TERM PAPER

UNEMPLOYMENT AND ITS SITUATION

INASIA

Submitted to:

Sir Abdul Farooq

Submitted by:

Muzammil Shahid (10)

Ifzal Ahmed (09)

Hajra Fazal(29)

Adeel Abid(08)

(F005-BBA)

Date: 11, December 2006

Contents

1. Introduction 3 1.1 Statement of problem 3

1.2 Objectives of Study 6 1.3 Methodology and source 71.4 Organization 7

2. Review of literature 8

3. Analysis of Data 23 3.1 Global Causes of Unemployment 23

3.2 Costs and effects of Unemployment 243.3 Situation of Unemployment in South Asia 26

3.4 Situation in Pakistan 29 3.5 Role of Pakistan Government 31

4. Suggestions and Conclusions 33

6. References 38

List of Illustrations

Table 1 27

Table 2 28

Table 3 30

Figure 1 27

Figure 2 38

Appendix A 36Appendix B 37

1. Introduction

2

1.1 Statement of Problem

Major obstacles in the path of Economic Development and Growth of

the Underdeveloped countries, better to say developing countries are:

Poverty, Inflation, illiteracy, Unemployment, Capital deficiency, Lack of

saving and investment, Low GDP growth rate, Unequal income

distribution, Political and economic Instability, and poor health,

transportation and sanitation facilities.

These are only the few obstacles out of long list of problematic

situations. Out of these we can say the most important or one of the

bases of many other problems is the problem of Unemployment or

Underemployment.

Lacking a job often means lacking social contact with fellow

employees, a purpose for many hours of the day, lack of self-esteem,

mental stress and illness, and of course, the inability to pay bills and to

purchase both necessities and luxuries. These effects are especially

serious for those with family obligations, debts, and/or medical costs,

where the availability of health insurance is often linked to holding a

job. Increasing unemployment raises the crime rate, the suicide rate,

and encourages bad health. During the Great Depression,

unemployment rates exceeded 20% in many countries. Finally, high

unemployment implies low real Gross Domestic Product - human

resources are not being used as completely as possible and are thus

wasting opportunities to produce goods and services. Mostly

unemployment thus represents a profound form of inefficiency.

In year 2005 labor force worldwide was mixed, with more people in

work than in 2004 but at the same time more unemployed people than

the year before.

3

At the end of 2005, 2.85 billion people aged 15 and older were in

work, up 1.5 per cent over the previous year, and up 16.5 percent

since 1995.

The last decade has witnessed a decline in the global employment-to-

population ratio, which is the share of the world’s working-age

population (aged 15 years and older) that is in work. It stood at 61.4 in

2005, which is 1.4 percentage points lower than ten years ago

(Appendix A).

The decrease was stronger among young people (aged 15 to 24).

Within this group the global employment-to-population ratio decreased

from 51.7 in 1995 to 46.7 in 2005. Part of this is explained by the

increasing proportion of young people in education. Among adults

(aged 25 years and older) the global employment-to-population ratio

declined from 66.8 to 66.3 between 1995 and 2005. Examining the

adult age range by sex reveals different trends between women and

men: while the share of employed adult males fell by 1.3 percentage

points to 80.8 per cent, the share of the adult female population that

was in work grew. In 2005, 52.2 per cent of adult women were

employed, compared with 51.7 per cent in 1995. The gap in the

employment-to-population ratio between women and men thus has

narrowed but remains wide.

The world’s unemployment rate in 2005 stood at 6.3 per cent,

unchanged from the previous year and 0.3 percentage points higher

than a decade earlier (Appendix B). In total, nearly 191.8 million

people were unemployed around the world in 2005, an increase of 2.2

million since 2004 and 34.4 million since 1995. Almost half of the

unemployed people in the world are young people, a troublesome

figure given that youth make up only 25 per cent of the working age

population. Young people are more than three times as likely as adults

to be unemployed.

4

South Asia’s unemployment rate stayed at 4.7 per cent in 2005 and

South-East Asia and the Pacific’s unemployment rate was 6.1 per cent.

SOUTH Asia faces five major employment challenges. The

Employment Challenge One, South Asia is a hugely populated region

with 1.4 billion people, 60 per cent of whom are in the working-age

group. Two, labor force participation is only about 66 per cent of the

working-age population. Three, employment growth rates are lower

than both gross domestic product (GDP) and labor force growth rates.

Four, agriculture is the predominant employer, although this sector has

been suffering from lack of investment and low productivity since the

Green Revolution during the 1960s. Five, one-third of South Asia is in

poverty; and, about half of the population — in four large countries —

is illiterate. Despite of the continuous economic growth of world

unemployment continue to be the serious problem for all nations.

1.2 Objectives of the study

Major objectives of our study related to this term paper are to discuss:

Major causes of unemployment in Developing countries

Major effects of unemployment in Developing countries

Changes in employment and unemployment pattern around the

globe and with special importance to Asian countries. I.e.

Pakistan, India and Bangladesh.

Role of Pakistan Government regarding unemployment

Term paper will also give suggestions to reduce and aid unemployment

in developing countries like India, Pakistan.

1.3 Methodology and Sources of Data

5

Most of the data is collected from internet for this term paper.

Statistics and figures are gathered from reliable sites of ILO

(International labor Organization), WB (World Bank), ADB (Asian

Development Bank) and SBP (State Bank of Pakistan).

Both absolute values and percentages are used to discuss changing

pattern of employment and unemployment. All the statistics use in the

paper are of 1995-onward up to 2005.

1.4 Organization

First introductory part of this term paper discuss about global scenario

of unemployment in detail with especial reference to Situations in

South Asia. Objectives of study are also given in this part of paper.

Then comes the review of literature which include summarized articles

of unemployment about situations in world and also related to Asian

developing countries. Then in the third part, named as Analysis of

Data, all the objectives of causes, effects and role of governments

regarding unemployment are fulfilled.

2. Review of literature

Katherine Hagen, ILO's Deputy Director-General,(1996) said, By the

year 2000, one-half of humanity will be living and working in cities,

with developing countries accounting for the major share of the world's

new urban population. These people will need jobs if the new cities are

to develop as centers of economic opportunity and civilization rather

6

than zones of inequality and misery. Only the generation of productive

employment can break the vicious circle of urban poverty that is taking

root in cities worldwide.

In spite of the problems caused by rapid urbanization, cities are rightly

regarded as centers of productivity and engines of economic growth.

Urban centers make a disproportionate contribution to Gross Domestic

Product. This is also true for many developing countries. For example,

although Kenya is 23% urban, Nigeria 35% and India 27%, the urban

areas in all three countries account for 70 % of GDP. In ILO's view cities

are a resource that needs to be developed continuously and with a

view to increasing human well-being and social justice.

Unemployment is not confined to developing-country cities. Cities in

developed countries have been hit hard by de-industrialization, since

most manufacturing was located in cities. Over the last two decades

the average drop in manufacturing employment in G7 countries was 15

%. Among the larger EU countries, the UK's share of manufacturing

employment declined by 43%, France's by 23% and Germany's by

14%. Most EU countries are struggling with double-digit

unemployment. The US has low unemployment, but average real

wages have stagnated in the last 20 years, and high pockets of

unemployment do exist in some large U.S. cities.

International Labor Organization (ILO), (1996) says, one-third of the

world's inner-city population, approximately 400 million people, is

living in poverty, with lack of productive employment as one of the

most direct causes. By the year 2000, the ranks of the urban poor are

expected to have swelled to one billion people. In absolute terms, Asia

represents the largest concentrations of urban poverty in the world. In

the developing world, African cities have the highest percentage of

7

poverty, with 41 % of the urban population living below the poverty

line.

The report, says that in both developed and developing countries, the

rise in urban joblessness causes urbanization of poverty.

The ILO estimates that there will be 1.2 billion new participants to the

world labor market by the year 2025. Most of the new jobs will have to

be created in cities. The share of non-agricultural employment grew by

93 per cent in the last four decades, and now accounts for 40 per cent

of all employment in developing countries.

Sunchild (1998) writes unemployment is good for big business, and

even small business. The higher the rate of unemployment the more

people there are looking for work, the more people there are looking

for work then the more likely they are to put up with poor working

conditions and poor pay, they more willing they are to put up with poor

conditions and pay the easier it is for businesses to grow as they do

not need to worry much about worker strikes and unions. This

exploitation of the workers, allows businesses to save the money they

should really be paying out and use it to further there own goals. Any

company like McDonalds why bother to employ more young people

when it could buy a machine such as a Fry-Basketing Machine. The

machine although may cost more money cannot refuse to work, does

not call in sick, is not late, does not need breaks, can work all day and

all night, and is generally reliable. Finally once company has paid for

the machine it no longer needs to pay more (other than electricity etc).

This means that this money can be used to further buy more

machinery to replace more workers until only few are left in place. The

companies are aiming for the highest output for the cheapest cost and

not even governments can make law that a certain number of

employees must be employed; rather they must beg the companies to

8

do it and offer them tax incentives, money which is later taken from

the pocket of the tax payers and workers. Capitalism favors this type of

system that leads to unemployment.

Syed M. Aslam (1999) writes that after fifty years, in Pakistan the

dream of Quaid-e-Azam still remains to be materialized as the

successive governments failed to exploit the natural and human

resources wisely. The economy is in such a worsening state which the

country never experienced before. The biggest portion of the budget

today goes towards the payments of foreign debts. Little is left for

education, health and development. This has taken a serious effect on

the employment opportunities in the country where finding a job at all

levels is becoming harder by everyday due to frequent lay-offs in the

public and private sector. There are many seekers but few jobs. In a

society where ‘who you know’ has replaced ‘what you know’ as the

major criteria for jobs, chances of employment are miserable due to

massive downsizing in the public sector. Tens of thousands of

graduates leaving the universities every year are finding it harder to

find a suitable employment. Unemployment weakens the economic

and social stability of any society. Societies which fail to provide

gainful and secure employment to their people invite political

instability, social unrest and economic insecurity. Unemployment issue

has taken a global viewpoint. Many of the developed countries became

more protectionist raising new protective barriers against imports,

particularly the competitive products, from the developing countries to

further worsen an already bad situation. The socio-economic fall out of

the high unemployment rate in Pakistan is evident from the drastic

increase in the crime wave. Today robberies, and kidnapping for

ransom have become a fearsome fixture of life in the country. The

resultant lack of civil peace and the rule of the law weaken the very

9

basis of all industrial, economic and trade activities in the country.

Economic policy plays a vital role to help keep the unemployment rate

under check. According to a UN report, the East Asian economies in the

1980s avoided stagnation and unemployment did so because they got

their domestic policies right by careful borrowing, creative use of

foreign exchange rates, promotion of exports, and protection of food

growers and restraint of nominal wages. All these measures have

combined to keep the growth of employment in flat compared to

overall economic growth.

Miss: Samina Khalil and Rao Noman Saleem (1999) from Applied

Economics Research Centre, finds that 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. In

Pakistan 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. On the basis of the population of 142.87

millions with Labor force participation rate of 27.46 percent, the total

labor force comes to 39.24 million. According to this about 2.4 million

person of labor force were estimated as unemployed in 1999.

According to Labour Force Survey 1996-97, the rate of open

unemployment was 6.1 percent and 5.4 percent as per Labour Force

Survey of 1994-95 This indicates that rate of unemployment has

increased between these two surveys by 0.7 percent officially but

unofficially unemployment is much larger than this rate. Often it is

perceived that unemployment rate of rural areas is greater because in

rural areas there are less chances of employment as compared to

urban areas where there are more chances of employment due to

more industries. In Pakistan unemployment rate is increasing in both

10

rural and urban areas in absolute as well as in percentage terms. From

Okun's law we know that for every 2% fall in GNP relative to potential

GNP, the unemployment rate rises by 1% point. High unemployment is

a symptom of waste, when unemployment is high, the economy is not

producing up to high level. When economy is not producing

sufficiently, we can say that we are unable to use our full resources for

production purposes.

Kerstin Marx (2000) reported that the fallout from the financial crisis in

Asia that began in mid-1997 has caused massive unemployment

throughout the region, according to a new United Nations study. The

economic disorder in Southeast and East Asia emphasized the

weakness of these once high growth and full employment economies,

where unemployment rates have doubled and even tripled in the space

of a few months. ILO statistics revealed that more than 150 million

workers in 1997 are unemployed out of a world labor force of about

three billion people. Additionally, about 25 to 30 percent of the

employed workers are underemployed. The economic crisis in Asia is

blamed for much of the setback to the world employment situation.

Between August 1997 and December 1998, rapid job losses create

unemployment rise in Indonesia from 4.3 million to 13.7 million people.

In Thailand, the numbers exploded from 0.7 million in February 1997 to

1.9 million in December 1998. Even in less severely effected

economies, such as Hong Kong, China, Malaysia and Singapore, there

are now twice as many people without work as before the crisis. Before

the crisis, the Southeast and East Asian countries often had been cited

as ''models of the positive impact of globalization in raising rates of

economic growth and job creation."

Their macroeconomic policies of promoting labor-intensive exports,

trade liberalization and attracting foreign direct investment had raised

the living standards and reduced poverty within the region, according

to the UN report. The crisis has now revealed that the rapid

11

globalization of the world economy has posed new challenges which

have made the goal of maintaining full employment a more complex

undertaking.

Mr. Johann Van Rooyen (2001) writes about the cost and causes of

unemployment that as is the case also with so many other socio-

economic problems, the issue of unemployment is much more

complicated than it appears in the world’s surface. As no country is

free from its revenge but developing countries are hardly hit by it. To

the people of poor countries job means access to the basic needs of

life, self esteem, and to whatever in small way contributing to the well

being of the nation. Being unemployed the person is liability on family

instead of an asset to the society. The physical and mental strain may

push the person to adopt illegal way of earning money. The

unemployed represents waste of the nation because goods and

services which could be produced by these unemployed now goes into

waste. It also increase the expenditure of the nation in the form of

social benefits and security provided to the effected people. There is

wide survey that unemployment in developing countries is caused by

structural factors while in developed countries as in the past

traditionally been associated with a downswing in the national business

cycle or a temporary slump in the world economy. When referring to

structural causes of unemployment one has in mind distinctive socio-

economic characteristic, which by their very nature tend to reinforce

low employment levels. Unemployment caused from structural

variables has greater permanency while cyclical unemployment tends

to fluctuate. Structural causes of unemployment are more persuasive

and embedded in developing societies. The other causal effect

contributing to unemployment includes diverse factors such as

diminishing donor interest, perceived political instability, and security

12

risk, over-regulation; labor market inflexibility; and irregular unstable

industrial relations etc.

MOHAMMED SHEHZAD (2004). South Asia faces five major

employment challenges, says the recent report of the Mahbub ul Haq

Human Development Centre, South Asia 2003: the Employment

Challenge. One, South Asia is a hugely populated region with 1.4 billion

people, 60 per cent of whom are in the working-age group. Two, labor

force participation is only about 66 per cent of the working-age

population. Three, employment growth rates are lower than both GDP

and labor force growth rates. Four, agriculture is the predominant

employer, although this sector has been suffering from lack of

investment and low productivity since the Green Revolution during the

1960s. Five, one-third of South Asia is in poverty; and, about half of the

population is illiterate. South Asia's labor market is characterized by

pervasive unemployment and underemployment, especially among the

youth and the educated; working poor who do not get adequate wages

to get out of poverty; working children; and women who face

discrimination across the labor market, reflecting prevailing social

attitudes. UNEMPLOYMENT among the youth accounts for a major

portion of the total unemployment. During 1997, youth accounted for

70% of the total unemployed in Sri Lanka, 53% in India and 45 % in

Pakistan. The failure to find jobs appears to have led the educated

youth towards either inactivity or further involvement in education.

According to the 1998-1999 Labor Force Survey of Pakistan, 20 % of

the post-graduate degree holders were out of the labor force. Almost

50% of female doctors and 35%of graduates in different disciplines

were reported to be out of the labor force. The survey claims that the

WTO failed to generate employment in the region. South Asia's

unemployment levels have raised from 2.9 per cent in 1995 to 3.4 per

13

cent in 2001. Data from ADB show that unemployment has increased

in Pakistan, Bangladesh and the Maldives, while it has decreased only

in Sri Lanka during this period. The Economic Survey of India shows

that the unemployment rate increased from 5.99%in 93-4 to 7.32% in

99-2000. The employment challenge in South Asia is highly

discriminatory against women. Women's limited access to employment

opportunities is best reflected in the gap between the unemployment

rates of men and women 3.5 times more unemployed then men in

Pakistan.

Mahbub-ul-Haq Human Development Centre (2004) based in

Islamabad, presents a rather depressing picture of human

development in the region. It points out that the WTO administration

has adversely impacted south Asian workers, particularly those in

small-scale industrial and agricultural enterprises. South Asia hopes of

gaining from WTO rules in the key areas of agriculture, textiles and

services, believing that greater market access and a more even-

handed trading system would allow them to use cheap labor to

encourage exports, have failed to materialize. Secondly, HDC

highlights the presence of severe gender discrimination in the job

market, pointing out that most women are concentrated in low-paying,

low-productivity jobs. HDC notes that adult literacy has raised, it adds

that there is a rise in the number of the educated unemployed,

generating a debate on the relevance of the educational system in

various countries. Probably the most intense recent example of this is

the high rate of farmer suicides across southern India, despite its

emergence as a south Asian leader in IT. Elaborating on this

inconsistency, the president of the Pakistan center, Khadija Haq,

remarks that, "India's data on nutrition is worrying. There has been a

higher level of hunger as reflected by data on under-weight. India

14

exports food grains now, yet nutritional data reveals the high

occurrence of hunger in the population." In neighboring Pakistan,

according to Haq, one-third of the population -- that is, 50 million

people -- live in acute poverty, making poverty reduction a main

concern for the country. In contrast, the troubled island nation of Sri

Lanka provides a positive difference, standing out as a model of human

development in south Asia. Says Haq, "The two main reasons of Sri

Lanka's success is achieving a very low level of population growth and

a high level of human development that is at equality with the

developed world." it achieved this miracle explains senior analyst Dr

Ketheswaran Loganathan, working with Sri-Lankan research body, "The

high literacy rate among women and increase in women's participation

in the job market especially in the private sector has delayed the

marriage age for women." This primary factor, he says has given a

boost to family planning here, elaborating that, “economic pressure

and the decline of the extended family, this has forced couples to

restrict the number of children to one or two."

ILO Director-General Mr. Somavia (2005), reports that there is need for

development of comprehensive strategies aimed at giving young

people a chance to maximize their productive potential through decent

employment, as well as for an increase of international aid for the most

helpless youth in order to bring them back into the fold of a civil

society. It is recognized within the UN as well as other international

organizations and governments that only through decent employment

opportunities can young people get the chance to work them out of

poverty.

15

Sarid (2006) reports that the number of young unemployed increased

from 74 million to 85 million over the past ten years, there were more

than 300 million youth who were living below the US $2 per day

poverty line, notes a report by ILO. The highest unemployment rate

was observed In the Middle East and North Africa: 25.7 %. In Sub-

Saharan Africa 18.1 %; South East Asia and the Pacific 15.8 per cent.

The European Union prides itself with 13.1 per cent and East Asia with

only 7.8% (officially). It is important to note that in the developing

regions, such as South Asia, young women face disproportionate

challenges in the labor market. This is mainly due to cultural traditions,

lack of work opportunities, and a tendency of labor markets to drop

young women more rapidly than men when fewer job opportunities are

available. There is also a harsh increase in the number of young people

who are neither in employment nor in education, in Central and

Eastern Europe 34 percent of youth falls in this category. In sub-

Saharan Africa the rate was 27 percent, while in Central and South

America it was 21 percent. In the developed countries, on the other

hand, that number was only 13 percent. 

International labor organization, ILO (2006) finds that unemployment

has reached to new heights despite of the healthy economic growth.

Unemployment is increasing at high rate especially youth are mostly

effected by this. ILO says that the rapid increase in the GDP of the

most of the economies could not turn that economic growth into job

creation and increasing of the wages. No doubt that world’s GDP

growth is increased to 4.3% but even this could not decrease the

unemployment rate. This shows that even economic growth is not

sufficiently addressing global employment needs and the world is

facing global job crises and deficit in well-mannered working which

could not be cure by itself. There were 191.8 million jobless people at

16

the end of 2005 an increase of 34 people million since 1995(Appendix

B).The main problem is that more than half of the world’s unemployed

is youth while youth makes up 25% of the working age population. The

report says that only in service sector the employment opportunities

increased with one exception i.e. Middle East and Africa. It says that if

service sector continued to grow on like this it will soon overtake

agriculture sector in providing employment opportunities.

Mr. Somavia, ILO (2006) said, in many countries, agricultural workers

are leaving a life of rural poverty in the hope of finding something

better in the city but end up little or no better off iN informal laboring

jobs or petty trading.

Economic shocks as well as natural disasters recently also hit those

areas who are already poor. This report suggests concept that poverty

can only be reduced by the rout of more and better job in the

economy.

It is quite clear from these articles that unemployment always

remained a serious problem in the way of development of any country

and it also is affecting the overall world development programs. The

cost of this for a nation is not only the lost GDP (output),and welfare

expenses paid for the survival of unemployed but also the increase in

crime and antisocial behavior which in turn badly effect industrial and

trade activities and create further more unemployment and poverty in

the society. Serious political and governmental attention is needed to

reduce its impact on the society. Suggestions are discussed in next

section of the paper.

17

3. Analysis of Data

3.1 Global causes of unemployment

Unemployment is not the result of any one cause. It makes its

appearance in a great variety of circumstances, some in personal

factors, some in economic changes, and some in legislative and

regulatory conditions. Throughout the year some workers may appear

in the labor market and then withdraw. Students work during the

summer and return to school in September. Building and construction

activities, logging and lumbering, slaughtering and meat packing are

very seasonal and give rise to a considerable amount of temporary

unemployment. Similarly, industrial and technological changes may

force workers to readjust and relocate. Jobs, wages, and working

conditions always point the way.

Unemployment can be considered as phenomenon driven by multiple

causes. Unemployment might be attributed to, for example, deficient

aggregate demand, high population growth rate, discriminations,

illiteracy, technical progress, market imperfections, utility maximising

decisions of workers, individual search behaviour, the rise and fall of

industries, trade union behaviour, seasonal nature of jobs etc., or

combinations of these factors. This makes clear that unemployment is

an instance in which more than one cause is involved in the production

of the phenomenon and that total unemployment is an intermixture of

effects of these singular causes.

Another important cause of unemployment is that it is good for big

business. The higher the rate of unemployment the more people there

18

are looking for work, the more people there are looking for work then

the more likely they are to put up with poor working conditions and

poor pay, they more willing they are to put up with poor conditions and

poor pay the easier it is for big businesses to grow as they do not need

to worry as much about worker strikes and unions. This exploitation of

the workers, allows businesses to sack the money they should really be

paying out and use it to further there own goals.

Less opportunities for women to take part in labor force in Asian

countries is also contributing to increase the overall ratio of

unemployment.

So we can say that each type of unemployment can have different and

more than one causes but the need is to control these situations.

3.2 Costs and effects of unemployment

Unemployment is potentially very damaging. Its knock-on effects are

far reaching, destroying the lives of countless individuals, parents and

children and severely affecting a country’s economy. For the

individual, unemployment can be psychologically damaging, eroding a

person’s self-esteem. Unemployment in the family context will cause

added stress. In many countries the common scenario is that

unemployment takes families in to the poverty trap. In anxiety parents

send their children out in search for work. In most instances this leads

to cheap labor, begging and trading on the streets and even

prostitution and criminal activity. Without education these children are

without hope of finding a decent job in the future. This is how child

labor birth takes place. This cycle of deprivation continues through the

generations.

Unemployment damages the economic and social stability of any

society. Societies which fail to provide gainful and secure employment

19

to their people invite political instability, social unrest and economic

insecurity. The link between unemployment and crime has also been

well established.

A rise in unemployment will seriously damage a country’s economy.

Unemployment represents a terrible waste of national resources. The

goods and services which the unemployed might have produced are

lost for ever. With rise in unemployment GDP gap between potential

and actual GDP increases. What is more, for the State that the cost of

unemployment does not only consist of the loss of potential income-

derived from taxation, it also includes the expenditure involved in

social security benefits and various forms of subsidization to assist in

maintaining at least a minimum level of human dignity for those

affected. Employment is also directly related to all industrial and trade

activities. These activities slow down when there is a high level of

unemployment but increases when it is low.

3.3 Situation of unemployment in Asian countries

South Asia's labor market is characterized by constant unemployment

and underemployment, especially among the youth and the educated;

working poor who do not get sufficient wages to get out of poverty;

working children; and women who face discrimination across the labor

market, reflecting prevailing social attitudes.

World Trade Organization (WTO) has failed to generate employment in

South Asian region. South Asia's unemployment levels have raised

from 2.9 per cent in 1995 to 3.4 per cent in 2001 (officially) and the

annual employment growth rate has come down during the second half

of the 1990s as compared to the first half.

Data from the Asian Development Bank (ADB) show that

unemployment has increased in Pakistan, Bangladesh and the

20

Maldives, while it has decreased only in Sri Lanka during this period.

Though the ADB data do not report India's unemployment rates, the

Economic Survey of India shows that the unemployment rate increased

from 5.99 per cent in 1993-4 to 7.32 per cent in 1999-2000.

Unemployment rates,1999-2001 (%)

Countries Rates

BangladeshBhutanMaldivesIndiaNepalPakistanSri Lanka

3.31.42.07.31.17.88.2

Table 1 .Source: ILO

Figure 1

The figures reveal that in most South Asian countries the employment

situation has worsened in the post-WTO period. Employment

generation in South Asian countries has so far not benefited much from

the WTO.

Pakistan current unemployment rate in 2003 officially remained same

7.8% but unofficial rate of unemployment is too high.

The employment challenge in South Asia is highly discriminatory

21

against women. Women's limited access to employment opportunities

is best reflected in the gap between the unemployment rates of men

and women, which shows women are 3.5 times more likely than men

to be unemployed in Pakistan.

Male & female unemployment in South Asian countries (%)

Countries Female Male F/M ratio

BangladeshMaldivesIndiaNepalPakistanSri Lanka

2.32.710.714.916.2

2.71.671.54.27.1

0.91.71.40.53.52.3

Table 2. Source: ILO

Figure 2

Two-thirds of South Asian women are employed in agriculture or

agriculture-related activities. They work in various roles such as

agricultural laborers, managers of homesteads, and sometimes even

as landowners. However, they are not allowed equal opportunities in

this sector in access to credit and inputs and face discrimination in

wages.

3.4 Situation in Pakistan

22

Many changes have been made to define the meaning of labor force

and employment in Pakistan— The Population Census of 1951 defined

the labor force as all persons of 12 years and above who are self-

supporting, partially self-supporting or seeking works. In 1961, its

definition was changed to include all those of ten years and above who

were working for profit or wages or helping their family members. Not

only the change lowered the age but it also included the unpaid family

members in the employed. Today, Labor Surveys define employment

as "all persons of ten years of age and above who worked at least one

hour during the reference period [the year] and were either ‘paid

employees’ or ‘self employed." Based on this definition, the total

number of employed labor force in 1999 is estimated at 36.2 million.

For instance, based on a population of 134.5 million today and a

participation rate of 28.7 per cent, the total labor force in Pakistan

comes to 38.6 million of which 36.2 million were employed. This also

shows that only 2.4 million persons were unemployed in the country

which reflected an affordable unemployment rate of 6.1 per cent. In

fact, unemployment is a much more serious problem than the official

statistics show. If the unemployment rate of 6.1 per cent is correct, the

employment rate is an ideal 93.9 per cent. Those who know Pakistan,

and there are many, find this highly unpalatable. Unemployment in

Pakistan today is widespread at all levels. It does not spare the highly

qualified professionals any more be they doctors, engineers and MBAs.

It hurts the illiterates, non-skilled, skilled, and educated and

professionals alike. Most of the jobs created and advertised are aimed

at the highly qualified professionals whose share in the total

employment is just 3.6 per cent. There are little or no vacancies

advertised for the two biggest occupational groups— skilled

agricultural and fishery workers whose share is 36.8 per cent and the

elementary or unskilled workers whose share is 22.9 per cent.

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Employed Work Force by Major Occupational Groups (1999)

Group No. %age Share

Legislators, senior officials and managers3.1 m 8.6%

Professionals 1.3 m 3.6%Technicians and Associate Professionals 1 m 2.8%Clerks 1.1 m 3%Service Workers and Shop and Market Sales Workers

2.8 7.7%

Skilled Agricultural and Fishery Workers 13.3m 36.8%Craft and Related Trade Workers 3.6 m 9.9%Plant and Machine Operators and Assemblers

1.7 m 4.7%

Unskilled 8.3 m 22.9%Total 36.2 m    100%

Table 3 Source economic survey 1989-1999

3.4 Role of Pakistan Government

The government is trying to reduce the unemployment rate in country.

‘Rozgar’ schemes were launched by the Prime Minister Benazir Bhutto

in 1989 and in 1994 and her predecessor Nawaz Sharif launched

Yellow Cab scheme in 1992. However these schemes could not

contribute a lot due to many reasons. One is the complicated

procedure especially intensive verification, which created hurdles for a

common man. The Yellow Cab scheme was drifted by the elite class,

which had their sources in the banks. After taking the cars as taxi in

their name, they converted them into private cars and most of those

deserved to get benefit from this scheme could not do it due to lengthy

procedures, guarantees and collateral formalities.

Under Prime Minister's Self Employment Scheme in 1999, different

Banks and Small Business Finance Corporations extended loans to

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unemployed youths and skilled professionals with diploma/degree and

business experience. Loans ranging from Rs.10,000 to be Rs.500,000

for small business and from Rs.500,000 to Rs.5,000,000 for small

industries etc. Small Business Finance Corporation played role in

reducing unemployment. Up to March 1999, the Small Business

Finance Corporation has sanctioned Rs.2,208.4 million, against

amounting to Rs.1,551.95 million have been disbursed to 9,383

persons.

The SBFC has generated employment for 28,149 persons under the

Prime Minister's Self-Employment Scheme up to March 31, 1999. A

Small and Medium Enterprises Development (SMEDA) has been setup

for growth and development of self-employment schemes in Pakistan

During the year 1998 about 104,000 persons have been sent abroad

for employment under Govt. overseas employment schemes.

President Musharaf recently launched self-employment scheme in

collaboration with National Bank of Pakistan (NBP) offers self

employment opportunities especially to youngsters for setting up small

scale enterprises such as small fixed phone PCO, mobile PCO, transport

rickshaw (Qingqi), Qingqi for goods delivery and small Utility Stores. It

is for the poorest of the poor and provides employment opportunities

to the unemployed youth. It aims to target about 2.5 million

unemployed individuals in three to five years through simplified

financing by the NBP.

Unfortunately President ‘Rozgar’ scheme has the same complicated

procedure. Like the past such employment schemes, this scheme also

has the condition of two guarantee witnesses who will testify

certificates and viability of the loan seeker as mandatory, which is a

difficult task for a poor common individual (male or female). The other

option is to provide evidence of applicant’s property. If someone has

ownership of property then he/she doesn’t need such a small amount

in shape of loan to start any little business. The scheme also has a

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condition of two personal references as compulsory. One of the major

concerns is that a secondary school certificate is a prerequisite for a

candidate that means middle grade or illiterate youth or unemployed

people cannot benefit from this scheme at all.

4. Suggestions and conclusions

The growing human poverty challenges faced by Pakistan need to be

addressed through integrated policies and approaches at individual

and collective levels. Efforts on the part of national governments,

supported by the international community, can be complemented for

this. Civil society can play its role through capacity building to get rid

of the root-causes of unemployment and poverty. Though complicated

phenomena, poverty can be addressed through adoption of

multidimensional approaches. First of all, real data should be collected

to project real state of poverty instead of false figures. This data can

help devise plans and strategies to address the issues around growing

poverty and to reduce this to maximum possible levels as defined in

the Millennium Development Goals (MDGs).

Unemployment and poverty, both cannot be addressed though such

short-sighted and politically motivated apparent measures. If we really

want to do this then, we have to reform our financial and

administrative structures and have to change the mindset tuning this

in terms of the people’s security that includes their food security, job

security, personal security and security of movement. If we continue

with huge spending on debt servicing and defense, we can hardly

allocate sufficient budgetary provisions to address the giants of

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growing poverty and unemployment. We need to recognize potential of

our people and look for options and possibilities that can divert our

huge budgets from debt serving and defense to human development

and poverty eradication, and job creations.

To meet the challenge of unemployment, we need to concentrate on

resource mobilization for the social sector development to create more

opportunities for education for all children as mandated in MDG-2

which demands to ensure children everywhere to be able to complete

a full course of primary education. More over we need to invest in

higher scientific and technical education. In this way, Pakistan as a

developing state may produce sufficient technical skills to accelerate

its economic growth and to position itself to meet challenges of

globalization in the twenty-first century. By creating more jobs we can

reduce burden on single bread earners in families. But the job creation

should be on easy and real terms and not just politically motivated

whims and assumptions. If the authorities want that the recently

launched President’s ‘Rozgar’ scheme should benefit the targeted

unemployed, then they have to think in real terms. We need to express

political will at the highest level to make this scheme successful.

Government should take the following steps:

1) Govt. should make efforts to push economic growth process.

For this purpose Economic Revival Package should announce for the

revival of industries sector, to stimulate production and investment.

2) Govt. should seriously try to boost exports through broadening the

tax base and lowering tariffs.

3) Govt. should announce a package for the development of

agriculture sector.

4) Beside this a number of fiscal and monetary measures should take

to attract industrialists and particularly foreign investment.

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5) More Technical and Vocational training facilities should be provided.

In this way unemployed people will get the chance to enhance their

skills and become able to earn reasonable income.

6) With a view to reduce educate unemployment; self-employment

scheme should be encouraged in true manners.

APPENDIX A

Source: ILO, Global Employment Trends Model, 2005

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Appendix B

Source: ILO, Global Employment Trends Model, 2005 2005 figures are preliminary estimate

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References

Syed M. Aslam, UNEMPLOYMENT — A NIGHTMARE

Mohammad Shezad, Human Development in South Asia, The challenge of unemployment

GLOBAL EMPLOYMENT TRENDS BRIEF, January 2006, ILO

Samina Khalil and Rao Noman Saleem, Applied Economics Research Centre Unemployment Situation in Pakistan

2003 Human Development Report, Globalization Fuels Unemployment in South Asia

President’s employment scheme, Pakistan observer

Kerstin Marx, Asia: Crisis causes massive unemployment

Dr Johann Van Rooyen, The cost and causes of unemployment, ECONOMIST.

Sunchild, Why is there unemployment spreading the world

List of countries unemployment rate. www.wikipedia.com

Source: ILO survey.

Websites www.ilo.orgwww.pakistaneconomist.comwww.sarid.netwww.pakistanobserver.comwww.google.comwww.wikipedia.com

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