Inflation in Pakistan

Summary

This report focuses on one of the central problem of our country unemployment. 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.
Furthermore, our report consists of effect of unemployment on economic growth also its causes and major factors of unemployment. We have conducted a survey to know about the views of different people about unemployment.

Introduction

Subject of our report is unemployment. Purpose of selecting this topic is to give information to our fellow friends about one of the major problem which Pakistan is facing these days. In this report we tried our best to put a spot light on its major causes and its effects.
The unemployment rate (10 years and over) in Pakistan was last reported at 5.7 percent in the second quarter of 2011. Historically, from 1990 until 2011, Pakistan Unemployment Rate averaged 5.8% reaching an all-time high of 7.8% in June of 2002 and a record low of 3.13% in December of 1990. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labor force.
Unemployment is a key measure of economic health. It is a major factor in determining how healthy an economy is; if the economy maximized efficiency, everyone would be employed at some wage. An individual unemployed is both unproductive and a drain on society’s resources. However, while unemployment seems a basic statistic the number without jobs divided by those with jobs the issue is anything but unemployment is a powerful statistic that shapes government policy and personal decisions.

Methodology

Questionnaire will be used for survey and collecting quantitative data. We had interviewed with those peoples who are unemployed & also taken their ideas about causes of unemployment. Internet is also a source for data collection.

Limitations
Following are the limitations that we faces while conducting our research:
• Time constraint
• Limited data
• Non serious attitude of people while filling questioner

Facts & Figures

Year Unemployment Rate
1983 3.85
1984 3.75
1985 3.65
1986 3.3
1987 3.071
1988 3.142
1989 3.141
1990 6.3
1991 4.689
1992 6.064
1993 5.283
1994 4.785
1995 5.099
1996 5.362 Year Unemployment
1997 5.755
1998 6.01
1999 5.906
2000 6.87
2001 7.829
2002 8.051
2003 8.267
2004 7.977
2005 7.691
2006 6.908
2007 6.195
2008 6.195
2009 6.195
2010 6.195

Unemployment

Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force.
Types of unemployment:
• Frictional Unemployment:
— This type of unemployment happens because of ‘normal’ workings of an economy. When a person quits finding a better job or when they’re fired and look for a more suitable job, this is called frictional unemployment. It can also happen if consumers shift their demand towards a new product, thus eliminating the need for so many workers in a field. The same is true if technology improves and makes the skills of some workers unnecessary.
• Structural Unemployment:
— As it sounds, this type is caused by significant changes in the structure of an industry. Substantial changes in industry, location, or even seasonal changes can cause structural unemployment. Generally these changes force workers out of a job because the cost to relocate or adjust is simply too much.
• Cyclical Unemployment:
— Downturns in the economy generally account for cyclical unemployment. When the number of unemployed workers exceeds the number of job positions available in an economy, that’s usually a sign of cyclical unemployment.

Unemployment in Pakistan
Unemployment is one of the biggest problems of Pakistan. In the current situation more than 30 lac people are unemployed in Pakistan and unemployment ratio is more than 12%. 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 lack of education, fertilizers, pesticides, quality seeds & absence of land reforms. Due to these entire factors agriculture sector is not developing.
Effects of Unemployment
If people are unemployed, production of goods and provision of services falls off, and simultaneously, the people who are unemployed lack the wherewithal to purchase goods and services. People who still have money, the investors, are reluctant to invest any money in the production of goods or the provision of services because when production and consumption are down, there is no opportunity to get a return on the investment.
Effects of unemployment are social not just economic. Frequently, crime rates rise as people are unable to meet their needs through work. Divorce rates often rise because people cannot solve their financial problems. The rate of homelessness rises, as do the rates for mental and physical illness. Homes are foreclosed upon or abandoned, and neighborhoods deteriorate as a result.
The ability of government to provide for people is also seriously compromised. When there is high unemployment, people pay fewer income taxes and also pay less in sales taxes because they purchase fewer goods and services. This leads to less in the way of public services, which includes everything from police and fire protection to the staffing for the municipal swimming pool and rubbish pickup.
Major Causes of Unemployment:
• Employment in the private sector absolutely stopped because they shifted their capital to other countries because of nationalization of industrial units badly affected the investment industrial sector.
• The higher growth rate of population is the major cause of unemployment in Pakistan. The resources of the country are limited because population has exceeded the optimum level.
• Karachi is the biggest industrial base of Pakistan, but investors are reluctant to invest there because of unrest and violence.
• Our educational system is also responsible for increasing unemployment rate among the educated youth. The attitude of our youth towards the choice of a career is unrealistic and unproductive. Rapid mechanization and computer technology also causing unemployment.
• The government is not involving in capital expenditures which create more jobs.
• Main issue of unemployment in our country is that whenever a new technology comes as software or hardware then all the people starts studying about that. Then at the end, you will see ten thousand students of a particular field about 5 to 10 job vacancies.
• Things are not handled in appropriate manner, as the vacancies are less but job seekers are more than that.
• Opportunities are not enough and system of reference is so much indulged in our society that if a company needs employees then workers of that company will provide some resume to them of their relatives and friends so in this way many people don’t get the opportunity to apply for those jobs.

Disadvantages of Unemployment
1. Personal: It involves loss of paycheck & personal identity, linked to crime, suicide, heart diseases and mental illness.
2. Costs to society: It means less goods and services produced in an economy.
Unless you are already loaded with money (inheritance, lottery, etc.) people have a job to make money to buy necessities. Unemployment affects the daily life adversely. No job means no money, no money means no:
 Home
 Food
 Decent clothing
 Access to a doctor (there are free clinics of course just depends where you are)
 Usually no family since you wouldn't be able to support
 Social life
 Pride
Effect of Unemployment on GDP
GDP is the amount of goods and services produced in a year within a country. When people are unemployed, it means there don't have any income so they can't purchase any good and services. Since income reduces, the demand curve shifts to the left and producers react to this reduction of demand by decreasing production therefore unemployment has a negative effect on GDP and reduces it.

Inflation and Unemployment
There has been an inverse relation between rate of inflation and the rate of unemployment in an economy. The more the entrepreneur extends the employment opportunity the more he has to pay to that particular factor of production and the more payment to factor of production the increase in the cost of producing a unit will be observed and in order to maintain the profitability of the product the entrepreneur will inflate the price of that product. A similar process will be observed throughout the economy when the government intends to create job. The price of products or services, where the workforce is installed, will increase hence an increase in the rate of inflation will be visible throughout the economy.
The relation of unemployment and inflation is known as Phillips curve. Importance of Pakistan NGOs on Solution
Of Unemployment Problem
Employment problem in the transitive period is a public problem, in solution of which all society, together with the representatives of its various population layers, shall participate. In the given aspect the importance of NGO is very powerful, as every NGO represents the certain group of a society. The third sector plays a considerable role in the solution an employment problem: it is a source of jobs, also it carries out professional training, personnel retraining, creates and provides employment to the citizens (recruitment NGOs), attracts volunteers. All of this is directed towards resolution of an unemployment problem.
NGO is such an area of human activity, which is built on the organized people’s initiatives. The unsatisfied economic and social needs of the people have caused an increase in number of NGOs worldwide, variety of the forms and directions of their activities. The governments of the various world countries, changing their own role in economy and society, using the new approaches and public structures for the resolution of essential economic, social, ecological and other problems, first of all, rely on non-state, non-governmental, noncommercial organizations. This is quite natural since they have already proved that necessity convincingly enough. In the states with market and transitive economies NGOs render services and produce public values, which are not profitable or do not bring sufficient profit to commercial structures on one hand and cannot be managed by bulky machine of the state bureaucracy on the other hand. Besides that the NGO services do not require such serious expenses from the state budget since they attract monies from private commercial structures and international charitable organizations while state structures perform the same social programs using state budget monies. All of this witnesses the significant contribution of NGOs to national economy.

In transition economy a number of newly created jobs increase much slower than dismissal from overcrowded fields. The situation in the employment market of work varies slowly the number of the unemployed grows. In this situation the great support for the state is the activity of non-state, non-governmental organizations, which are actively engaged in staff preparation and retraining, help to employ youth, women, and disables, needy, conducting computer literacy training, assisting the beginning businessmen to open their own business, thus stimulating creation of jobs. The inspection has shown that NGOs in Pakistan play a considerable and growing role in maintenance of unemployment. On one hand starting to function NGOs create jobs for their own employees, on the other hand, within their own activities they find employment the other people, thus increasing employment of the population. As the recently conducted polls have shown, the overwhelming majority of NGO perceive the problem of employment and personnel training very seriously and this allows us to consider them as the partners to the state on maintenance of employment. Just small number of the respondents have given the negative answer to the question of creating jobs but also they actually also are engaged in employment of the population, creating jobs both inside themselves and by development of their branches or representations in regions.
The greatest amount of jobs was created by female movement, professional associations, children's and youth organizations. Female NGOs actively function in all areas of republic, are an example and sample of the most serious and active partnership with state structures. They decide the most various problems: motherhood and childhood support; creation of conditions promoting formation of healthy generation; protection of women interests and their economic status, female business etc.
NGO studies a situation with employment of certain area revealing unprofitable or low profitable enterprises, can at any moment reduce jobs, scale of real both potential dismissal of the workers and employment opportunities. Besides that NGO finds out what the dismissed workers need, including in terms of education continuation or training for a new profession. As a result the educational centers are formed, the required resources for the solution of the established tasks are defined and the personnel retraining programs are developed. Personnel retraining efficiency are expressed in the program cost and a number of the employed after retraining. As a rule, a part of the retrained personnel find a job at once. A vivid example is the work of the business women association, which has created during its existence 60 thousand jobs and more than 6 thousand women from all areas of the country have passed the training for a new profession. This makes such NGOs the reliable business partner of the Ministry of Labor.
The influence of NGO activities on employment increase is obvious and requires more detailed consideration by state authorities. It is necessary to consider NGO as the tool by the help of which unemployment problem can be partially solved. Probably, it is necessary the potential incorporated in the essence of NGO and solve unemployment problem in our region having united all interested parties efforts.