Unemployment is a central problem because when unemployment is high, resources are wasted and people’s incomes are depressed.
Unemployment is the situation where the country is not making full use of its resources.
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 emotions and family lives.
Unemployment is measured annually as the percent of the labor force that cannot find a job. The labor force comprises adults who want to work. Uncounted are those who do not seek employment, or who have become discouraged enough to stop looking.
Classification of Unemployment
Unemployment is classified into three categories.
- Frictional unemployment (workers who are simply moving between jobs)
- Structural unemployment (workers who are in regions or industries that are in persistent slump)
- Cyclical unemployment (workers who laid off when the overall economy suffers a downturn. In Pakistan unemployment is of structural and cyclical nature.
Understanding the sources of unemployment has proved one of the major challenges of modern macroeconomics. Voluntary unemployment may be or when qualified people chose not to work out the going wage rate unemployment occur. The key element in understanding involuntary unemployment is the inflexibility of wages in the face of economic shocks. The same situation is in Pakistan, inflexibility arises because of costs involved in administering the compensation system.
The upward creep in the natural rate arises mainly because of demographic trends particularly the higher proportion of teenagers in the labour force. In addition, government policies are also increasing unemployment rate i.e. Golden Shake Hand, ban on jobs increasing unemployment rate.
Unemployment in Pakistan
In Pakistan labour 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 existing population of 142.87 millions with Labour force participation rate of 27.46 percent, the total labour force comes to 39.24 million. According to this about 2.4 million persons of labour force were estimated as unemployed in 1999, as construction and transport sectors have absorbed 11.2 percent, 6.8 percent and 5.7 percent, compared to 10.5 percent, 7.2 percent and 5.0 percent respectively in 1994-95.
Economies are powered by consumer spending and savings investment. Unemployed workers earn no wages; they spend little and save less. Economies with high levels of unemployment are stalled economies
The estimated population of Pakistan for the year 2005 is said to be 162,419,946 million
At the time of independence, it was only 32.5 million, but 116 million people were added during the last 57 years
The population growth rate is 2.03% (2005 est.)
Population below poverty line: 32% (FY00/01 est.)