Acknowledgements:

“No report is ever a work of only one person and this one is no exception”

First of all we are thankful to Almighty Allah for his blessings upon us in the completion of this
task.

We are highly thankful to our honorable teacher Miss. Urooj Aijaz particularly for guidance.

This report is the product of many hands, and countless hours from our group members, our
thanks go out to all those who helped, whether through comments or suggestions.

1
A man willing to work and unable to find work is perhaps the saddest sight that fortunes
inequality exhibits under the sun.

- Thomas Carlyle

2
EXECUTIVE SUMMARY:

Earning is the biggest issue in world. In Pakistan, we are facing many kind of crisis due to our
economy’s disaster. Our major problem is unavailability of jobs.

As defined by the International Labor Organization, “unemployed workers” are those who are
currently not working but are willing and able to work for pay, currently available to work, and
have actively searched for work.

The image of unemployment is the one which we receive from our newspapers or televisions.
We hear our politicians explaining that the latest figures show that unemployment is decreasing,
while opposition party would be much more cynical. There are various reasons of unemployment
present in our society.

The report focuses on unemployment in Pakistan at present.

The objective is to build awareness among the youth for their career in Pakistan.

The report contains description on what unemployment is, how many types of unemployment,
and what are their root causes.

Our major focus is Pakistan where large no of educated people are available but there are only
few organizations which are providing jobs to them and training as well, we have also compare
our unemployment rate with some other developed and under development countries in which
we find PAKISTAN is on top most position for unemployment .

3
DEFINITION:

Unemployment is the state in which a person is without work, available to work, and is currently
seeking work. It is a situation where there is non-availability of job for the persons. It is a
situation in which a person who is physically capable, mentally willing to work at existing wage
rate does not find any job and is forced to remain unemployed.

THE UNEMPLOYMENT PROBLEM

One of the major problems that our country has been experiencing in the last ten years has been
unemployment. The severity of the problem has been increasing over the years.

The results of the Labour Force Survey showed that the general rate of unemployment was 6% in
2001/2002 as compared to 15.2% in 2010. The highest rate of unemployment recorded in year
2010. The unemployment problems seen today have several interrelated causes which we
discuss later in this report.

4
INTRODUCTION:

Unemployment is the situation where the country is not making full use of its resources. In the
current situation more than 30 lakh people are unemployed in Pakistan and unemployment ratio
is more than 15%.

It involves a waste of human resource and results in many social evils like theft, pick- pocketing,
robbery, murder etc. It’s a serious economic, social and political problem of the country. It’s a
cause as well as effect of poverty. The unemployment rate is used in economic studies. Rate is
determined as the percentage of those in the labor force without jobs.

There are a variety of different causes of unemployment, and disagreement on which causes are
most important. Unemployment is one of the biggest problems of Pakistan.

UNEMPLOYMENT is measured by the number of people seeking jobs.

Labor force:

55.88million
note: extensive export of labor, mostly to the Middle East, and use of child labor (2009 est).

Labor force - by occupation:

Agriculture: 43%

industry: 20.3%

services: 36.6% (2005 est.)

5
Rate of Unemployment

Types of Unemployment:

Cyclical unemployment

This refers to unemployment that rises during economic downturns and falls when the economy
improves. This type of unemployment exists due to inadequate effective aggregate demand. It
gets its name because it varies with the business cycle, though it can also be persistent, This type
of unemployment is the most serious one. This arises when demand for most goods and services
fall. To the Economist, the country is in recession. When demand falls, less production is needed
and consequently fewer workers are being demanded, in such a case mass unemployment can be
expected.

Frictional unemployment

This unemployment involves people in the midst of transiting between jobs, searching for new
ones; it is compatible with full employment. It is sometimes called search unemployment and
can be voluntary. New entrants (such as graduating students) and re-entrants (such as former
homemakers) can also suffer.

6
Structural unemployment

Structural unemployment involves a mismatch between the sufficiently skilled workers looking
for jobs and the vacancies available. Even though the number of vacancies may be equal to the
number of the unemployed, the unemployed workers lack the skills needed for the jobs — or are
in the wrong part of the country or world to take the jobs offered. It is a mismatch of skills and
opportunities due to the structure of the economy changing. That is, it is very expensive to unite
the workers with jobs. One possible example in the rich countries is the present combination of
the shortage of nurses with an excess labor supply in Information Technology. Unemployed
programmers cannot easily become nurses, because of the need for new specialized training, the
willingness to switch into the available jobs, and the legal requirements of such professions.

Seasonal unemployment

In this case, like that of cyclical unemployment, the number of job-seekers exceeds the number
of vacancies. In this situation, real wages are higher than the market-equilibrium wage. In simple
terms, institutions such as "the minimum wage" deter employers from hiring all of the available
workers, because the cost would exceed the technologically-determined benefit of hiring them
(the marginal product of labor). Some economists theorize that this type of unemployment can be
reduced by increasing the flexibility of wages (e.g., abolishing minimum wages or employee
protection), to make the labor market more like a financial market.

Hidden unemployment

Hidden, or covered, unemployment is the unemployment of potential workers that is not

reflected in official unemployment statistics, due to the way the statistics are collected. In many
countries only those who have no work but are actively looking for work (and/or qualifying for
social security benefits) are counted as unemployed. Those who have given up looking for work
(and sometimes those who are on Government "retraining" programmers) are not officially
counted among the unemployed, even though they are not employed. The same applies to those
who have taken early retirement to avoid being laid off, but would prefer to be working. The
statistic also does not count the "underemployed" - those with part time or seasonal jobs who
would rather have full time jobs. Because of hidden unemployment, official statistics often
underestimate unemployment rates.

Voluntary unemployment

7
 There are some persons in a society who for various reasons prefer to remain jobless even
though there are possibilities of getting job; some have the desire to have jobs only of their liking
or giving better remuneration than that in the earlier jobs and therefore they prefer to remain
unemployed. Such a kind of unemployment is referred to as VOLUNTARY
UNEMPLOYMENT.

Involuntary unemployment

Involuntary unemployment is a situation where a person is physically and mentally fit to work
and also willing to work at existing wage rate, but does not get a job. He is forced to remain idle
even if he is willing to work.

UNEMPLOYEMENT IN PAKISTAN AND ITS REASONS:

There are already many reports and researches have been done on unemployment in Pakistan but
we are going to study about current situation of our country. Below are the tables show the
public response towards problems they facing in Pakistan.

8
Now we see that in Pakistan what is the situation of unemployment and what are its impacts.

1. The biggest reason of unemployment in Pakistan is concerned with the backwardness of

agriculture sector. Agriculture is the biggest sector of our economy that contributes 20.9% to
GDP and 44% people get jobs from this sector directly or indirectly. Unemployment in this

9
sector is from two sides.

First is due to the adoption of latest machinery and capital intensive technology. Due to this,
demand for labor has been decreased. Second is the backwardness of this sector. There is less
availability of fertilizers, pesticides, and quality seeds, absence of land reforms and lack of
agriculture education. Due to all these factors agriculture sector is not expanding and there is
general and disguised unemployment.

2. Industrial sector is the second largest sector of our economy and contributes 19% to national
income. This sector should employ a large number of labors. But due to backwardness it is
employing a small number of people. Due to electricity breakdown already established industry
is deteriorating, resulting in the prevailing unemployment ratio.

In Pakistan education system is defective. There is no educational planning. This system is

producing the stuff, which is useless in technical fields of the country. There is lack of technical
and vocational institutions. Public attitude towards education is wrong, they want to get their
degrees in general and arts subjects. Nobody can set up his own business without technical
education.

Millions of people in Pakistan are poor. Due to poverty people are overburdened with
expenditures and their savings are very low. It is said that for the reasonable growth of economy
saving rate should be at least 25% in any country, but in Pakistan it is only 13 to 14% which is
very low. Low investment level is due to fewer saving, ultimately there is unemployment.

In Pakistan majority of the businessmen are less educated. They do not know how to run their
businesses properly. So they become bankrupt. This factor generates unemployment on a
massive level.

In Pakistan there is lack of every kind of planning. There is a huge difference between the
demand and supply for labor. There is absence of such kind of planning to produce doctors,
engineers, technical expert’s scientists etc, according to the need of different sectors of the
economy.

Load shedding of electricity is disturbing economy, especially the industrial sector. Due to less
availability and high rates of basic inputs like electricity, gas and oil etc, many industries have
been closed.

In Pakistan, tax system is not satisfactory. Ratio of direct taxes is more than indirect taxes. Tax
evasion is common. Due to less income from the taxes, government cannot start developmental

10
projects. If there is no investment, then from where public would find jobs. On the other side if
government takes step to increase indirect taxes, it would also affect investment and ultimately
employment level.

Current international financial crisis is one of the biggest reasons of unemployment in Pakistan
and in the whole world. This crisis originated from the banking sector of USA, UK and some
European countries and is now a global phenomenon.

Pakistan's population growth rate is 1.8% which is the highest in the region. Our resources are
limited. Different sectors of economy are unable to provide jobs to the growing population. So
there is unemployment.

Fiscal and monetary policies are also responsible for unemployment. In view of fiscal policy,
Pakistan has fewer funds to invest in job providing projects. Every annual budget shows deficit.
Through the monetary policy if the government increases the rate of interest, it discourages the
investors from getting loans.

Political instability, bad law and order situation, army's interference, bomb blasts, terrorism,
inconsistent economic policies etc are the factors which are disturbing domestic and foreign
investment. Pakistan investors are taking away their money to Dubai and other countries of the
world.

Craze for work only in government sector, instead of private sector and seasonal firms, industries
are also responsible for unemployment.

Since 1947, Pakistani rulers got loans from IMF, World Bank and many other sources. Such
loans were not utilized honestly. Current external debt of Pakistan is more than 50 billion dollar.
Government has to allocate a big amount for the repayment of loans with interest. So due to
fewer resources for developmental projects there is unemployment.

PAKISTAN UNEMPLOYEMENT RATE:

Unemployment rate 2010: 15.2% (2009 est.)

11
 Unemployment rate %
15.2

8.3
7.8 7.7 7.4
7 6.6
6.3 6.5
6 5.6

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

This entry contains the percent of the labor force that is without jobs. The level of unemployment
is moving up from last years.

Year Unemployment rate Rank Date of Information

2003 7.80 % 119 2002 est.
2004 7.70 % 122 2003 est.
2005 8.30 % 75 2004 est.
2006 6.60 % 65 2005 est.
2007 6.50 % 72 2006 est.
2008 5.60 % 71 2007 est.
2009 7.40 % 92 2008 est.
2010 15.20 % 151 2009 est.

Source: CIA World Fact book as of Feb. 19, 2010.

Country Comparison:

12
Here is the comparison of Pakistan with its neighbor countries and some of the developed
countries.

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.

Unemployment comparision rate%

15.2

12.5

9.9 9.7
9.5
9
7.8 7.5

5.5

Japan Russia UK India Pakistan Germany china Iran USA

http://www.indexmundi.com/pakistan/unemployment_rate.html

13
Country Unemployment rate (%) Source / date of
information

Pakistan 15.2 2009

Japan 5.5 2009 (August)

UK 7.80 2010 (January)

USA 9.70 2010 (January)

India 9.50 2009

Germany 7.5 2010 (January)

Russia 9.9 2009 (May)

China 9.00 Jan 2009 est

Iran 12.50 2009 (May)

Source: CIA World Fact book

14
Causes of Unemployment in Pakistan:

There are different causes due to which unemployment occurs.

The major causes for unemployment among the poor in Pakistan include a lack of technical
skills, little or no education, low income, 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 in economic activities.

Over population

The estimated population of Pakistan for the year 2010 is said to be over 17million the world's
sixth most-populous country, the population growth rate now stands at 1.6%.
At the time of independence, it was only 32.5 million. The first and the most common cause of
not only the unemployment but the cause of many other social problems are over population. It
causes poverty, inflation, unemployment, etc. It cause unemployment because if there are more
people and less opportunities so their need will fulfilled and if there are limited job requirement
and a large numbers of spectators so how will every one become employed so over population
cause unemployment.

15
 PAK POPULATION
200000000
180000000 176242949
160000000
140000000
120000000
100000000
80000000
60000000
40000000
20000000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Lack of Education

The primary or basic education in Pakistan about which little attention has been paid and which
continues to deteriorate. We are unable to produce quality graduates at a tertiary level. The
curriculum is outdated and the teachers too are pathetic. 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.

Rapid mechanization and computer technology also causing unemployment. Main issue of
unemployment in our country is that whenever a new technology comes as software or hardware
then all the people starts studying about that and search the scope of market. Then at the end, you
will see ten thousand students of a particular field about 5 to 10 job vacancies.

16
 The graph shows the
literacy rate of Pak in
last ten years as we
notice above population
is increasing day by day but the literacy is not that much greater as it could have to be.

Literacy Rate %
60

50 48.7 48.7 49.9 49.9 49.5

45.7 45.7
42.7 42.7
40
37.8
30

20

10

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

White collar jobs

White collar job means the respectable and honorable job. Now a day every one want to have
these kinds of jobs but these jobs are very less in number so everyone can not get these jobs and
they do not want to get other unrespectable jobs and they remain unemployed.

High cost and low Quality

High cost and low quality are responsible for less demand for our Agri. and industrial items.
Because of less demand of such kind of goods both the domestic and international producers are
losing their interest in production. That's why people are becoming unemployed.

Smuggling

17
In our country smuggling is also causing unemployment because the smuggled product have low
price as compare to those things which are produce in the industries and due to which the sale of
produced product is decrease and if the sale is decreased so the producer is producing less
numbers of products then there is no need of allot of workers so it cause unemployment.

References

Now a days in our countries most of the jobs are reference based jobs so any common man who
have no reference cannot get a good job and he will not accept the unrespectable job and remain
unemployed.

Poverty

Poverty is another factor which adds to unemployment. Because unfortunately, corruption has
always been at its peak in all big employer's system/institutions in Pakistan. Due to poverty
many of our graduates are unable to give a heavy amount for being selected or having an entry
into any system.

Economy slow down

If our economy is getting slower and slower so it means we are not producing well and have less
sales and if the sales are less so owner will not able to pay wages to all hiss employees so he will
kick out his employees which cause unemployment.

Lack of industries

Industries are the important part of the success of any economy in our country the number of
industry is very low as compare to other developing countries. If we have more industries so
more peoples can work there.

18
Political instability

Political instability is one with the successive governments failing to come up with any
substantial plan to tackle growing unemployment. There is a vicious cycle of unemployment and
the mandarins at the top don’t have a clue as to how to reduce it.

The political condition can also affect the rate of unemployment. Because if there is bad political
condition so the investors of other country will not invest in our country and then we can not
make more industries.

Poor job performance

By giving poor performance during the job so the owner will kick out the person who is not
working efficiently. Due to which they become unemployed.

Load shading of Electricity

Load shedding of electricity is disturbing every sector of the economy, especially the industrial
sector. Due to less availability and high rates of basic inputs like electricity, gas and oil, etc.
many industries have been closed.

Unemployment Rate in Rural and Urban Areas

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.

19
Effects of Unemployment on the People

People have lost their hopes and find ill ways to satisfy their utmost needs. It is anticipated that if
no concrete actions are taken against these problems in the coming years, the crime rate will
become three times higher than the present. People will become poorer and will lose hope and
trust in Government.

During the last four months, many people committed suicide in different areas of the country.
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 in the country.

Impacts of Unemployment on the Economy

Economic Impact

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 to high level. When
economy is not producing sufficiently, we can say that we are unable to use our full resources for
production purposes. Economy will not grow as fast as it can if become able to produce at high
level.

Social Impact

However large the cost to economy of unemployment, a recounting of Rupees lost does not
adequately convey the human, social and psychological toll that periods of persistent involuntary
unemployment bring.
Although unemployment has plagued capitalism, the Industrial Revolution, understanding its
causes and costs has been possible only with the rise of modern macroeconomic theory. It is
apparent that recessions and the associated high unemployment are extremely costly to the
economy.

• effects to the individual

• effects to the family

20
• effects to the economy and government

EFFECTS TO THE INDIVIDUAL

• Unemployed loses their self-esteem

• become depressed
• get violent
• mentally disturbed
• lead to suicide, drug addiction, vandalism
• loss of productive services

EFFECTS TO THE FAMILY

• Loss of family income

• leading to falling expenditure
• increase in domestic violence
• higher divorce rates

EFFECTS TO THE ECONOMY & GOVERNMENT

• Unemployment leads to under-utilization of resources

• economy therefore cannot reach its optimum production level
• Productivity falls GDP falls economic growth falls
• Higher crime rates government spending on security etc-police.
• In developed countries they become a burden to the Govt must pay more unemployment
benefits.
• Government tax revenue falls since less people working

21
Crime and Unemployment

Unemployment has direct relation with crime rate. Increase in unemployment results in
increasing crime rates. With people unable to find jobs they find criminal ways of making
money. However, the overwhelming abundance of research directed at crime and unemployment
views the issue from the starting points of poverty, education, and unemployment as the
causatives.

Efforts of Government of Pakistan

• Banks & Business Finance institutions

• Small Business Finance Corporation (SBFC)

• Small and Medium Enterprises Development (SMEDA)

The government is trying to reduce the unemployment rate. Under Prime Minister's Self
Employment Scheme, different Banks and Small Business Finance Corporations are extending
loans to unemployed youths and skilled professionals having diploma/degree and business
experience. Loans ranging from Rs.10,000 to be Rs.500,000 for small business and from
Rs.500,000 to Rs.5,000,000 for small industries etc. Small Business Finance Corporation is
playing role in reducing unemployment. The liberal economic and fiscal policies of the
government may reduce unemployment rate because they can create new job opportunities and
business in the country. In addition, construction of additional motorways and setting up of
industrial zones throughout the country would also generate new opportunities for employment
in the country.

SUGGESTIONS

Economic Growth

Govt. should make efforts to push economic growth process. For this purpose Economic
recovery Package should announce for the revival of industries sector, to stimulate production
and investment.

Talent Base Jobs

22
In the Rural area education should be technical .there is many individual problem such as
physical unfitness, age factor and physical disabilities ,so government should help them
.casteisim problem checks the  progress ,so replace it by talented people means people get job
based on talent not based on cast.

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.

Small Scale Industries

In our rural sector there is not only unemployment but also disguised unemployment. This
unemployment and disguised unemployment can be removed through the development of small
scale and cottage industry but industrial units can only be established when roads are there.

Transport and communication:

The main physical infrastructure in a country is transport and communication. The transport in
Pakistan included road, railways, ports and communication net work consists of postal services,
Telecommunications, etc. The development of a country’s transport system is a pre-requisite to
its economic growth. There is a close relationship b/w transport communication and the level of
economic activity. Economic development requires a highly organized system of transport and
communications. A planned and organized system of transport and communication is one of the
indications of country’s development. If we economically compare advanced countries with
backward countries, we would find a better system of transport and communication in advanced
countries. While traffic jams and other irregularities are in the system of transport and
communication in a backward country.

23
Self-Employment Schemes

With a view to reduce educate unemployment; self-employment scheme should be encouraged in

true manners. 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.

CONCLUSION:

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. Therefore, every step taken to improve the living standard of common man proves
to be unsuccessful and ineffective.

Unemployment is a heinous problem of the whole world. Same is the case with Pakistan with
multiple challenges. Pakistan has to eliminate these economic and social evils along with all of
its aspects to the maximum extent.

Concluding, I would like to suggest that with proper economic planning, consistent policies of
government, better law and order situation, abolishing energy crisis, sincerity with Pakistan and
by adopting the Islamic economic system we can not only tackle the issue of unemployment but
every economic problem of our country as well.

24
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 CIA World Fact book - information in this page is accurate as of January 1, 2009

 Economics, Eighteenth Edition, Samuelson Nordhaus. Mc GRAW HILL

 Principles of Economics, Second Edition, N.Gregory Mankiw, Harcourt, 2001

 Kemal, A. R. and Rashid Amjad (1997), Macroeconomic policies and their impact on poverty
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 Pakistan Economic and Social Review

Volume 47, No. 1 (Summer 2009), pp. 79-98

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