Research Analyst
July 05 - 11, 2010

The global economic turmoil has created unemployment around the world and in Pakistan 2.93 million of the work force is unemployed. Mismatch in job and skills as well as the temporary nature of most jobs is problematic. Certain segments of the labour market do not give secure employment.

Unemployment rate decreased to 5.2 percent in 2007?08 from 6.2 percent in 2006?07. However, it has increased to 5.5 percent during 2008?09. Agriculture sector is the largest source of employment (45.1 per cent). On the other hand, the services sector, the second largest job provider (34.5 per cent) and having the highest employment elasticity, is expected to grow at 4.56 percent in 2009?10 compared with 1.58 percent in 2008?09.

In 2005?06, the unemployed labour force in youth (15?25 years) was 1.2 million, which was 0.4 million lower than the stock in 2001?02. If the current level of unemployment prevails for the next 20 years, the stock of youth unemployed in 2030 will be around 6 million.


Increased focus on the generation of decent work opportunities is central to achieving the goals established by the United Nations Millennium Summit.


AGE GROUP 2007-08 2008-09
10-14 8.95 9.3
15-19 8.7 9.5
20-24 6.8 7.3
25-29 4.1 4.3
30-34 2.3 2.6
35-39 1.5 1.7
40-44 1.6 1.5
45-49 2.5 2.4
50-54 3.7 4.6
55-59 6.6 6.1
60 above 12.5 12.7

Access to productive Work provides an adequate income for working men and women and is the surest route out of poverty. However, there exists a negative correlation between GDP growth rate, and poverty headcount and a positive correlation between unemployment and poverty headcount ratio.


The main focus of the government should be on creation of decent employment, and human resource development. Some initiatives are taken by the government such as National internship Program, President's Rozgar Program Credit is being provided for self employment by National Bank of Pakistan (NBP), enhancement of residential facilities by construction of one million housing units, doubling of lady health workers to cover Kachi Abadis (shanty towns), raising of minimum wage and pension of workers, restoration of Trade Unions. These steps are helpful in employment generation and human resource development but not sufficient enough to give more employment to the people.


Economic growth has direct implications for employment. Productivity fosters capital-intensive activities thus causing layoff in the short run but in the longrun due to product diversification and greater output it causes job increase. Thus government's priority should be to take the growth rate to an optimum level for job creation. There is a distinction between low-quality jobs contributing to the increase in the number of working poor and quality jobs so emphasis must also on this aspect of the labour force.


Agriculture is the largest sector of Pakistan's economy employing nearly 45.1 percent of the country's work force in 2008?09. More than two-thirds of the county's population lives in rural areas and depends directly or indirectly on agriculture for their livelihood. The major constraint in Pakistan's agriculture has been the lack of availability of sufficient irrigation water.


SME Bank was established to provide financial assistance and business support to small and medium enterprises. Up to 31st December, 2009 SME Bank has financed 8,299 SMEs, disbursed loans amounting to Rs9,510 million to 40,891 beneficiaries in the country.


One factor that allowed countries to reduce poverty and to improve income distribution despite a weak growth employment linkage is overseas employment, which has been an important feature of Pakistan's experience. In 2008, for example, the flow of workers abroad was over 400,000. In 2009, the flow of workers abroad reached estimated 600,000 which is a major factor in the increase in remittances.


Information Technology has enormous potential to create jobs for the educated unemployed in the country. The development of IT and Telecom sector has created enormous employment opportunities, directly or indirectly, for educated unemployed in a wide range of areas like call centers, telecom engineering telecom sales, customer services, finance and accounting etc. This is one of the fastest growing sectors of the economy. The allocation of just Rs3.30 billion has been retained for this sector. This would create less employment activities in the coming years. Creating more business and employment opportunities in the country should be the main strategy of the government.


The world economic situation has been improving since the past six months. The global economic recovery is expected to remain sluggish, while un-employment rates are expected to stay high. Developing countries, especially those in Asia, are expected to show the strongest recovery in 2010.

Nonetheless, growth is expected to remain well below potential and the pre-crisis levels of performance in the developing world.


Strong positive correlation exists between employment generation and poverty reduction. Increasing opportunities for decent work is central to shaping an enabling environment for the achievement of the goals of the Millennium Declaration. This will entail crucial choices about the pattern of development. Dialogue, involving trade unions, employers' organisations and others, is vital to finding the right balance of policies for employment creation, productivity growth, and poverty reduction.