- Back to Home »
- Unemployment, Causes and Control
Posted by : Ahsan Khan Monday, 23 April 2012
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.
“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 %.
Concept of unemployment may be clear from the following types:
Employment means that a person is willing to work, able to work and is working.
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
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.
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.
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.
Main causes of unemployment are as below:
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 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 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. 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.
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) 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
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
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.
Re-employment of higher rank civil and especially armed forces officers has decline the jobs for qualified young men in Pakistan.
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.
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 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.
Following steps must be taken by the people and government to control 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 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 & 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.
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
Government should provide loans to the unemployed skilled labour to promote self-employment. Provision of credit facilities should be provided to reduce unemployment.
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.