1. Economic and Educational Issues of
Pakistan
Monday, 23 April 2012
Unemployment, Causes and Control
WHAT ARE THE CAUSES OF
UNEMPLOYMENT IN PAKISTAN?
GIVE SOUND SUGGESTIONS TO
REDUCE THE LEVEL OF
UNEMPLOYMENT IN PAKISTAN?
Introduction:
The condition of one who is capable
of working, actively seeking work, but
unable to find any work. It is
important to note that to be
considered unemployed a person
must be an active member of the
labour force and in search of
remunerative work.

2. Definition:
“Unemployment is a situation where
people of a country are willing to
work, able to work but can not find
jobs.”
According to Samuelson:
“Unemployment occurs if there are
qualified workers who would be
willing to work at prevailing wages
but can not find jobs.”
Unemployment Situation in
Pakistan:
According to Economic Survey of
2010-11, population of Pakistan is
177.1 million. Total labour force is
about 54.92 million out of which
51.87 million is employed and
remaining 3.05 million is
unemployed. Rate of male
unemployment is 5.6 % and female
unemployment is 9.3 %.

3. BASIC CONCEPTS:
Concept of unemployment may be
clear from the following types:
1- Employment
Employment means that a person
is willing to work, able to work and is
working.
2- Unemployment
Unemployment is a condition of one
who is capable of working, actively
seeking work, but unable to find any
work. Rate of unemployment is 5.6 %
in Pakistan during 2010-11.
3- Casual Unemployment
Casual unemployment arises when
demand for labour is irregular.
4- Cyclical Unemployment
Such type of unemployment is the
result of fluctuations in the trade
cycle.
5- Frictional Unemployment

4. If there is a certain lack of mobility it
is likely that jobs remain unfilled in
one place at a time when there is
unemployed labour at another.
6- Seasonal Unemployment
It is caused by fluctuations in
demand that occur regularly at
certain times of the year.
7- Structural Unemployment
This is due to fundamental changes
taking place in the economy, such as
the decline of some industries and
the rise of others.
8- Unemployable
This term is used for those who are
physically or mentally unable to work.
9- Voluntary Unemployment
If people have sufficient resources
to meet their necessities of life and
do not want to work.
10- Under-employment

5. The term describes the condition of
workers whose education or training
makes them overqualified for their
jobs. Rate of under employment in
Pakistan is 16 %. Underemployment
is the term used to describe the
situation of those who are able to find
employment only for shorter than
normal periods, part-time workers,
seasonal workers, day or casual
workers.
11- Disguised Un-employment
Disguised unemployment refers to
the situation where total production is
maximum and marginal production is
drops down to zero. Rate of
disguised unemployment is 20% in
Pakistan.
CAUSES OF UNEMPLOYMENT
Main causes of unemployment are
as below:

6. A. ECONOMIC CAUSES
1) Low Industrial Growth
Rate
Low industrial growth rate is 1.7 %
in Pakistan. Number of industries is
not increasing in Pakistan. Lack of
industries means less opportunities
of employment.
2) Use of Advanced
Technology
A poor country uses backward
techniques of production and labour
intensive technologies. But when it
uses the advanced technology there
spread more unemployment in the
country.
3) Mechanization of
Agriculture
Due to mechanization of agriculture
there is less use of labour in
agricultural sector. These

7. unemployed persons move to cities
to find jobs at less wage rate.
Accordingly, use of modern
techniques in agricultural sector is
also a further cause of
unemployment and under
employment.
4) Use of Capital Intensive
Techniques
Capital intensive techniques mean
use of more capital and less labour in
the production process. Population is
very much in Pakistan, due to use of
capital intensive techniques of
production they remains
unemployed.
5) Low Rate of Capital
Formation
Deficiency of capital is an important
cause of unemployment in Pakistan.
Low saving leads to low investments

8. that result in low capital formation. If
capital formation is low its result is in
unemployment. Rate of capital
formation is only 5 % in Pakistan.
6) Lack of Employment
Opportunities
Today, literacy rate is 57.7 %.
There are various technical
educational institutes in Pakistan.
Number of students of every field
especially of commerce, are so large
but employment opportunities for
them are few. So, only a few
vacancies in Pakistan are unable to
adjust these students.
7) Trade Cycle
Trade cycle refers to the
fluctuations in economic activities of
a country and world. Unemployment
may also take place due to
international economic depression.

9. As in 1930, there was great
depression and unemployment all
over the world.
8) Reduction in Foreign
Employment
Due to illiteracy, ill training and lack
of skill & efficiency demand for our
labour in foreign market is
decreasing. It also creates problem
of unemployment.
B. SOCIAL CAUSES
9) High Population Growth
Rate
The population of Pakistan is
increasing at a rate of 2.1 %. Due to
this high rate about two million
people enter into the labour market
each year. Such huge labour force
cannot be provided jobs due to
backward economic condition.

10. 10) Illiteracy & Literacy
Illiteracy and literacy both are the
causes of unemployment in Pakistan.
Due to illiteracy people are not able
to work and they remain
unemployed. On the other hand
number of educated is increasing
annually but government is unable to
create employment opportunities
e.g., students of B. Com. are
increasing at very fast speed but
they cannot find jobs and admissions
for higher education. Rate of illiteracy
in Pakistan is 42.3 %.
11) Rural-Urban Migration
There is rural-urban migration due
to farm mechanization. there is
already unemployment in cities these
workers create more unemployment
and under employment in cities.
12) Only Particular Job

11. Another reason for unemployment
is that the educated persons need
and wish to get only particular type of
jobs. If those jobs are very few then
only few persons get job.
13) Political Instability
There is political instability in
Pakistan, which creates less
attraction for foreign investment. Due
to political instability investor
hesitates to invest. It creates less
opportunity of employment and
results in unemployment.
14) Afghan Refugees
Afghan refugees are an additional
cause of unemployment. They create
a bad effect on our labour market.
They are ready to work more at less
wage rate. It caused unemployment
and under-employment.
15) Lack of Skill

12. Most of the businessmen in
Pakistan are illiterate, ill-trained and
unskilled. They think that if they
employ more persons they will have
to pay more and their profit will
decline.
16) Nepotism and
Favouritism
One more problem of
unemployment and under-
employment is nepotism and
favouritism. It means selection
according to relation not according to
ability. Here deserving candidates do
not get jobs and remain unemployed
or under employed.
17) Re-employment
Re-employment of higher rank civil
and especially armed forces officers
has decline the jobs for qualified
young men in Pakistan.

13. 18) High Age of Retirement
The higher age of retirement in
government sector has closed the
employment opportunities for the
young, literate and trained person. In
Pakistan retirement age is 60 years.
19) Seasonal Variation
There is seasonal unemployment in
Pakistan. Seasonal unemployment
exists especially in industrial sectors.
For example, sugar industries and
ice factories create seasonal
unemployment.
C. FINANCIAL CAUSES
20) General and Absolute
Poverty
Poverty is also a serious cause of
unemployment. Poor persons due to
lack of income has low saving and
shortage in investment. So, they are

14. unable to established self-
employment opportunities.
21) Deficiency of Capital
There is shortage of capital that
leads to low level of saving and
investment in Pakistan. It results in
low rate of capital formation and
caused in unemployment.
22) Lack of Credit Facilities
It is so difficult to manage the
personal business and self-
employment due to absence of easy
credit facilities. Accordingly, shortage
of credit facilities is also a main
cause of unemployment.
MEASURES TO CONTROL
UNEMPLOYMENT
Following steps must be taken by
the people and government to control

15. the problem of unemployment &
under-employment:
1) Establishment of
Employment Offices
There is not any single office for the
information about employment
opportunities in Pakistan. More and
more employment offices should be
established these would cause in
reduction in unemployment.
2) Population Control
Fast growth rate of population
should be controlled. Due to
population control there will be more
employment opportunities and
reduction in unemployment.
3) Capital Accumulation
Aggregate saving and investment
should be increased to raise the level
of capital formation. This will result in

16. promoting the level of income and
employment in the economy.
4) Growth of Industrial
Sector
Government should provide basic
infrastructure to established
industries is rural areas. Growth of
industrial sector is needed to reduce
unemployment.
5) Growth of Agricultural
Sector
Agriculture is the main sector of our
economy. It provides more jobs to
population. It is necessity to establish
it at commercial basis to provide
more jobs to unemployed.
6) Technical Education and
Training
Technical education and training is
necessary to produce efficient labour
force. Total number of technical &

17. vocational institutes is more than
1522 in Pakistan in 2010-11.
7) Provision of Self-
employment
People and government should
maintain self-employment. In this
case government should provide
them credit facilities.
8) Growth of Small-scale
and Cottage Industries
Government should encourage the
setting-up of small industries,
particularly in rural areas.
Government should provided
subsidies and infrastructure to
establish small industries.
9) Use of Labour Intensive
Technologies
It is compulsory to use the labour
intensive technologies to reduce the
unemployment.

18. 10) Reduction in
Retirement Period
Retirement age is 60 years in
Pakistan. It should be reduce to 55
years to provide more employment
opportunities.
11) Subsidies to Private
Sector
Stable government is required to
subsidize the private sector.
Government should help the private
sector to development. It will create
more employment chances.
12) Job on Merit
Government should eliminate the
nepotism and favouritism.
Employment opportunities should be
provided in accordance to skill and
ability.
13) Provision of Credit
Facilities

19. Government should provide
loans to the unemployed skilled
labour to promote self-employment.
Provision of credit facilities should be
provided to reduce unemployment.
Conclusion:
We conclude that there are
two major elements, which can
reduce the unemployment i. e., use
of labour intensive industries and
adoption of self-reliance policy.
Progress and prosperity is
impossible without the reduction in
unemployment.
Posted by Ahsan Khan at 20:57
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1 comment:
1.

20. Noah Webster26 December 2012
21:50
its a great.
Management Consultancy in Pakistan
Trade with Pakistan
Industry Pakistan
Reply
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