Account of Unemployment in Pakistan

04/08/2011 16:19


For any modern society, unemployment is one the major challenge to be tackled which is usually correlated negative factors such as crime rate, suicide and illegal trafficking. Since the unemployment account of instability, poverty and civil anarchy in Pakistani society it is one the most vital issue to be address.


Historical Accoun...t of unemployment in Pakistan:

Unemployment is a central problem of Pakistan because when unemployment is high, resources are wasted and people’s incomes are depressed; during such periods, economics distress also spills over to affect people’s 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

In the current situation more than 30 lakh people are unemployed in Pakistan and unemployment ratio is more than 12%.


15 Key Factors of unemployment in Pakistan:


i. Agricultural Dependence and Backwardness

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 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.


ii. Industry Related Problems

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. Also Lack of industrial infrastructure fueled with shaky confidence of foreign investors. Due to electricity breakdown already established industry is deteriorating, resulting in the prevailing unemployment ratio.


iii. Quality Related Issues

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


iv. Educational Deficiency  

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.


v. Expenses versus Income

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 3 to 4% which is very low. Low investment level is due to fewer saving, ultimately there is unemployment.


vi. Lack of Entrepreneur Competence

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.


vii. Lack of Economic Planning

 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.


viii. Lack of Power Generation

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.


ix .Incompetent Tax System

 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.


x. Global Rescission

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.


xi. Inappropriate Population Growth

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.


xii. Lack of Fiscal Policy

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.


xiii. Domestic Instability

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.


xiv. ‘Image’ as Terrorist State

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.


Xv. Sole Dependence of Foreign aid

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.


Solution to Unemployment:

  • Unemployment is completely based on our educational system which gives out a typical student who is never suited for any kind of work. So we must Change our Education System.
  • The other thing is that in Pakistan there is lack of skill training centers where young men and women should be trained so that they may make a better way out of unemployment.
  • Major issue to tackled is dependant in the hands of government and functioning authority to stabilize the domestic issues, with lower and investment & cooperate friendly tax system along designing an infrastructure of at least next three decays could change the face of the Pakistani society. This could also be done by allocating cities purely for economic hubs and function such as Karachi, Faisalabad, Sialkot, Gawadar, Peshawar and Lahore to serve as connecting economic centers in country.
  • Possible attracting foreign direct investment from measures which gives confidence and attractive returns as the sheer volume of population can be a factor. Law and order situation should be handled with Iron hands as its one key factor.
  • Adopting Liberal and open market approach with lesser restriction on starting up business as well as allocating easy and soft loans to new starter business in attractive industrial sectors such as energy , education , IT etc

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.


FOOT NOTE: I have extracted the major portion of this article from Business recorder and the extracted portion belongs solely to author and institution. The extraction is solely for non-commercial and educational purpose.


Faizan Ali Raza

APU Volunteer.


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