagers in the labor force. In addition, governmentpolicies are also increasing unemployment rate i.e. Golden Shake Hand, ban on jobsincreasing unemployment rate.Unemployment in Pakistan:In Pakistan labor force include all persons who are of ten years and above, and during theperiod are without work, currently available for work and seeking for work. On the basisof the existing population of 142.87 millions with Labor force participation rate of 27.46percent, the total labor force comes to 39.24 million. According to this about 2.4 millionperson of labor force were estimated as unemployed in 1999, as constructionand transport sectors have absorbed 11.2 percent, 6.8 percent and 5.7 percent, comparedto 10.5 percent, 7.2 percent and 5.0 percent respectively in 1994-95.Economies are powered by consumer spending and savings investment. Unemployedworkers earn no wages; they spend little and save less. Economies with high levelsof unemployment are stalled economiesCauses of Unemployment:The major causes for unemployment among the poor in Pakistan include a lack oftechnical skills, little or no education, low income worsened by indebtedness tomoneylenders, no career guidance, lack of awareness regarding available jobs,high expectations without commensurate experience, little understanding of workethics and the weak economy. Low income can be improved by small enterprise
development (SED) activities, entrepreneurial and technical skills, increasedfinancial resources and management skills, and increased participation of womenin economic activities providing more income for the family as compared to asingle breadwinner.Political Instability:Political instability is one with the successive governments failing to come up with anysubstantial plan to tackle growing unemployment. There is a vicious cycleof unemployment and the mandarins at the top don’t have a clue as to how toReduce it.Low Quality of Education:It all boils to the primary or basic education in Pakistan about which little attention hasbeen paid and which continues to deteriorate. Budgetary allocations are very small forsuch an important sector with the result that we are unable to produce quality graduates ata tertiary level. The curriculum is outdated and the teachers too are pathetic. Unless wedon’t have a plan to improve basic education we can’t expect quality graduates beingchurned out at the tertiary level.Literacy Rate (2003 EST.) Male: 59.8%Total population: 45.7% female: 30.6%Effects of Unemployment on the People:People have lost their hopes and find ill ways to satisfy their utmost needs. It isanticipated that if no concrete actions are taken against these problems in the comingyears, the crime rate will become three times higher than the present. People will becomepoorer and will lose hope and trust in Government.During the last five months, 889 people committed suicide in different areas of thecountry. The study of suicide cases by Madadgaar, revealed that unemployment, poverty,skyrocketing prices of food items, fast deepening sense of insecurity and financial
problem seem to be the main reasons behind the sudden rise in the cases of self-murder inthe country.Impacts of Unemployment on the Economy:From Okun’s law we know that for every 2% fall in GNP relative to potential GNP,the unemployment rate rises by 1% point. High unemployment is a symptom of waste –for during recessions, when unemployment is high, the economy is not producing up tohigh level. When economy is not producing sufficiently, we can say that we are unable touse our full resources for production purposes. Economy will not grow as fast as it can ifbecome able to produce at high level.Social Impact:However large the cost to economy of unemployment, a recounting of Rupees lost doesnot adequately convey the human, social and psychological toll that periods of persistentinvoluntary unemployment bring.Although unemployment has plagued capitalism, the Industrial Revolution,understanding its causes and costs has been possible only with the rise of modernmacroeconomic theory. It is apparent that recessions and the associatedhigh unemployment are extremely costly to the economy.Suggestions: Economic Growth 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. Exports Government should seriously try to boost exports through broadening the tax base and lowering tariffs.
Agriculture Sector Govt. should announce a package for the development of agriculture sector. Fiscal and Monitory Policies Beside this a number of fiscal and monetary measures should take to attract industrialists and particularly foreign investment. Technical Training 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. Self-Employment Schemes With a view to reduce educate unemployment; self-employment scheme should be encouraged in true manners. Of course we need economy to get out of its present sordid affairs. Plus we are hardly seeing investors showing interest in the manufacturing sector with FD Is proving to be a mere drop in the ocean at this stage. In conclusion, another erupting challenge standing before Pakistan is wide- spread unemployment. Thousands of educated graduates are jobless. Hundreds of thousands of unemployed workers are forced to lead their lives below their status. Large scale unemployment has serious effects on the country’s production also. Moreover, the country’s population has drastically increased during recent years.