hypothesis of unemployment in pakistan

A Study on Determinants of Unemployment in Pakistan

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• First Online: 01 January 2013
• pp 1337–1348
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• Asif Kamran 5 , 6 ,
• Sobia Shujaat 5 , 6 ,
• Nadeem A. Syed 7 &
• Syed Nayyer Ali 8  

Part of the book series: Lecture Notes in Electrical Engineering ((LNEE,volume 242))

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This study has been carried out to examine the determinants of unemployment in Pakistan for the period of 1981–2010 using Regression Model, descriptive stats and graphs. Population growth, Interest rate, foreign direct investment, gross domestic product and literacy rate in Pakistan are being used as explanatory variables. Also the state of democracy in the country has been taken into consideration. Findings include that population growth fuels unemployment positively and where as literacy rate and foreign direct investment has negative impact on unemployment. 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. Political regime is also taken into consideration as a dummy variable. In this research we also analyze factors underlying the employment, study the trends of variables involved in the study and suggest recommendations for reduction in unemployment in Pakistan. Numerical data collected from various sources which will be presented in forms of charts and tables and will be given statistical and mathematical treatment through use of E-views. The study is by and large descriptive in nature all the findings will be analyzed theoretically and objectively.

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School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, 610054, People’s Republic of China

Asif Kamran & Sobia Shujaat

Management Science Department, Bahria University, Karachi, 75260, Pakistan

Management Science Department, National University (Fast), Karachi, 75400, Pakistan

Nadeem A. Syed

General Studies Department, Yanbu Industrial College, Madinat, Yanbu Al Sinaiyah, 30426, Kingdom of Saudi Arabia

Syed Nayyer Ali

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Business School, Sichuan University, Chengdu, China, People's Republic

Drexel University, Philadelphia, PA, USA

John A. Fry

LeBow College of Business Department of Decision Sciences, Drexel University, Philadelphia, Pennsylvania, USA

Benjamin Lev

Azerbaijan National Academy of Sciences, Institute of Cybernetics, Baku, Azerbaijan

Asaf Hajiyev

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Kamran, A., Shujaat, S., Syed, N.A., Ali, S.N. (2014). A Study on Determinants of Unemployment in Pakistan. In: Xu, J., Fry, J., Lev, B., Hajiyev, A. (eds) Proceedings of the Seventh International Conference on Management Science and Engineering Management. Lecture Notes in Electrical Engineering, vol 242. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40081-0_114

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DOI : https://doi.org/10.1007/978-3-642-40081-0_114

Published : 24 September 2013

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Impact of Population Growth and Unemployment on Pakistan Economy

• Nayab Minhaj Department of Economics, University of Karachi, Karachi, Pakistan
• Mohammad Imran Department of Economics, University of Karachi, Karachi, Pakistan

Purpose: This study examines the impact of population on unemployment, and economic growth of Pakistan.

Methodology: The ARDL bounds testing approach is used to explore the long-term relationship between population growth, unemployment, and economic growth in Pakistan. The data used in this study is annual and spans from 1990 to 2017.

Findings: The findings show that there is a long-term relationship between population growth, unemployment, and economic growth in Pakistan, supporting the Population and Unemployment-Led Economic Growth Hypothesis.

Suggestion: It is suggested that the government of Pakistan increase the level of per capita technology, as this would promote the use of economic resources and, as a result, lead to a significant decrease in the unemployment rate.

Editor-in-Chief : Dilshad Zafar ISSN (P) : 2708-4051 ISSN (E) : Online: 2708-406X Publication Frequency : Bi-annual Review Type : Double Blind Publication Fee : Free of Cost Subject Areas : human resource management, marketing management, operations management, entrepreneurship, business ethics, international business, corporate governance, innovation management, and other interlinked areas

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Determinants of Unemployment in Pakistan

Unemployment is one of the most important issues in macro economics. Unemployment creates many economic and social problems in the economy. This is inevitable to address this issue by means of identifying the causes which influence the level of employment. This paper determines the factors that influence the employment level in Pakistan. Four important independent variables are selected as determinants which include GDP Growth rate, inflation, FDI and Population growth rate. The correlation and multiple regression analysis reveal that GDP Growth rate and inflation have no significant relationship with the Unemployment. However, FDI and Population growth rate have significant and negative relationship with unemployment.

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Causes And Effects Of Unemployment In Pakistan

Unemployment in Pakistan has far-reaching causes and effects. Factors such as rapid population growth, a lack of quality education, economic instability, and insufficient job opportunities contribute to the high unemployment rate. The consequences of unemployment include poverty, social unrest, increased crime rates, and a decline in overall economic growth. Understanding these causes and effects is crucial for implementing effective policies and interventions to address the issue of unemployment in Pakistan.

Unemployment in Pakistan is one of the major economic and social challenges facing the country. With millions of people unemployed, it has an immense impact on both individuals and communities. Due to population growth and lack of employment opportunities, unemployment is becoming more widespread every year. This can have a devastating effect on local economies, public services, income levels, consumer confidence and increasing poverty levels. In this blog post we are going to explore some of the causes and effects of unemployment in Pakistan so that you can gain insight into how it affects society.

• Unemployment in Pakistan

Unemployment is an ever-growing issue that affects many countries around the world, including Pakistan. The current situation in Pakistan regarding unemployment is quite alarming and needs to be addressed urgently. According to recent statistics, the unemployment rate in Pakistan is around 5.8%, which does not seem like a significant number. However, when we take into account the soaring population, especially the youth, the figures become quite concerning.

The government needs to take strong measures to curb this issue and provide more job opportunities for the people. Without employment, people cannot sustain themselves or their families, which can lead to poverty and other related problems. Therefore, it is the need of the hour to find a solution to this issue and ensure that everyone in the country has access to a decent job, regardless of their background.

Prevalence of unemployment in Pakistan

Unemployment in Pakistan is a growing concern. With a population of over 220 million people and a workforce of around 65 million, the country is struggling to provide sufficient job opportunities for its citizens. The problem is particularly acute for young people, who make up around 60% of the population and face an unemployment rate of around 10%.

Despite efforts by the government to boost employment through investment and economic reform, the situation continues to worsen, with many people struggling to make ends meet. The consequences of long-term unemployment can be devastating for individuals and families, leading to poverty, social exclusion and a range of health problems. It is clear that urgent action is needed to address this crisis and ensure that everyone in pakistan has the opportunity to earn a living and contribute to society.

• Causes of unemployment in pakistan

1- Growing population

Pakistan faces a daunting challenge with its growing population and simultaneous rise in unemployment rates. The reasons behind this phenomenon are multi-faceted and intricate. One of the biggest culprits of unemployment is rapid urbanization that has created an insufficient job market. This has led to a surplus of workers competing for a limited number of vacancies.

Another factor is the lack of quality education and training opportunities that results in a mismatch between the skills and knowledge of the workforce and the demands of the job market. Furthermore, the economy's over-reliance on the agricultural sector has also contributed to unemployment, with limited job opportunities available in other industries. As the population continues to grow, the need to address this issue becomes more urgent.

2- Illiteracy

Illiteracy is a major issue in pakistan that has resulted in a high rate of unemployment. The lack of education and basic literacy skills has left a significant portion of the population struggling to find gainful employment. While several factors contribute to the unemployment rate in pakistan, illiteracy remains a top cause. The inability to read and write limits job opportunities, as many jobs require basic literacy skills.

Furthermore, illiteracy perpetuates poverty and limits access to healthcare and other crucial resources that are necessary for individuals to be healthy and employable. Consequently, it is vital that efforts are made to address illiteracy in pakistan to alleviate the burden of unemployment and give citizens an opportunity to improve their economic status.

3- Flawed education system

The flaws in pakistan’s education system have been cited as one of the major reasons for the high rate of unemployment in the country. Students often graduate from schools and universities without the necessary skills and knowledge required for the job market. The system focuses more on rote learning and theoretical concepts rather than practical application and critical thinking.

Additionally, there is a mismatch between the subjects taught and the demands of the job market, resulting in a shortage of skilled workers in certain fields and an oversupply of graduates in others. Reforms in the education system are necessary to bridge this gap and provide students with the skills they need to secure employment and contribute to the economy.

4- Economic state of pakistan

Pakistan's economy has been facing a challenging phase for the past few years, and one of the most significant concerns is the rising unemployment rate. Despite efforts to boost job opportunities, various factors still contribute to the unemployment problem in the country. One of the leading causes is the lack of investment in the economy, leading to minimal business growth and limited job opportunities.

Additionally, the education system fails to equip students with the skills necessary for the job market, leaving graduates unemployed. The agricultural sector's decline is another reason, with fewer people employed in farming and agriculture. Furthermore, political instability, corruption, and ineffective policies have all contributed to the unemployment crisis in pakistan. With a focus on implementing effective and sustainable solutions, pakistan can address its growing unemployment problem and pave the way for a thriving economy.

View More: Various Health Stress Of Unemployment In Pakistan

5- Energy crisis

Pakistan is facing a severe energy crisis that has been plaguing the country for years. The shortage of electricity and gas in pakistan has caused immense problems for citizens and businesses alike, leading to frequent power outages and even blackouts. The country's economy has suffered tremendously as a result, with factories shutting down and productivity taking a hit. The situation has only been exacerbated by the rising demand for energy, coupled with lack of investment in the sector.

With pakistan's population projected to grow significantly in the coming years, it's crucial that the government takes immediate action to address this crisis and ensure a sustainable supply of energy for the country's citizens and businesses.

6- Shift of our textile industries

Pakistan's textile industry has undergone a significant transformation in recent years. With the introduction of modern technology and innovative techniques, the industry has witnessed a major shift in its overall production and manufacturing processes. Today, pakistan is recognized as one of the leading textile producers in the world, with a diverse range of products that cater to various international markets.

This shift has not only enhanced the country's reputation, but it has also provided much-needed employment opportunities to thousands of people. With this progress, the textile industry in pakistan is poised to contribute more significantly to the country's overall economic growth in the years to come.

7- High taxation rate

For years, the taxation rate in pakistan has been a source of worry for its citizens and investors alike. With one of the highest taxation rates in the region, it has become increasingly difficult for businesses to expand and flourish, while the average citizen struggles to make ends meet. The issue of tax evasion only exacerbates the problem, as the burden of tax collection falls disproportionately on those who are already paying their fair share.

Despite the government's efforts to decrease the tax evasion rate, it remains a significant issue. The need for a fair and efficient taxation system in pakistan is vital for the country's economic growth and the well-being of its citizens. A reform in the tax system is necessary to encourage both local and foreign investment to help create more jobs and increase the tax base, leading to decreased dependence on foreign aid and increased self-sufficiency for pakistan.

8- Lack of technology

Pakistan's lack of technology has become a pressing issue that is preventing it from unleashing its full potential. Despite the country being home to a vibrant and talented population, the lack of access to advanced technology is hampering progress across all sectors. The challenges of poverty, inadequate infrastructure, and an underdeveloped education system have compounded the problem, leaving pakistan behind many of its regional neighbors.

However, the government, private sector, and civil society are starting to recognize the urgent need for technology to drive growth and development. By embracing digital innovation and investing in the technology sector, pakistan can unlock a brighter future for its people and society as a whole.

Effects of unemployment

9- Less money

Pakistan is a nation that has been facing economic hurdles for various years, but lately, the country has been hit by a more substantial crunch. The dwindling economy has ensured that people have less money to use, and the situation is dire. It is affecting not only the citizens but also the whole nation as it generates a sense of insecurity and uncertainty about the future. The government of pakistan is striving to find possible solutions to turn around the situation, but the people of pakistan also need to come together and contribute to solving the problem.

The country possesses immense natural resources, a diverse and dedicated workforce, but without enough money, the economy is weakened, causing a ripple effect throughout the nation. To solve the problem, pakistan requires strategic planning and a collaborative effort towards achieving definite goals, and with the right strategy, pakistan can become a prosperous nation again.

10- Health stress & mental disturbance

Pakistan is a country that has been riddled with health stress and mental disturbance for decades. With a high poverty rate, political instability, and ongoing terrorism threats, it’s no wonder that people in this nation are feeling the strain. The situation is exacerbated by the lack of mental health facilities and infrastructure, making it difficult for those who need help to access the resources they need. It’s not just adults who are affected; children and adolescents are also grappling with the mental health ramifications of living in a country where violence and instability permeate daily life.

Despite these challenges, there are organizations and individuals working tirelessly to address this issue and improve the mental well-being of pakistan’s citizens. It’s important that we bring attention to this pressing issue and work towards making mental health support more widely available for those who need it.

11- Economic suffering

The economic situation in pakistan has been a subject of concern for many years. Despite the country's rich natural resources and strategic geographic location, pakistan has struggled to establish a stable and prosperous economy. The recent pandemic has only worsened the situation, with many struggling to put food on the table. The daily wage earners have been hit hardest, unable to work due to nationwide lockdowns and social distancing measures.

Moreover, the country faces a significant debt burden while struggling to attract foreign investment and stabilizing its currency. However, the people of pakistan remain resilient in their pursuit of a better tomorrow, and the government is working to implement economic reforms to improve the situation.

12- Mental disturbance

Mental disturbance has become a pressing issue in pakistan. The country has been facing ongoing political instability, economic turmoil, and natural disasters, which have resulted in high levels of stress and anxiety among its citizens. Furthermore, lack of awareness and a stigma surrounding mental health prevent many individuals from seeking professional help.

This is particularly alarming as suicide rates in pakistan continue to rise. It is crucial that the government and healthcare institutions prioritize mental illness and promote its acceptance within society. Accessible and affordable mental health resources must be made available to those in need. By addressing this issue head-on, pakistan can truly begin to rebuild and support its citizens' overall well-being.

13- Labor exploitation

The issue of labor exploitation is a gruesome reality in many parts of the world, and pakistan is no exception. Employers take advantage of vulnerable workers, paying them unfairly, and making them work long hours in dangerous and unhygienic conditions. Children, in particular, are highly vulnerable to exploitation, with many working in brick kilns and as domestic servants.

The government of pakistan has made some efforts to combat labor exploitation, but these measures are not enough to put an end to the problem entirely. It's time for the international community to step up and join hands with local stakeholders to put an end to this shameful practice and ensure that every worker is treated with the dignity and respect they deserve.

14- Social dilemmas

In pakistan, social dilemmas often revolve around issues of gender equality, poverty, and education. Despite government efforts to address these issues, many pakistanis still struggle to access basic resources and opportunities. For instance, women often face discrimination in the workplace and in society at large, while impoverished individuals may not have access to healthcare or clean water.

Education is also a major concern, as many children and adults cannot afford to attend school or lack the necessary resources to succeed academically. While progress is being made in some areas, there is still much work to be done to ensure that all pakistanis have access to basic rights and opportunities.

Unemployment is a wide spread socio-economic issue in pakistan. In conclusion, we can see that the main causes of it are a lack of education, low wages, poor working conditions, an absence of qualified labor, and a dearth of jobs. The effects this has had on the country are alarming, ranging from increasing poverty and inequality to greater crime rates and mental health issues. It is clear that if these root causes continue to be addressed ineffectively, or even ignored altogether, the problem will only get worse.

This situation needs systematic solutions which should address both short- and long-term issues like providing more vocational training for those who cannot go to college or take advantage of other educational opportunities, introducing better labor laws and practices so that workers feel more secure in their positions and gain higher wages, offering employability-boosting incentives and tax breaks to small businesses so that they can create more workplaces—the list goes on. If we really want to make a positive change across pakistan’s society—especially for its youth—only then can employment rise along with the nation’s wellbeing.

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Frequently Asked Questions

What are the main causes of unemployment in pakistan.

There are several main causes of unemployment in Pakistan: 1. Rapid population growth: The high population growth rate outpaces job creation, resulting in a surplus of labor and limited job opportunities. 2. Lack of quality education: Inadequate access to quality education and skills training leaves many individuals ill-prepared for the job market, leading to unemployment. 3. Economic instability: Fluctuating economic conditions, including inflation, low GDP growth, and fiscal deficits, create an uncertain business environment, hindering job creation. 4. Insufficient job opportunities: Limited job opportunities in both the public and private sectors fail to accommodate the growing labor force, leading to unemployment. 5. Skill mismatch: There is often a mismatch between the skills possessed by job seekers and the requirements of available positions, leading to unemployment or underemployment. 6. Gender inequality: Women face significant barriers to employment, including cultural norms, lack of opportunities, and limited access to education and resources. 7. Rural-urban divide: Disparities in job opportunities and economic development between rural and urban areas contribute to higher unemployment rates in rural regions. Addressing these causes requires comprehensive strategies focusing on education reform, investment in job creation, skill development, promoting entrepreneurship, and reducing economic disparities to alleviate unemployment in Pakistan.

What are the reasons and effects of unemployment?

There are various reasons and effects of unemployment: Reasons for Unemployment: 1. Economic recession: Downturns in the economy can lead to reduced business activity and job losses. 2. Technological advancements: Automation and advancements in technology can lead to job displacement and reduced demand for certain skills. 3. Lack of skills: Insufficient education or training can result in a mismatch between the skills possessed by job seekers and those demanded by employers. 4. Demographic factors: Population growth, retirement of older workers, and changes in labor force participation rates can impact unemployment rates. 5. Government policies: Certain policies or regulations may create barriers to job creation or hinder workforce mobility. Effects of Unemployment: 1. Financial hardships: Unemployed individuals often face financial difficulties due to the loss of income, leading to economic instability and poverty. 2. Mental health issues: Unemployment can contribute to stress, anxiety, depression, and a decline in overall mental well-being. 3. Social consequences: Unemployment can strain relationships, erode social connections, and lead to social isolation and exclusion. 4. Skills deterioration: Prolonged unemployment can result in a loss of skills and work experience, making it harder to find employment in the future. 5. Reduced economic growth: High unemployment rates can slow down economic growth and hinder overall development by limiting consumer spending and investment. Addressing unemployment requires a comprehensive approach that focuses on creating job opportunities, investing in education and skills training, promoting entrepreneurship, and implementing supportive social welfare programs to mitigate its negative effects on individuals and society as a whole.

What are the 7 causes of unemployment?

The seven main causes of unemployment are as follows: 1. Economic Recession: Economic downturns and recessions can lead to reduced business activity, causing companies to downsize or lay off workers. 2. Technological Advancements: Automation and technological advancements can replace jobs previously performed by humans, resulting in unemployment. 3. Globalization: Globalization and outsourcing of jobs to other countries with lower labor costs can lead to job losses in certain industries. 4. Lack of Skills or Education: Insufficient education or skills that are not aligned with the demands of the job market can result in unemployment. 5. Demographic Factors: Population growth, changes in the labor force participation rate, and shifts in the age distribution can affect unemployment rates. 6. Government Policies: Certain government policies and regulations can impact job creation and workforce mobility, either positively or negatively. 7. Cyclical Unemployment: Fluctuations in the business cycle, such as booms and busts, can lead to cyclical unemployment as demand for goods and services changes. Understanding these causes can help policymakers, businesses, and individuals develop strategies and policies to address unemployment effectively and create a more robust and inclusive job market.

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