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Review of unemployment rate and economic development

Researchers revealed that unemployment is a pessimistic phenomenon in any human society as it adversely affects in dissimilar directions and dimensions as well. Unemployment refers to an economic defect affecting the community structure. Thus, the economic and social dimensions of unemployment rise complexity, consequently lead us to attain various analyses to understand its nature and impact on the growth.

In Pakistan, the unemployment rate is very high and the main cause is the wastage of resources on the large scale. It results in the decline in the income of people. They have also recorded that the unemployment problem in the country is growing rapidly and because of this, many crimes are taking place. According to PBS (Pakistan Bureau of Statistics), unemployment rate constituted growing curve till 2011-12 when it was 5.7 percent, but the rate lost steam in the last 3-year. The government statistics showed that male and female unemployment rates make the same pattern, however the latter are higher than formers in 2018. It is reported that unemployment rate grew to 5.7 percent previous year in the country from 5.1 percent a decade ago with joblessness in female standing much higher than male.


Various researchers also mentioned that to achieve high and sustainable output growth with low levels and stable rates of unemployment is the major objective of macroeconomic policies in any country.

Statistics also showed that unemployment is a main contributor to widespread poverty and income inequality. Therefore, it is of utmost significance to understand the relationship between unemployment and economic growth to ensure sound strategies that will increase economic growth. Statistics further explained that annual average unemployment rate reached at 5.5 percent for a decade in Pakistan. Unemployment rate reached at 5.8 percent in 2014-15, 5.6 percent in 2013-14, six percent in 2012-13, 5.7 percent (2010-11), 5.3 percent 2009-10 and 5.0 percent in 2007-08. Unemployment rate in male reached at 4.9 percent in the previous fiscal year as against to 8.5 percent in female, 4.7 percent v/s 9.2 percent in FY2015, 4.6 percent as compared to 8.9 percent in FY2014, 5.1 percent as against to 9.1 percent during FY2013, 4.8 percent as opposed to 9 percent during FY2011, 4.1 percent v/s 9.2 percent during FY2010, 4.2 percent as compared to 9.0 percent during FY2009, 4 percent v/s 8.7 percent during 2008, and 4.2 percent in male population as against to 8.6 percent in female segment.

PBS officials also recorded that unemployment rate, calculated as a percentage of active population, was the highest 7.3 percent in KPK previous year, followed by 5.7 percent in the Punjab, 5.0 percent in Sindh and 4.0 percent in Balochistan. However, the highest female unemployment rate was recorded in Balochistan 17.3 percent, followed by 11.8 percent in Sindh, 9.2 percent in Khyber Pakhtunkhwa and 7.7 percent in the Punjab.


It is believed that although economic growth is of significant importance in reducing unemployment, however it is not sufficient since economic growth alone cannot overcome all the critical factors that contribute to unemployment rate. Therefore, there is a need to attain further policies that assist to construct investment programs which in turn will enable job creation, boost economic growth, eradicate and unemployment in Pakistan. PBS statistics also explained that employment to population ratio fell a bit to 48.9 percent in FY2018 from 49.8 percent during FY2007 and remained in the proximity of 50 percent during the rest of the period.

The size of the employment ratio for males scaled down to 77.2 percent in FY2018 from 79.6 percent in FY2007. Ratio of female employment ratio signify growing trend during the period FY2007 to FY2015 and slightly fell in FY2018. Furthermore, the share of employment in informal sector slightly declined to 71.4 percent during FY2018 from 71.5 percent during FY2007.

In male, the shares were 71.6 and 71.5 percent, respectively, while the shares of female were 69.9 and 70.7, respectively. In the country, the share of agriculture sector in total employment charted a mildly growing trend to 43.5 percent during FY2011 from 42 percent in FY2007 and ended up at the lower level of 37.4 percent in 2018. Share of male seems higher at 35 percent in FY2007 and lowered at 29.6 percent in FY2018.

Share of females, faring about 2.0 times higher than male, grew to 74.9 percent during FY2013 from 71.4 percent in FY2007 and followed downward trend till FY2018. Share of industry in total employment set out at 21.4 percent in FY2007, but it moved up to 24 percent in FY2018. Share of males grew to 26 percent from 23.5 percent, while share of female grew to 16.6 percent in FY2018 from 12.6 percent in FY2007. The present government of Pakistan should come up with effective macroeconomic policies and ensure improvements in the structure and functioning systems of governance for stabilising economic growth along with job creation.

In last I would suggest that the Government of Pakistan thus also needs to create a conducive environment and flexible labour market policies or legislations that entice many private sector and small businesses which will in turn consolidate the existing entrepreneurship activity with new entrepreneurial entrants so as to create more employment and absorb a large pool of unemployed population in the country.

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