TERM PAPER

UNEMP LOYME NT AND ITS SIT UATIO N IN ASIA

Submitted to:
Sir Abdul Farooq

Submitted by:
Muzammil Shahid (10) Ifzal Ahmed (09) Hajra Fazal(29) Adeel Abid(08) (F005-BBA) Date: 11, December 2006

Contents
1. Introduction 1.1 Statement of problem 1.2 Objectives of Study 1.3 Methodology and source 1.4 Organization 2. Review of literature 3. Analysis of Data 3.1 Global Causes of Unemployment 3.2 Costs and effects of Unemployment 24 3.3 Situation of Unemployment in South Asia 3.4 Situation in Pakistan 3.5 Role of Pakistan Government 4. Suggestions and Conclusions 6. References 26 29 31 33 38 3 3 6 7 7 8 23 23

List of Illustrations
Table 1 Table 2 Table 3 Figure 1 Figure 2 Appendix A Appendix B 27 28 30 27 38 36 37

2

1. Intr od uct io n
1.1 Statement of Problem
Major obstacles in the path of Economic Development and Growth of the Underdeveloped countries, better to say developing countries are: Poverty, Inflation, illiteracy, Unemployment, Capital deficiency, Lack of saving and investment, Low GDP growth rate, Unequal income distribution, Political and economic Instability, and poor health, transportation and sanitation facilities.

These are only the few obstacles out of long list of problematic situations. Out of these we can say the most important or one of the bases of many other problems is the problem of

Unemployment or Underemployment.

Lacking a job often means lacking social contact with fellow employees, a purpose for many hours of the day, lack of selfesteem, mental stress and illness, and of course, the inability to pay bills and to purchase both necessities and luxuries. These effects are especially serious for those with family obligations, 3

debts, and/or medical costs, where the availability of health insurance is often linked to holding a job. Increasing

unemployment raises the crime rate, the suicide rate, and encourages bad health. During the Great Depression,

unemployment rates exceeded 20% in many countries. Finally, high unemployment implies low real Gross Domestic Product human resources are not being used as completely as possible and are thus wasting opportunities to produce goods and services. Mostly unemployment thus represents a profound form of inefficiency. In year 2005 labor force worldwide was mixed, with more people in work than in 2004 but at the same time more unemployed people than the year before. At the end of 2005, 2.85 billion people aged 15 and older were in work, up 1.5 per cent over the previous year, and up 16.5 percent since 1995. The last decade has witnessed a decline in the global

employment-to-population ratio, which is the share of the world’s working-age population (aged 15 years and older) that is in work. It stood at 61.4 in 2005, which is 1.4 percentage points lower than ten years ago (Appendix A). The decrease was stronger among young people (aged 15 to 24). Within this group the global employment-to-population ratio decreased from 51.7 in 1995 to 46.7 in 2005. Part of this is explained by the increasing proportion of young people in 4

education. Among adults (aged 25 years and older) the global employment-to-population ratio declined from 66.8 to 66.3

between 1995 and 2005. Examining the adult age range by sex reveals different trends between women and men: while the share of employed adult males fell by 1.3 percentage points to 80.8 per cent, the share of the adult female population that was in work grew. In 2005, 52.2 per cent of adult women were employed, compared with 51.7 per cent in 1995. The gap in the employment-to-population ratio between women and men thus has narrowed but remains wide. The world’s unemployment rate in 2005 stood at 6.3 per cent, unchanged from the previous year and 0.3 percentage points higher than a decade earlier (Appendix B). In total, nearly 191.8 million people were unemployed around the world in 2005, an increase of 2.2 million since 2004 and 34.4 million since 1995. Almost half of the unemployed people in the world are young people, a troublesome figure given that youth make up only 25 per cent of the working age population. Young people are more than three times as likely as adults to be unemployed.

South Asia’ s unemployment rate stayed at 4.7 per cent in 2005
and South-East Asia and the Pacific’s unemployment rate was 6.1 per cent. SOUTH Asia faces five major employment challenges. The Employment Challenge

One,

South

Asia

is

a

hugely

populated region with 1.4 billion people, 60 per cent of whom are 5

in the working-age group. Two, labor force participation is only about 66 per cent of the working-age population.

Three,

employment growth rates are lower than both gross domestic product (GDP) and labor force growth rates. Four, agriculture is the predominant employer, although this sector has been

suffering from lack of investment and low productivity since the Green Revolution during the 1960s. Five, one-third of South Asia is in poverty; and, about half of the population — in four large countries — is illiterate. Despite of the continuous economic growth of world unemployment continue to be the serious problem for all nations.

1.2 Objectives of the study
Major objectives of our study related to this term paper are to discuss: • • • Major causes of unemployment in Developing countries Major effects of unemployment in Developing countries Changes in employment and unemployment pattern around the globe and with special importance to Asian countries. I.e. Pakistan, India and Bangladesh. • Role of Pakistan Government regarding unemployment

Term paper will also give suggestions to reduce and aid unemployment in developing countries like India, Pakistan. 6

1.3 Methodology and Sources of Data
Most of the data is collected from internet for this term paper. Statistics and figures are gathered from reliable sites of ILO (International labor Organization), WB (World Bank), ADB (Asian Development Bank) and SBP (State Bank of Pakistan). Both absolute values and percentages are used to discuss changing pattern of employment and unemployment. All the statistics use in the paper are of 1995-onward up to 2005.

1.4 Organization
First introductory part of this term paper discuss about global scenario of unemployment in detail with especial reference to Situations in South Asia. Objectives of study are also given in this part of paper. Then comes the review of literature which include summarized articles of unemployment about situations in world and also related to Asian developing countries. Then in the third part, named as Analysis of Data, all the objectives of causes, effects and role of governments regarding

unemployment are fulfilled.

7

2. R evie w o f lit er atur e

Katherine Hagen, ILO's Deputy Director-General,(1996) said, By
the year 2000, one-half of humanity will be living and working in cities, with developing countries accounting for the major share of the world's new urban population. These people will need jobs if the new cities are to develop as centers of economic opportunity and civilization rather than zones of inequality and misery. Only the generation of productive employment can break the vicious circle of urban poverty that is taking root in cities worldwide. In spite of the problems caused by rapid urbanization, cities are rightly regarded as centers of productivity and engines of economic growth. Urban centers make a disproportionate

contribution to Gross Domestic Product. This is also true for many developing countries. For example, although Kenya is 23% urban, Nigeria 35% and India 27%, the urban areas in all three countries account for 70 % of GDP. In ILO's view cities are a resource that needs to be developed continuously and with a view to increasing human well-being and social justice.

Unemployment is not confined to developing-country cities.
Cities in developed countries have been hit hard by de-

industrialization, since most manufacturing was located in cities. Over the last two decades the average drop in manufacturing 8

employment in G7 countries was 15 %. Among the larger EU countries, the UK's share of manufacturing employment declined by 43%, France's by 23% and Germany's by 14%. Most EU countries are struggling with double-digit unemployment. The US has low unemployment, but average real wages have stagnated in the last 20 years, and high pockets of unemployment do exist in some large U.S. cities.

International Labor Organization (ILO), (1996) says, one-third of
the world's inner-city population, approximately 400 million people, is living in poverty, with lack of productive employment as one of the most direct causes. By the year 2000, the ranks of the urban poor are expected to have swelled to one billion people. In absolute terms,

Asia

represents

the

largest

concentrations of urban poverty in the world. In the developing world, African cities have the highest percentage of poverty, with 41 % of the urban population living below the poverty line. The report, says that in both developed and developing countries, the rise in urban joblessness causes urbanization of poverty. The ILO estimates that there will be 1.2 billion new participants to the world labor market by the year 2025. Most of the new jobs will have to be created in cities. The share of non-agricultural employment grew by 93 per cent in the last four decades, and

9

now accounts for 40 per cent of all employment in developing countries.

Sunchild (1998) writes unemployment is good for big business,
and even small business. The higher the rate of unemployment the more people there are looking for work, the more people there are looking for work then the more likely they are to put up with poor working conditions and poor pay, they more willing they are to put up with poor conditions and pay the easier it is for businesses to grow as they do not need to worry much about worker strikes and unions. This exploitation of the workers, allows businesses to save the money they should really be paying out and use it to further there own goals. Any company like McDonalds why bother to employ more young people when it could buy a machine such as a Fry-Basketing Machine. The machine although may cost more money cannot refuse to work, does not call in sick, is not late, does not need breaks, can work all day and all night, and is generally reliable. Finally once company has paid for the machine it no longer needs to pay more (other than electricity etc). This means that this money can be used to further buy more machinery to replace more workers until only few are left in place. The companies are aiming for the highest output for the cheapest cost and not even governments can make law that a certain number of employees must be 10

employed; rather they must beg the companies to do it and offer them tax incentives, money which is later taken from the pocket of the tax payers and workers. Capitalism favors this type of system that leads to unemployment.

Syed M. Aslam (1999) writes that after fifty years, in Pakistan the
dream of Quaid-e-Azam still remains to be materialized as the successive governments failed to exploit the natural and human resources wisely. The economy is in such a worsening state which the country never experienced before. The biggest portion of the budget today goes towards the payments of foreign debts. Little is left for education, health and development. This has taken a serious effect on the employment opportunities in the country where finding a job at all levels is becoming harder by everyday due to frequent lay-offs in the public and private sector. There are many seekers but few jobs. In a society where ‘who

you know’ has replaced ‘what you know’ as the major criteria for
jobs, chances of employment are miserable due to massive downsizing in the public sector. Tens of thousands of graduates leaving the universities every year are finding it harder to find a suitable employment. Unemployment weakens the economic and social stability of any society. Societies which fail to provide gainful and secure employment to their people invite political instability, social unrest and economic insecurity. Unemployment 11

issue has taken a global viewpoint. Many of the developed countries became more protectionist raising new protective barriers against imports, particularly the competitive products, from the developing countries to further worsen an already bad situation. The socio-economic fall out of the high unemployment rate in Pakistan is evident from the drastic increase in the crime wave. Today robberies, and kidnapping for ransom have become a fearsome fixture of life in the country. The resultant lack of civil peace and the rule of the law weaken the very basis of all industrial, economic and trade activities in the country.

Economic policy plays a vital role to help keep the unemployment rate under check. According to a UN report, the East Asian economies in the 1980s avoided stagnation and unemployment did so because they got their domestic policies right by careful borrowing, creative use of foreign exchange rates, promotion of exports, and protection of food growers and restraint of nominal wages. All these measures have combined to keep the growth of employment in flat compared to overall economic growth.

Miss: Samina Khalil and Rao Noman Saleem (1999) from Applied
Economics Research Centre, finds that 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 12

emotions and family lives. In Pakistan labor 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 population of 142.87 millions with Labor force participation rate of 27.46 percent, the total labor force comes to 39.24 million. According to this about 2.4 million person of labor force were estimated as unemployed in 1999. According to Labour Force Survey 1996-97, the rate of open unemployment was 6.1 percent and 5.4 percent as per Labour

Force

Survey

of

1994-95

This

indicates

that

rate

of

unemployment has increased between these two surveys by 0.7 percent officially but unofficially unemployment is much larger than this rate. 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. In Pakistan unemployment rate is increasing in both rural and urban areas in absolute as well as in percentage terms. 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, 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.

13

Kerstin Marx (2000) reported that the fallout from the financial
crisis in Asia that began in mid-1997 has caused massive unemployment throughout the region, according to a new United Nations study. The economic disorder in Southeast and East Asia emphasized the weakness of these once high growth and full employment economies, where unemployment rates have

doubled and even tripled in the space of a few months. ILO statistics revealed that more than 150 million workers in 1997 are unemployed out of a world labor force of about three billion people. Additionally, about 25 to 30 percent of the employed workers are underemployed. The economic crisis in Asia is blamed for much of the setback to the world employment situation. Between August 1997 and December 1998, rapid job losses create unemployment rise in Indonesia from 4.3 million to 13.7 million people. In Thailand, the numbers exploded from 0.7 million in February 1997 to 1.9 million in December 1998. Even in less severely effected economies, such as Hong Kong, China, Malaysia and Singapore, there are now twice as many people without work as before the crisis. Before the crisis, the Southeast and East Asian countries often had been cited as ''models of the positive impact of globalization in raising rates of economic Their growth policies and of job promoting attracting creation." labor-intensive foreign direct

macroeconomic trade

exports,

liberalization

and

investment had raised the living standards and reduced poverty 14

within the region, according to the UN report. The crisis has now revealed that the rapid globalization of the world economy has posed new challenges which have made the goal of maintaining full employment a more complex undertaking.

Mr. Johann Van Rooyen (2001) writes about the cost and causes
of unemployment that as is the case also with so many other socio-economic problems, the issue of unemployment is much more complicated than it appears in the world’s surface. As no country is free from its revenge but developing countries are hardly hit by it. To the people of poor countries job means access to the basic needs of life, self esteem, and to whatever in small way contributing to the well being of the nation. Being

unemployed the person is liability on family instead of an asset to the society. The physical and mental strain may push the person to adopt illegal way of earning money. The unemployed represents waste of the nation because goods and services which could be produced by these unemployed now goes into waste. It also increase the expenditure of the nation in the form of social benefits and security provided to the effected people. There is wide survey that unemployment in developing countries is caused by structural factors while in developed countries as in the past traditionally been associated with a downswing in the national business cycle or a temporary slump in the world 15

economy. When referring to structural causes of unemployment one has in mind distinctive socio-economic characteristic, which by their very nature tend to reinforce low employment levels. Unemployment caused from structural variables has greater permanency while cyclical unemployment tends to fluctuate. Structural causes of unemployment are more persuasive and embedded in developing societies. The other causal effect contributing to unemployment includes diverse factors such as diminishing donor interest, perceived political instability, and security risk, over-regulation; labor market inflexibility; and irregular unstable industrial relations etc.

MOHAMMED SHEHZAD (2004). South Asia faces five major
employment challenges, says the recent report of the Mahbub ul

Haq

Human

Development

Centre,

South

Asia

2003:

the

Employment Challenge. One, South Asia is a hugely populated
region with 1.4 billion people, 60 per cent of whom are in the working-age group. Two, labor force participation is only about 66 per cent of the working-age population. Three, employment growth rates are lower than both GDP and labor force growth rates. Four, agriculture is the predominant employer, although this sector has been suffering from lack of investment and low productivity since the Green Revolution during the 1960s. Five, one-third of South Asia is in poverty; and, about half of the 16

population

is

illiterate.

South pervasive

Asia's

labor

market

is and

characterized

by

unemployment

underemployment, especially among the youth and the educated; working poor who do not get adequate wages to get out of poverty; working children; and women who face discrimination across the labor market, reflecting prevailing social attitudes.
UNEMPLOYMENT among the youth accounts for a major portion of the total unemployment. During 1997, youth accounted for 70% of the total unemployed in Sri Lanka, 53% in India and 45 % in Pakistan . The failure to find jobs appears to have led the

educated youth towards either inactivity or further involvement in education. According to the 1998-1999 Labor Force Survey of

Pakistan, 20 % of the post-graduate degree holders were out of
the labor force. Almost 50% of female doctors and 35%of graduates in different disciplines were reported to be out of the labor force. The survey claims that the WTO failed to generate employment in the region. South Asia's unemployment levels have raised from 2.9 per cent in 1995 to 3.4 per cent in 2001. Data from ADB show that unemployment has increased in Pakistan, Bangladesh and the Maldives, while it has decreased only in Sri Lanka during this period. The Economic Survey of India shows that the unemployment rate increased from 5.99%in 93-4 to 7.32% in 99-2000. The employment challenge in South Asia is highly discriminatory against women. Women's limited access to employment opportunities is best reflected in the gap 17

between the unemployment rates of men and women 3.5 times more unemployed then men in Pakistan.

Mahbub-ul-Haq Human Development Centre (2004) based in
Islamabad, presents a rather depressing picture of human development in the region. It points out that the WTO

administration has adversely impacted south Asian workers, particularly those in small-scale industrial and agricultural enterprises. South Asia hopes of gaining from WTO rules in the key areas of agriculture, textiles and services, believing that greater market access and a more even-handed trading system would allow them to use cheap labor to encourage exports, have failed to materialize. Secondly, HDC highlights the presence of severe gender discrimination in the job market, pointing out that most women are concentrated in low-paying, low-productivity jobs. HDC notes that adult literacy has raised, it adds that there is a rise in the number of the educated unemployed, generating a debate on the relevance of the educational system in various countries. Probably the most intense recent example of this is the high rate of farmer suicides across southern India, despite its emergence as a south Asian leader in IT. Elaborating on this inconsistency, the president of the Pakistan center, Khadija Haq, remarks that, "India's data on nutrition is worrying. There has been a higher level of hunger as reflected by data on under18

weight. India exports food grains now, yet nutritional data reveals the high occurrence of hunger in the population." In neighboring Pakistan, according to Haq, one-third of the

population -- that is, 50 million people -- live in acute poverty, making poverty reduction a main concern for the country. In contrast, the troubled island nation of Sri Lanka provides a positive difference, standing out as a model of human

development in south Asia. Says Haq, "The two main reasons of Sri Lanka's success is achieving a very low level of population growth and a high level of human development that is at equality with the developed world." it achieved this miracle explains senior analyst Dr Ketheswaran Loganathan, working with SriLankan research body, "The high literacy rate among women and increase in women's participation in the job market especially in the private sector has delayed the marriage age for women." This primary factor, he says has given a boost to family planning here, elaborating that, “economic pressure and the decline of the extended family, this has forced couples to restrict the number of children to one or two."

ILO Director-General Mr. Somavia (2005), reports that there is
need for development of comprehensive strategies aimed at giving young people a chance to maximize their productive potential through decent employment, as well as for an increase 19

of international aid for the most helpless youth in order to bring them back into the fold of a civil society. It is recognized within the UN as well as other international organizations and

governments that only through decent employment opportunities can young people get the chance to work them out of poverty.

Sarid (2006) reports that the number of young unemployed
increased from 74 million to 85 million over the past ten years, there were more than 300 million youth who were living below the US $2 per day poverty line, notes a report by ILO. The highest unemployment rate was observed In the Middle East and North Africa: 25.7 %. In Sub-Saharan Africa 18.1 %; South East Asia and the Pacific 15.8 per cent. The European Union prides itself with 13.1 per cent and East Asia with only 7.8% (officially). It is important to note that in the developing regions, such as South Asia, young women face disproportionate challenges in the labor market. This is mainly due to cultural traditions, lack of work opportunities, and a tendency of labor markets to drop young women more rapidly than men when fewer job opportunities are available. There is also a harsh increase in the number of young people who are neither in employment nor in education, in Central and Eastern Europe 34 percent of youth falls in this category. In sub-Saharan Africa the rate was 27 percent, while in

20

Central and South America it was 21 percent. In the developed countries, on the other hand, that number was only 13 percent.

International

labor

organization,

ILO

(2006)

finds

that

unemployment has reached to new heights despite of the healthy economic growth. Unemployment is increasing at high rate especially youth are mostly effected by this. ILO says that the rapid increase in the GDP of the most of the economies could not turn that economic growth into job creation and increasing of the wages. No doubt that world’s GDP growth is increased to 4.3% but even this could not decrease the unemployment rate. This shows that even economic growth is not sufficiently addressing global employment needs and the world is facing global job crises and deficit in well-mannered working which could not be cure by itself. There were 191.8 million jobless people at the end of 2005 an increase of 34 people million since 1995(Appendix

B).The main problem is that more than half of the world’s
unemployed is youth while youth makes up 25% of the working

age population. The report says that only in service sector the
employment opportunities increased with one exception i.e. Middle East and Africa. It says that if service sector continued to grow on like this it will soon overtake agriculture sector in providing employment opportunities.

21

Mr. Somavia, ILO (2006) said, in many countries, agricultural workers are leaving a life of rural poverty in the hope of finding something better in the city but end up little or no better off iN informal laboring jobs or petty trading. Economic shocks as well as natural disasters recently also hit those areas who are already poor. This report suggests concept that poverty can only be reduced by the rout of more and better job in the economy.

It is quite clear from these articles that unemployment always remained a serious problem in the way of development of any country and it also is affecting the overall world development programs. The cost of this for a nation is not only the lost GDP (output),and welfare expenses paid for the survival of

unemployed but also the increase in crime and antisocial behavior which in turn badly effect industrial and trade activities and create further more unemployment and poverty in the society. Serious political and governmental attention is needed to reduce its impact on the society. Suggestions are discussed in next section of the paper.

22

3. A na l ysi s o f Da ta
3.1 Global causes of unemployment
Unemployment is not the result of any one cause. It makes its appearance in a great variety of circumstances, some in

personal factors, some in economic changes, and some in legislative and regulatory conditions. Throughout the year some workers may appear in the labor market and then withdraw. Students work during the summer and return to school in September. Building and construction activities, logging and lumbering, slaughtering and meat packing are very seasonal and give rise to a considerable amount of temporary unemployment. Similarly, industrial and technological changes may force

workers to readjust and relocate. Jobs, wages, and working conditions always point the way.

Unemployment can be considered as phenomenon driven by multiple causes. Unemployment might be attributed to, for example, deficient aggregate demand, high rate, discriminations, illiteracy, technical population growth progress, market

imperfections, utility maximising decisions of workers, individual search behaviour, the rise and fall of industries, trade union behaviour, seasonal nature of jobs etc., or combinations of these factors. This makes clear that unemployment is an instance in 23

which more than one cause is involved in the production of the phenomenon and that total unemployment is an intermixture of effects of these singular causes.

Another important cause of unemployment is that it is good for big business. The higher the rate of unemployment the more people there are looking for work, the more people there are looking for work then the more likely they are to put up with poor working conditions and poor pay, they more willing they are to put up with poor conditions and poor pay the easier it is for big businesses to grow as they do not need to worry as much about worker strikes and unions. This exploitation of the workers, allows businesses to sack the money they should really be paying out and use it to further there own goals. Less opportunities for women to take part in labor force in Asian countries is also contributing to increase the overall ratio of unemployment. So we can say that each type of unemployment can have different and more than one causes but the need is to control these situations.

3.2 Costs and effects of unemployment

24

Unemployment is potentially very damaging. Its knock-on effects are far reaching, destroying the lives of countless individuals, parents and children and severely affecting a country’s economy. For the individual, unemployment can be psychologically

damaging, eroding a person’s self-esteem. Unemployment in the family context will cause added stress. In many countries the common scenario is that unemployment takes families in to the poverty trap. In anxiety parents send their children out in search for work. In most instances this leads to cheap labor, begging and trading on the streets and even prostitution and criminal activity. Without education these children are without hope of finding a decent job in the future. This is how child labor birth takes place. This cycle of deprivation continues through the generations. Unemployment damages the economic and social stability of any society. Societies which fail to provide gainful and secure employment to their people invite political instability, social unrest and economic insecurity. The link between unemployment and crime has also been well established. A rise in unemployment will seriously damage a country’s economy. Unemployment represents a terrible waste of national resources. The goods and services which the unemployed might

have produced are lost for ever. With rise in unemployment GDP gap between potential and actual GDP increases. What is more,
for the State that the cost of unemployment does not only 25

consist of the loss of potential income-derived from taxation, it also includes the expenditure involved in social security benefits and various forms of subsidization to assist in maintaining at least a minimum level of human dignity for those affected. Employment is also directly related to all industrial and trade activities. These activities slow down when there is a high level of unemployment but increases when it is low.

3.3 Situation of unemployment in Asian countries

South

Asia's

labor

market

is

characterized

by

constant

unemployment and underemployment, especially among the
youth and the educated; working poor who do not get sufficient wages to get out of poverty; working children; and women who face discrimination across the labor market, reflecting prevailing social attitudes. World Trade Organization (WTO) has failed to generate

employment in South Asian region. South Asia's unemployment levels have raised from 2.9 per cent in 1995 to 3.4 per cent in

2001 (officially) and the annual employment growth rate has
come down during the second half of the 1990s as compared to the first half.

26

Data from

the Asian

Development

Bank (ADB) show that

unemployment has increased in Pakistan, Bangladesh and the Maldives, while it has decreased only in Sri Lanka during this period. Though the ADB data do not report India's unemployment rates, the Economic Survey of India shows that the

unemployment rate increased from 5.99 per cent in 1993-4 to 7.32 per cent in 1999-2000. Unemployment rates, 1999-2001 (%) Countries
Bangladesh Bhutan Maldives India Nepal Pakistan Sri Lanka Table 1 .Source: ILO

Rates
3.3 1.4 2.0 7.3 1.1 7.8 8.2

9 8 7 6 5 4 3 2 1 0 Bangladesh India Pakistan Sri Lanka Nepal

Uem ploym ent rate

Figure 1

27

The figures reveal that in most South Asian countries the employment situation has worsened in the post-WTO period. Employment generation in South Asian countries has so far not benefited much from the WTO. Pakistan current unemployment rate in 2003 officially remained same 7.8% but unofficial rate of unemployment is too high. The employment challenge in South Asia is highly discriminatory against women. is Women's best limited in access the to employment between the

opportunities

reflected

gap

unemployment rates of men and women, which shows women are 3.5 times more likely than men to be unemployed in Pakistan.

Male & female unemployment in South Asian countries (%) Countries Female Male F/M ratio
Bangladesh Maldives India Nepal Pakistan Sri Lanka 2.3 2.7 10 .7 14.9 16.2 2.7 1.6 7 1.5 4.2 7.1 0.9 1.7 1.4 0.5 3.5 2.3

28

Table 2. Source: ILO

15 10 fem ale unem ploym ent (%) 5 0 Pakistan India m ale unem ployment (%)

Figure 2

Two-thirds of South Asian women are employed in agriculture or
agriculture-related activities. They work in various roles such as agricultural laborers, managers of homesteads, and sometimes even as landowners. However, they are not allowed equal

opportunities in this sector in access to credit and inputs and
face discrimination in wages.

3.4 Situation in Pakistan
Many changes have been made to define the meaning of labor force and employment in Pakistan— The Population Census of

1951 defined the labor force as all persons of 12 years and above
who are self-supporting, partially self-supporting or seeking works. In 1961, its definition was changed to include all those of

ten years and above who were working for profit or wages or
helping their family members. Not only the change lowered the 29

age but it also included the unpaid family members in the employed. Today, Labor Surveys define employment as "all

persons of ten years of age and above who worked at least one hour during the reference period [the year] and were either ‘paid employees’ or ‘self employed." Based on this definition, the total
number of employed labor force in 1999 is estimated at 36.2 million. For instance, based on a population of 134.5 million today and a participation rate of 28.7 per cent, the total labor force in Pakistan comes to 38.6 million of which 36.2 million were employed. This also shows that only 2.4 million persons were unemployed in the country which reflected an affordable unemployment rate of 6.1 per cent. In fact, unemployment is a much more serious problem than the official statistics show. If the unemployment rate of 6.1 per cent is correct, the

employment rate is an ideal 93.9 per cent. Those who know Pakistan, and there are many, find this highly unpalatable. Unemployment in Pakistan today is widespread at all levels. It does not spare the highly qualified professionals any more be they doctors, engineers and MBAs. It hurts the illiterates, nonskilled, skilled, and educated and professionals alike. Most of the jobs created and advertised are aimed at the highly qualified professionals whose share in the total employment is just 3.6 per cent. There are little or no vacancies advertised for the two biggest occupational groups— skilled agricultural and fishery workers whose share is 36.8 per cent and the elementary or 30

unskilled workers whose share is 22.9 per cent. Emplo yed W or k F or ce by Major Occupa tional Gr oups

(1999)
Table 3 Source economic survey 1989-1999 Gr oup
Legislators, senior officials and managers Professionals Technicians and Associate Professionals Clerks Service Workers and Shop and Market Sales Workers Skilled Agricultural and Fishery Workers Craft and Related Trade Workers Plant and Machine Operators and Assemblers Unskilled Total

No .
3.1 m 1.3 m 1m 1.1 m 2.8 13.3m 3.6 m 1.7 m 8.3 m 36.2 m

%a ge S har e
8.6% 3.6% 2.8% 3% 7.7% 36.8% 9.9% 4.7% 22.9% 100%

3.4 Role of Pakistan Government

The government is trying to reduce the unemployment rate in country.

‘Rozgar’ schemes were launched by the Prime Minister Benazir Bhutto in 1989 and in 1994 and her predecessor Nawaz Sharif
launched Yellow Cab scheme in 1992. However these schemes could not contribute a lot due to many reasons. One is the complicated procedure especially intensive verification, which 31

created hurdles for a common man. The Yellow Cab scheme was drifted by the elite class, which had their sources in the banks. After taking the cars as taxi in their name, they converted them into private cars and most of those deserved to get benefit from this scheme could not do it due to lengthy procedures,

guarantees and collateral formalities. Under Prime Minister's Self different Banks and Small Employment Scheme in 1999, Business Finance Corporations

extended loans to unemployed youths and skilled professionals with 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 played role in reducing

unemployment. Up to March 1999, the Small Business Finance Corporation has sanctioned Rs.2,208.4 million, against

amounting to Rs.1,551.95 million have been disbursed to 9,383 persons. The SBFC has generated employment for 28,149 persons under the Prime Minister's Self-Employment Scheme up to March 31, 1999. A Small and Medium Enterprises Development (SMEDA) has been setup for growth and development of self-employment schemes in Pakistan During the year 1998 about 104,000 persons have been sent abroad for employment under Govt. overseas employment schemes. 32

Pr esident

Musha raf

recently

launched

self-employment

scheme in collaboration with National Bank of Pakistan (NBP) offers self employment opportunities especially to youngsters for setting up small scale enterprises such as small fixed phone PCO, mobile PCO, transport rickshaw (Qingqi), Qingqi for goods delivery and small Utility Stores. It is for the poorest of the poor and provides employment opportunities to the unemployed youth. It aims to target about 2.5 million unemployed individuals in three to five years through simplified financing by the NBP. Unfortunately complicated President procedure. ‘Rozgar’ Like the scheme past has such the same

employment

schemes, this scheme also has the condition of two guarantee witnesses who will testify certificates and viability of the loan seeker as mandatory, which is a difficult task for a poor common individual (male or female). The other option is to provide evidence of applicant’s property. If someone has ownership of property then he/she doesn’t need such a small amount in shape of loan to start any little business. The scheme also has a condition of two personal references as compulsory. One of the major concerns is that a secondary school certificate is a prerequisite for a candidate that means middle grade or illiterate youth or unemployed people cannot benefit from this scheme at all.

33

4. Suggestions and conclusions
The growing human poverty challenges faced by Pakistan need to be addressed through integrated policies and approaches at individual and collective levels. Efforts on the part of national governments, supported by the international community, can be complemented for this. Civil society can play its role through capacity building to get rid of the root-causes of unemployment and poverty. Though complicated phenomena, poverty can be addressed through adoption of multidimensional approaches. First of all, real data should be collected to project real state of poverty instead of false figures. This data can help devise plans and strategies to address the issues around growing poverty and to reduce this to maximum possible levels as defined in the

Millennium Development Goals (MDGs).
Unemployment and poverty, both cannot be addressed though such short-sighted and politically motivated apparent measures. If we really want to do this then, we have to reform our financial and administrative structures and have to change the mindset tuning this in terms of the people’s security that includes their food security, job security, personal security and security of movement. If we continue with huge spending on debt servicing and defense, to we can hardly the allocate of sufficient growing budgetary and

provisions

address

giants

poverty

unemployment. We need to recognize potential of our people and 34

look for options and possibilities that can divert our huge budgets from debt serving and defense to human development and poverty eradication, and job creations. To meet the challenge of unemployment, we need to concentrate on resource mobilization for the social sector development to create more opportunities for education for all children as mandated in MDG-2 which demands to ensure children

everywhere to be able to complete a full course of primary education. More over we need to invest in higher scientific and technical education. In this way, Pakistan as a developing state may produce sufficient technical skills to accelerate its

economic growth and to position itself to meet challenges of globalization in the twenty-first century. By creating more jobs we can reduce burden on single bread earners in families. But the job creation should be on easy and real terms and not just politically motivated whims and assumptions. If the authorities want that the recently launched President’s ‘Rozgar’ scheme should benefit the targeted unemployed, then they have to think in real terms. We need to express political will at the highest level to make this scheme successful. Government should take the following steps: 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. 35

2) Govt. should seriously try to boost exports through broadening the tax base and 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.

APPENDIX A

36

Source: ILO, Global Employment Trends Model, 2005

Appendix B
37

Source: ILO, Global Employment Trends Model, 2005 2005 figures are preliminary estimate

References
38

Syed M. Aslam, UNEMPLOYMENT — A NIGHTMARE Mohammad Shezad, Human Development in South Asia, The challenge of unemployment GLOBAL EMPLOYMENT TRENDS BRIEF, January 2006, ILO Samina Khalil and Rao Noman Saleem, Applied Economics Research Centre Unemployment Situation in Pakistan 2003 Human Development Report, Globalization Fuels Unemployment in South Asia President’s employment scheme, Pakistan observer Kerstin Marx, Asia: Crisis causes massive unemployment Dr Johann Van Rooyen, The cost and causes of unemployment, ECONOMIST. Sunchild, Why is there unemployment spreading the world List of countries unemployment rate. www.wikipedia.com Source: ILO survey.

Websites www.ilo.org www.pakistaneconomist.com www.sarid.net www.pakistanobserver.com www.google.com www.wikipedia.com

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