Unemployment Major Issues PDF

Define Labour force participation rate. Labour force participation rate is defined as the section of working population in the age group of 16-64 in the economy currently employed or seeking employment. People who are still undergoing studies, housewives and persons above the age of 64 are not incl...

Define Labour force participation rate. Labour force participation rate is defined as the section of working population in the age group of 16-64 in the economy currently employed or seeking employment. People who are still undergoing studies, housewives and persons above the age of 64 are not included in the labour force. But in Pakistan Labour Force Participation Rate is measured as the percentage of economically active population to the total population aged 10 years and above. According to International Labour Organization (ILO), in 2021, the labor force participation rate for male is 78% and for females it is just 21%. Define Unemployment. According to Samuelson: “Unemployment occurs if there are qualified workers who would be willing to work at prevailing wages but can not find jobs.” What is the Unemployment Rate? The unemployment rate is defined as the percentage of unemployed workers in the total labor force. Workers are considered unemployed if they currently do not work, despite the fact that they are able and willing to do so. The total labor force consists of all employed and unemployed people within an economy. Types of unemployment: There are different types of unemployment: 1. Frictional unemployment: Frictional unemployment is caused by temporary transitions in workers’ lives, such as when a worker moves to a new city and has to find a new job. Frictional unemployment also includes people just entering the labor force, such as freshly graduated college students. It is the most common cause of unemployment, and it is always in effect in an economy. 2. Structural unemployment: Structural unemployment is caused by a mismatch in the demographics of workers and the types of jobs available, either when there are jobs available that workers don’t have the skills for, or when there are workers available but no jobs to fill. Structural unemployment is most obvious in industries undergoing technological advancements. For example, in the farming industry, much of the work is becoming mechanized, which means that fewer farmers are needed and many are let go. When these farmers go to cities to find work, they may find no other similar jobs in which to apply their skills. 3. Cyclical unemployment: Cyclical unemployment is caused by declining demand: when there is not enough demand in an economy for goods and services, businesses cannot offer jobs. According to Keynesian economics, cyclical unemployment is a natural result of the business cycle in times of recession: if all consumers become fearful at once, consumers will attempt to increase their savings at the same time, which means there will be a decrease in spending, and businesses will not be able to employ all employable workers. 4. Seasonal unemployment: Seasonal unemployment is caused by different industries or parts of the labor market being available during different seasons. For instance, unemployment goes up in the winter months, because many agricultural jobs end once crops are harvested in the fall, and those workers are left to find new jobs. 5. Disguised unemployment: Disguised or hidden unemployment is a kind of unemployment where some people seem to be employed but are actually not. This type usually occurs when there is overemployment in a particular work. Even if some are removed, the efficiency of work is improved rather than getting reduced i.e. MPL of those workers was zero or negative. What are the different criteria to measure unemployment? Late Professor Raj Krishna suggested the following four criteria to measure unemployment: (a) Time Criterion: This refers to identifying those persons as unemployed who have no gainful work for less than some normal standard (of hours in a week or less than a certain normal standard of days in a month or a year). (b) Willingness Criterion: This cells a person unemployed when he is either seeking or is available for work at the prevailing wage rate. (c) Income Criterion: This considers those persons unemployed or underemployed who have income (or expenditure) less than a certain ‘poverty norm’ generally fixed on the basis of minimum calories required for subsistence. (d) Productivity Criterion: This considers those persons as unemployed or underemployed who may be working but they have less than some normal standard of productivity. Thus, a change from time and willingness criteria to productivity criterion changes the estimate of rural unemployment for the year 1972-73 from 8.21 per cent of rural labour force (on daily status basis) to 33.7 per cent. How unemployment can be decreased in a country like Pakistan? MEASURES TO CONTROL UNEMPLOYMENT Following steps must be taken by the people and government to control the problem of unemployment & under-employment: 1) Establishment of Employment Offices There is not any single office for the information about employment opportunities in Pakistan. More and more employment offices should be established these would cause in reduction in unemployment. 2) Population Control Fast growth rate of population should be controlled. Due to population control there will be more employment opportunities and reduction in unemployment. 3) Capital Accumulation Aggregate saving and investment should be increased to raise the level of capital formation. This will result in promoting the level of income and employment in the economy. 4) Growth of Industrial Sector Government should provide basic infrastructure to established industries is rural areas. Growth of industrial sector is needed to reduce unemployment. 5) Growth of Agricultural Sector Agriculture is the main sector of our economy. It provides more jobs to population. It is necessity to establish it at commercial basis to provide more jobs to unemployed. 6) Technical Education and Training Technical education and training is necessary to produce efficient labour force. Total number of technical & vocational institutes is more than 1522 in Pakistan in 2010-11. 7) Provision of Self-employment People and government should maintain self-employment. In this case government should provide them credit facilities. 8) Growth of Small-scale and Cottage Industries Government should encourage the setting-up of small industries, particularly in rural areas. Government should provided subsidies and infrastructure to establish small industries. 9) Use of Labour Intensive Technologies It is compulsory to use the labour intensive technologies to reduce the unemployment. 10) Reduction in Retirement Period Retirement age is 60 years in Pakistan. It should be reduce to 55 years to provide more employment opportunities. 11) Subsidies to Private Sector Stable government is required to subsidize the private sector. Government should help the private sector to development. It will create more employment chances. 12) Job on Merit Government should eliminate the nepotism and favouritism. Employment opportunities should be provided in accordance to skill and ability. 13) Provision of Credit Facilities Government should provide loans to the unemployed skilled labour to promote self- employment. Provision of credit facilities should be provided to reduce unemployment. Conclusion:  We conclude that there are two major elements, which can reduce the unemployment i. e., use of labour intensive industries and adoption of self-reliance policy. Progress and prosperity is impossible without the reduction in unemployment.