This document discusses unemployment in Pakistan. It provides background on unemployment rates and types in Pakistan. Some key points: - Unemployment in Pakistan is over 12% which equates to over 113 million people. The rate has increased in recent years. - Major causes of unemployment include a declining agriculture sector due to technology and water issues, a lack of investment and economic crisis, and rapid population growth. - Types of unemployment discussed include frictional, structural, natural rate, and demand deficient unemployment. - Pakistan's unemployment rates have fluctuated over the past few decades from a low of 3.13% to a high of 8.27%. Rates are higher for youth and decrease with age.

1. Economic
reasons for
high
unemployment
in Pakistan
April 30
2018
Unemployment is one of the most difficult social issues of market economics. The
unemployment shifts over the business cycles as understood as changes in aggregate
demand relative to aggregate supply. This paper deals with the information and the
causes of unemployment and its impact on the Pakistan economy. It also shows different
aspects and reasons for growing unemployment in Pakistan including its prevailing
economic crisis. The role of government is also taken care of to identify the causes of
unemployment. The research is conducted about the impact of unemployment on
Pakistan economy. Study identifies the economic reasons of unemployment in Pakistan,
to search unemployment in Pakistan and Effects of social economic impact on youth of
Pakistan. The research gives information of various reasons for unemployment and its
impact on the economy of Pakistan.
Asad ullah
163-BH-MLT-16

2. Introduction:
Those who have abilities and the will to do work, but there is lack of opportunities to get job are in the category of
unemployed. When unemployment high resources are wasted,people’s income are depressed. In the current situation
the ratio of unemployed persons in Pakistan is more than 12 percent which consists of 113 million peoples. (Nizami.S;
2010) According to latest labour survey for 2008-09, the unemployment rate has increased to 55% from 52%
unemployment rate as 15 percent. (Khalil; 1999) There are so many reasons of unemployment in Pakistan. The biggest
reason is the insufficient methods of production potential targets in almost all activities and branches of agriculture.
Agriculture contributes almost directly or indirectly (Farooq 2009-10) Unemployment in agriculture sector is due to
two main factors. Firstly, adaptation of latest technology has decreased the demand for farm labour. Secondly the
labour displaced cannot be re-employed by other economic sectors due to low level of education, unskilled to be used
in industries and due to vicious circle of poverty. Because they do not have enough resources to initiate small business
venture on their own and be able to break his vicious circle
Causes ofUnemployment:
This part deals with the causes of unemployment and its impact on the economy of Pakistan. Some of the major causes
of unemployment in Pakistan are following; Agriculture sector engages directly or indirectly 45% of the labour force
and it also contributes 23% to the GDP. The main causes of unemployment in Pakistan are : The first cause is
unpleasant as well as unacceptable condition of law and order and because of this serious situation foreign direct
investment is sliding down, In survey of Pakistan economically, in last year current decade FDI was minimum,
According to the international institute of Finance Direct Investment, FDI which fell 32% in 2009 is the reduction in
Pakistan. In 2009 the FDI was $3.2 billion but in 2009-10, July to April FDI was totally $1.8 billion which represent
declines of 45 percent. Agriculture is the second major sector for the maximum job provision in Pakistan, but
nowadays agriculture sector is facing severalchallenges such as water shortage, climate changes and technological
backwardness. This causes a decline in jobs. Almost 62% of population living in rural areas directly or indirectly
depend on agriculture sector. In 2009- 10 the growth of agriculture production was 2% which was against the target of
3.8%. The largest and biggest sector of the economy is industrial sector. 13% of total employment depends on
industrial sector which contributes 18.5% of gross domestic product. In manufacturing the absorption on employment
at around 13% has remained fairly stable. Another main cause of unemployment in Pakistan is the economic
depression of the world combined with the terror of America, has reduced trade and industrial activity in Pakistan. It
has not only defaced Pakistan's image in the international arena but also doubled our expenditures on Armed forces.
Pakistan is not attracting new investment plus these factors have put international investment at risk. In 2007
American states spent $368 billion in research and development field. The amount spent on research as wellas
education, create more specialized fields and generate more opportunities. Only 2 percent of the GDP has been spent
by Pakistan on education according to 2010 budget which is quiet a small amounts as seen in the region context. Other
cause of unemployment in Pakistan is the rapid growth of population. At the end of june 2009, estimated population is
1699 millions, in 2050, it is expected that Pakistan will become the fourth largest nation of the world in population
with growth rate of 2.06 percent. At present Pakistan is sixth in worlds from population point of view. The economy
of Pakistan has been facing economic, social and political upheavals in the recent past resulting in colossal monetary
and material losses. To pinpoint a few,the energy crisis is on the top. Not only the productivity and efficiency of the
industrial sector has suffered a lot, but it has also added to the suffering of human life human life. In such a vulnerable
situation it is no wonder that unemployment may creep up to an unmanageable level. Many other causes are the
aftermath of the energy crisis. These include a marked decrease in the productive capabilities of the industrial goods
and services,the galloping rate of inflation, low investment and low saving, causing the lowering of GPD of the
industrial sector. This took the unemployment rate to ever highest level during the past 60 years.
Types of Unemployment:
This part deals with the various types of unemployment and nomenclatures used by researchersand scholars.

3. Frictional Unemployment:
Changes in individual market in the cost of Frictional or Temporary unemployment for example new workers to
search different jobs possibilities. Even experienced workers spend a period of unemployed time for searching
attractive jobs offering. The concept of frictional unemployment is different concept from cyclical unemployment
which is a result of low level aggregate to demand with reference to wages and price from one place to another.
Structural Unemployment:
When there are regional job vacancies but they do not match the pattern and skills of workers, are the pattern of the
jobs is different from workers skills.
Natural Rate of Unemployment or the Non Accelerating Inflation Rate of
Unemployment (NAIRU):
The constant inflation rate is called non accelerating inflation rate of unemployment. It has no tendency for inflation to
change. The accelerating inflation rate of unemployment is that unemployment rate in which in the long run the
Phillips curve is vertical. Okun's law shows the relationship between cyclical movements in GDP and unemployment.
According to Okun's law, when the actual GDP declines 2% relative to potential GDP the unemployment rate
increases by about 1%.
Demand DeficientUnemployment:
According to Keynesian, any level of unemployment beyond the natural rate is due to insufficient demand in
economy. The period of recession, aggregate expenditure (AE) is deficient causing the under utilization of inputs e.g.
including labour. According to Keynes,aggregate demand can be increased by increasing consumption investment (I,
government expenditure (G) or increasing the export (export minus import) or (x-m).
DiscussiononPakistan’s unemployment rate:
In December 2009, the unemployment rate reported in Pakistan was 5.05% from 1990 until 2009, unemployment rate
in Pakistan was arranged 5.88 percent reaching at the tremendous height of 8.27% in December 2002, and recorded
low at 3.13 percent in December 1990. The labour is defined as the members employed plus the people are not
employed but looking for jobs. Unemployment Rate is the Unemployed Population which is defined as a percentage
of the present working population while present working population consists of persons whose age is ten years and
above and who fulfill the requirements for employed or unemployed persons during the reference period i.e, one week
preceding the date of interview. There has been a decrease in the unemployment rate during the last few years. The
percentage of unemployed as compared to the present working population has declined except in 2001-02 where it
increased. Normally it is observed that unemployed labour force has decreased during the last decade with the
exception of the few years. A little change was noticed in 2008-09 when unemployed labour force increased. The rate
of unemployment reduces with age; it is seen that mostly people participate in the laboure force in the age group 20-
50. This following table shows that Unemployment Rate decreasesas age and participation increase (unless the age is
above 50). In 2005-06 1.2 million of the youth (15-25 years) was unemployed, which is 0.4 million less than the
number of unemployed youth in 2001-02. in case the present percentage of unemployment continuous for the next 20
years,the number of unemployed youth will be nearly 6 million in 2030.
Pakistan’s Status ofUnemployment:
The economy of Pakistan has generated a lot of advantages from the foreign expatriates, specifically the gulf
countries. This was traditionally unskilled labour engaged in the construction boom of the post -1973 oil price hike
shock. However,due to the economic changes in the Arab countries the opportunities for unskilled labour has been
decreased. Because of decrease in jobs abroad, the economy does not allow employment opportunities, which can be
figured out from the low growth rates. With the high rate of population growth, the figure for unemployed Pakistanis

4. is likely to go up further. In Pakistan the demand for skills could not match the supply for skills. Studies indicate that
Pakistan's literacy rate is one of the lowest in the world and is worse than the rest of countries in the region. In
Pakistan no unidirectional movement of Head Count Ratio has been observed regarding poverty status. The HCR ratio
of 30.6 percent in 1998-99, increased to 3.5 percent in 2000 before declining to 23.9 percent during 2004-05 and
2005-06 (Aslam, 2009-10) In Pakistan Less than three- quarters of the school-age population goes to primary school.
Expenditure on education as a percentage of GNP has been less than 3% in the last decade.
Unemployment in Pakistan's youth:
The problem of unemployment has all along been existed in Pakistan since its inception. It remained an important
issue center in the country therefore; Pakistan's new generation suffers from this problem a lot. Causes behind the
unemployment of youth are the following;
 There are no vacancies for youth in the market as it is already saturated.
 Education system is not fully equipped to prepare the youth to meet the market demand.
 In budget the fiscal deficit has detracted the ratio of the employment.
 There is lack of industrialization.
 Favoritism in politics.
 Because of the population explosion there is unemployment in Pakistan youth.
 In budget fiscal defict has detracted the ratio of the employment.
 Due to the lack of there is unemployment for Pakistan youth.
 Favoritism in politics is also one the causes of unemployment in Pakistan.
 Copy culture has also contributed to the unemployment in Pakistan.
 Interruption of the political parties in educational institution has also caused unemployment in Pakistan
youth.
 Weak,defective and inefficient economic plans and management is also one of the reasons for caused
unemployment in Pakistani youth.
Effectof unemployment on youth of Pakistan:
The youth are inclined to various social evils and diseases and even commit suicide. Pressure groups are active in the
country. Ratio of juvenile delinquency is on the increase. Street killing, kidnapping, robbing are taking over the
community. Youth indulge into undesirable activities like smuggling, sale of heroin etc. Social disorder in the society
is growing rapidly. Due to effects of unemployment on youth of Pakistan there is a loss of national talent on which
hope of family and future of Pakistan mainly depend.
Conclusion:
The present scenario of unemployment shows a gloomy picture of the future. Since unemployment has multifarious
reasons as discussed in this paper, therefore the solution is not simple. Before unemployment could be controlled, the
whole of economy needs to be put on firm footing free of corruption from top to bottom among all the members of the
society. Suggestions As the global trade in service has grown much faster it is imperative that government should
devise policies which encourage and promote relative education in the particular field. For the revival of industrial
sector government should announce economic revival package to stimulate production and investment. For the
development of agriculture sector government should announce multiple packages. The fiscal and monetary measures
should attract industrialists, and foreign investment. Government should provide technical training facilities. To break
the vicious cycle of poverty letting free the harassed tenants landless people from the iron clutches of the feudal lords,
the mafias and the aristocratic jagirdars. Establishing the rules of law for fair justice by formulating short and long
plans directed towards just and fair play of the economic activities in the economy. Opportunities for investment are
created through honest means and the natural and human resources are judiciously utilized in all productive activities
of the economy.

5. References:
 Aslam, M. (2010). Poverty in Pakistan. Economic survey. Islamabad: Economic adviser wing, finance
division, Government of Pakistan. 127-128.
 Habib, R. (2010). Manufacturing in Pakistan economic survey. Islamabad: Economic adviser wing, finance
division, Government of Pakistan. 39-40.
 Farooq, Omer. (2010). Agriculture in Pakistan. Islamabad: economic adviser wing, finance division,
Government of Pakistan. 13-14.
 Farooq, Omer. (2010). Education economic survey. Islamabad: economic adviser wing, finance division,
Government of Pakistan. 145-148.
 Nizami, N. S. (2010). Population, Lahore force and employment economic survey. Islamabad: Economic
adviser wing, finance division, Government of Pakistan. 145-148.
 Sherani, Sakib. (2010). Growth and investment, Economic survey. Islamabad: Economic adviser wing,
finance division, Government of Pakistan. 1-5.
 Khalil, Samina. & Noman, R. S. (1999), Unemployment situation in Pakistan. Islamabad: Applied research
center.