UNEMPLOYMENT A Report on the topic UNEMPLOYEMENT IN PAKISTAN Presented To

Mr. Saif R. Khan Professor (Human Resource Management) Mohammad Ali Jinnah University, Islamabad.

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By Mohammad Arslan Khan BB 093999

Mohammad Ali Jinnah University Islamabad Campus

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Acknowledgment

By the grace of Allah Almighty who gave me strength and knowledge. It is a matter of great pleasure and privilege for me to complete this report. I am pleased to acknowledge the help, which made me able to understand the practical aspects of Unemployment market in Pakistan. I am very thankful to Mr. Qazi Abdul Subhan & Mr. Mehar Asif Hayat whom thesis, guidance & information helped me alot in completing my report.

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Dedication

I am dedicating my work to my parents and my respected teacher Mr.Saif R.Khan who has played a vital role in my studies and has guided me at every step with his precious ideas. No doubt this dedication is insufficient and I can never repay for the role he has played in my studies but I am sure that his work will prove itself an asset in my life.

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Abstract I have chosen this topic because this is one of the major problems of our society nowadays, employment is going doing and unemployment is rising. In my report I have shown different aspects of unemployment a small view on our economy, types and reasons for unemployment, why it is growing, what are the figures in which it is increasing and what can we do to make it stop.

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Table of Contents Acknowledgment.2 Dedication3 Abstract4 Table of Contents.5 1. Chapter 1: Introduction6 Economy of Pakistan an-Overview..6-7 2. Chapter 2: Unemployment.8 Types of Unemployment..8 3. Chapter 3: Unemployment in Pakistan...9 Factors of Unemployment in Pakistan..9 Causes of Unemployment in Pakistan...9-10 4. Chapter 4: Unemployment Figures11 Reasons for Growing Unemployment..11-12 5. Chapter 5: Consequences...13 Recommendations13 Conclusion14 References....14

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UNEMPLOYMENT Chapter 1 Introduction:-

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Unemployment is a central problem of Pakistan because when unemployment is high, resources are wasted and peoples incomes are depressed; during such periods, economics distress also spills over to affect peoples emotions and family lives. The socio economics system of Pakistan and institutions has failed to provide employment to the increasing labor force. 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. About 2.4 million persons of labor force were estimated as unemployed in 1999, as construction and transport sectors have an absorbed 11.2 percent, 6.8 and 5.7 percent as compared to 10.5percent, 7.2 and 5.0 percent respectively in 1994-1995. Economy of Pakistan-an-Overview:Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and low levels of foreign investment. Between 2001-07, however, poverty levels decreased by 10%, as Islamabad steadily raised development spending. In 2008-09 and unemployment rose, inflation remains the top concern among the public, climbing from 7.7% in 2007 to more than 13% in 2010. In addition, the Pakistani rupee has depreciated since 2007 as a result of political and economic instability. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis, but during 2009-10 its current account strengthened and foreign exchange reserves stabilized largely because of lower oil prices and record remittances from workers abroad. Record floods in July-August 2010 lowered agricultural output and contributed to a jump in inflation, and reconstruction costs will strain the limited resources of the government. Textiles account for most of Pakistan's export earnings. Other long term challenges include expanding investment in education, healthcare, and electricity production, and reducing dependence on foreign donors.

1.) Labor force: 55.77 million Country comparison to the world: 10

1.1) Labor force - by occupation: Agriculture: 43% Industry: 20.3% Services: 36.6% (2005 est.)

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UNEMPLOYMENT 2.) Unemployment rate: 16.2% (2011 est.) 15.4% (2010) 14.4% (2009) Country comparison to the world: 150 3.) Population below poverty line: 24% (FY05/06 est.) Country comparison to the world: 130 4.) Inflation rate (consumer prices): 13.4% (2010) Country comparison to the world: 217 5.) Electricity - production: 90.8 billion kWh (2007) Country comparison to the world: 33 6.) Electricity - consumption: 72.2 billion kWh (2007) 433 kWh per capita (2008) Country comparison to the world: 37

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7.) Oil - production: 59,140 bbl/day (2009) Country comparison to the world: 59

7.1) Oil - consumption: 373,000 bbl/day (2009.) Country comparison to the world: 34

8.) Exchange rates: Pakistani rupees (PKR) per US dollar - 85.27 (2010), 81.7129 (2009), 70.64 (2008), 60.6295 (2007)
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UNEMPLOYMENT Chapter 2 Unemployment:-

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Unemployment (or joblessness), as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force. In a 2011 news story, Business Week reported, "More than 200 million people globally are out of work, a record high, as almost two-thirds of advanced economies and half of developing countries are experiencing a slowdown in employment growth.

Types of Unemployment:1.) Frictional Unemployment: Frictional unemployment is a temporary condition. This unemployment occurs when an individual is out of his current job and looking for another job. The time period of shifting between two jobs is known as frictional unemployment. The probability of getting a job is high in a developed economy and this lowers the probability of frictional unemployment. 2.) Structural Unemployment: Structural unemployment occurs due to the structural changes within an economy. This type of unemployment occurs when there is a mismatch of skilled workers and occupational vacancies in the labor nmarket. Some of the causes of the structural unemployment are geographical immobility (difficulty in moving to a new work location), occupational immobility (difficulty in learning a new skill) and technological change (introduction of new techniques and technologies that need less labor force). Structural unemployment depends upon the growth rate of an economy and also on the structure of an industry. 3.) Cyclical Unemployment: Cyclic unemployment occurs when there is an economic recession. When there is a downturn in an economy, the aggregate demand for goods and services decreases and demand for labor decreases. At the time of recession, unskilled and surplus laborers become unemployed. 4.) Seasonal Unemployment: A type of unemployment that occurs due to the seasonal nature of the job is known as seasonal unemployment. The industries that are affected by seasonal unemployment are hospitality and tourism industries, ice-cream companies and also the fruit picking and catering industries.

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UNEMPLOYMENT Chapter 3 Unemployment in Pakistan:-

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Unemployment is one of the biggest problems of Pakistan. That person is unemployed who has ability to do work and is willing to do work but is unable to get job opportunity. In the current situation more than 30 lakh people are unemployed in Pakistan and unemployment ratio is more than 12%. In Pakistan, due to gigantic rise in population, individual finances have been disturbed a lot. This is also because of rising unemployment Economy of an individual is at the utmost priority of every democratic as well as welfare state. Since the dawn of human history, individual needs have been prioritized by every human being and these individual needs can only be met by proper sources of employment.

Factors of Unemployment in Pakistan:The following are the basic factors of unemployment: Poor governance Political instability Underdeveloped industrial sector Managerial inefficiency Decreased investment Population growth Corruption Globalization Nepotism Energy crisis

Causes of Unemployment in Pakistan:There are the following main causes of unemployment: 1.) The first cause of unemployment or joblessness in Pakistan is worsening law and order situation. Owing to this negative social phenomenon, foreign direct investment is sliding down to the bottom. Also investors are losing confidence in the political and economic system of the country therefore they are reluctant to invest in any new business venture. Resultantly, new jobs are not generating while the job seekers are rising continuously in the country.

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2.) Secondly, Agriculture is account for the maximum job provision in the country. Agriculture sector is facing severe challenges of water shortage, climatic changes and technological backwardness in recent years. In 2009-10, agriculture showed a growth of only 2% against the target of 3.8% while nearly 62% of Pakistan population is living in rural areas, and is directly or indirectly linked with agriculture for their livelihood. 3.) Thirdly, Industry is also a heaven for educated as well as semi-educated labour force in the country. Pakistan industry is short listing its labour because of gradual decrease in demand as well as acute energy shortage. Energy shortfall crosses 5500 MW at time causing severe damage to production capacity. 4.) Fourthly, United States of America spent 368 billion in 2007 on research and development whereas Pakistans attention towards this sector is the least. By spending on education and research, we can create more specialized fields thus generating more jobs. In the 2010 budget, Pakistan has earmarked only 2% of its GDP on education which is the lowest in whole of the region. 5.) Fifth and the last cause is that, Population increase is also a cause of unemployment in Pakistan. Till 2010, Pakistans population is 173.54 million whereas most of the population is unable to survive in the financial race because of illiteracy.

Finally, we can hold the government responsible for its poor performance in financial sector. Poor governance has destroyed the performance of our economic sector by every side and government has taken only cosmetic measures to redress the problem. Dr. Ishrat Hussain suggestions to improve the governance have been put on the backburner.

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Chapter 4 Unemployment Figures of Pakistan:If the unemployment rate is as low as the government claims it to be, then even the minor uptick in the number of people without work would not be cause for worry. But Pakistan Labour Force Survey for fiscal year 2010, is showing something else, according to it the unemployment rate in 2010 was more than 6.8%. We are not certain as to whether the error is a genuine methodological flaw or whether the government is deliberately fiddling with the numbers, but all evidence suggests that the real rate of unemployment is significantly higher. As 6.8% per cent rate suggests that unemployment is not a serious problem in the country, yet the overwhelming majority of economists and public policy experts agree that it is one of the most serious economic concerns facing Pakistan today. If the government cannot get itself to admit the problem, then how can it be expected to work towards a solution? It is highly likely that the labour force survey is just another in a long line of symptoms showing that the current administration has neither the wisdom nor the courage to confront the countrys economic challenges and would rather hide behind distortions and platitudes. We remain confounded as to why that should be so. The economy is admittedly in bad shape and it will take strong efforts to get it back on track, but there is an almost same consent among experts as to how get the task done. It is time for the administration to cease commenting and start taking charge of the economy. The government owes it to the people to be honest about the scale of the problem as well as the hard measures that would be needed to move towards a solution.

Reasons of Growing Unemployment in Pakistan: 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. Industrial sector is the second largest sector of our economy and contributes 19% to national income. This sector should employ a large number of labor. 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.

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High cost and low quality are responsible for less demand for our agriculture and industrial items. Because of less demand of such kinds of goods both the domestic and international producers are losing their interest in production. Thats why people are becoming unemployed. 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. 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. 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. Loadshedding 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 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. Pakistans 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. Political instability, bad law and order situation, armys 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. Due to 9/11 incident, Gulf war and the baseless allegations of terrorism the image of Pakistan has been affected very badly at international level. So in the current scenario Pakistan has limited job opportunities in other countries of the world. 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.

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Chapter 5 Consequences of Unemployment:The following consequences occur due to unemployment: Individual Effects: Loss of income Fall in real living standards Increased health risks like stress, social exclusion because of loss of work and incme Demotivation and Deskilling.

Social effects: Low moral value Security threats Increase crimes Family breakdowns

Economic effects: Fall in sales Fall in profits Fall in revenue Decreased economic growth

Recommendations: Good governance Education Transparency in resource allocation Stable political environment Better policies Continuity of policies Security of investors Check and balance Better strategies and plannings.

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UNEMPLOYMENT Conclusion:-

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Concluding, I would like to say that Poor governance has destroyed the performance of our economic sector by every side and government has taken only cosmetic measures to redress the problem so I 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. References: http://www.indexmundi.com/pakistan/unemployment_rate.html http://tribune.com.pk/story/117940/unemployment-figures/ on 12 February 2011 http://www.theodora.com/wfbcurrent/pakistan/pakistan_economy.html http://www.gfmag.com/gdp-data-country-reports/204-pakistan-gdp-countryreport.html#axzz1Kuu33GaH http://www.opfblog.com/8449/reasons-for-growing-unemployment-in-pakistan/ http://www.hamariweb.com/articles/article.aspx?id=4817 http://www.einfopedia.com/causes-of-unemployment-in-pakistan.php http://www.sleekarticles.com/unemployment-in-pakistan/ http://www.pakistaneconomist.com/issue1999/issue28/etc1.htm

Articles & Sources From: The Express Tribune Pakistan News Blog Overseas Pakistan IMF Global Finance CIA World Factbook Index Mundi Bahria University

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