Unemployment

Presented By : Group – 5
19011519-001 Usama Mustafa
19011519-002 Usama Raheem
19011519-003 Usama Saeed
19011519-031 Qaseem Hussain
19011519-034 Hassaan Ahmad
Presented To :
Ms. Saima Iqbal
Unemployment and
Major Factor
By Usama Mustafa
19011519-001
 Definition

• The state of being without any work yet looking for

work is unemployment.
• In such a state a person is able to work but unable to
find work or any relative job.
• The person is continuously seeking a job.
 Unemployment(Def.)

Employed Unemployed
(looking for a job )
 Major factor of Unemployment
• Unemployment is a serious social and economic issue that results in a
tremendous impact on everything but is often overlooked.
• The major factors of unemployment in Pakistan are as follows:
• Poor Governance
• Political Instability
• Corruption
 Poor Governence

• Good governance is necessary for maintaining employment rate country

wide as it establishes the enabling regulatory and legal framework essential
for the sound functioning of land, labor, capital and other factors of market.
• Whereas good governance is considered to be non-existent in Pakistan and
poor governance is taken one of the key underlying causes of
unemployment in Pakistan
 Political Instability

• Political stability is fundamental to the creation of an enabling environment

for growth and development.
• Economic agents, particularly investors, must be reassured with regard to
the continuation of policies, should have confidence in the government’s
credibility in order to operate effectively, and in the case of investors, be
induced to take risks.
 Corruption
• Corruption is one of the most dangerous factor that eroded Pakistan’s
economic and governance system since its inception. In 2008, Pakistan was
ranked as the 46th most corrupt country out of the 180 countries of the
world.
• The persistently rampant corruption in Pakistan not only jeopardizes its
resolve to fight against unemployment rather adding to the menace of
unemployment from all direction.
Types of Unemployment
By Usama Raheem
19011519-002
 Classification of Unemployment
Unemployment can be broadly classified under two broad categories.

1. Voluntary Unemployment
Unemployment that results when resources which are willing and able to engage in production choose not
to produce output. These are resources (especially labor) that decide to leave one job, often in search of
another.

2. Involuntary Unemployment
• Involuntary unemployment occurs when a person is unemployed despite being willing to work at the
prevailing wage. It is distinguished from voluntary unemployment, where a person refuses to work
because their reservation wage is higher than the prevailing wage. involuntary unemployment is also
known as Forced Unemployment.
 Types of Unemployment
There are some types of unemployment, I’m going to describe. These types are as follows:
Types:>--

1. Frictional Unemployment.
2. Structural Unemployment.
3. Cyclic Unemployment.
4. Seasonal Unemployment..
5. Disguised Unemployment
6. Technological Unemployment.
7. Geographical Unemployment
8. Long Term Unemployment. (Length of Unemployment)
9. Short Term Unemployment. (Length of Unemployment)
 Frictional Unemployment
• Frictional Unemployment
• This is a temporary condition when someone is doing job but he/she is not 100 percent happy with that job
and looking for a better one.
• This is a type of voluntary unemployment that arises because of the time needed to match job seekers with
job openings.
• Just as friction always takes place before the slider comes to its final position on the surface.
• people need time to find the best job, thus voluntarily rubbing back and forth between choices and staying
unemployed

• Example:
• When you make up your mind and set off looking for a better job and abandoning the current one, you are in
the frictional unemployment labor force.
 Structural Unemployment
• Structural Unemployment
• This unemployment arises due to structural change in dynamic economy.
• Structural unemployment exists when there are jobs available and people willing to work, but there are
not a sufficient number of people qualified to fill the vacant jobs.

• Example:
• Heavy Manufacture (mining). Manufacture now involves machines so humans are no longer needed for
the harder work
• Structural unemployment causes more of a problem because workers must seek jobs elsewhere or must
develop the skills demanded. The process is full of pain and frustration, and may lead to negative impacts
on society.
 Cyclic Unemployment
• Cyclical Unemployment
• There come ups and downs in economy or in a country, due to which employment opportunities are
affected. 
• Cyclical unemployment occurs when the overall demand for goods and services in an economy cannot
support full employment.
• It occurs during periods of slow economic growth or during periods of economic contraction.

• Example:
• During recession, there is low demand for output (production), so there is low labor demand, most of
labor remains unemployed and decrease demand for labor would increase unemployment rate 
 Seasonal Unemployment

• Seasonal Unemployment
• When people or companies are employed for only a particular season, according to temperature and
remain idle for other season. It includes regular seasonal changes in employment or labor demand. It
affects certain industries more than others.

 Construction
 Agriculture
 Retailing

• Example
 Companies which produce winter clothes, remain idle in summer season.
 In cultivation season, there is a high demand of labor but in other seasons many of them remain idle.
 Disguised Unemployment

• Disguised Unemployment
•When persons are working as a labor just to help and engage busy, so a labor does not help in production
increment. When more people are engaged in some activity than the number of person required for that,
this is called disguised unemployment.

• Example
•In a farm, two kids are working as a labor to help their father and to engage busy, Here, two persons are
unemployed and that is disguised unemployment.

•An agricultural field require 4 laborers but people engaged in this activity is 6 then this unemployment for
2 labors is called disguised unemployment
 Technological Unemployment

• Technological Unemployment
Definition: Technological unemployment occurs when technological change causes some workers to
lose their jobs. There are number of caused that can lead to technological unemployment.

Example:
• The evolution of the automobile assembly plant.
• In the beginning, everything on the line was done by humans in order to build a car.
• The assembly line itself was a great technological innovation.
• Today, robots are employed for much of the hand-work humans used to do.
 Geographical Unemployment

• Geographical Unemployment
• Geographical Unemployment occurs when workers are not willing or able to move from region to
region, or town to town.
• Geographical mobility is made worse by immense house price variation between regions.
• Other factors also contribute to geographical immobility, such as strong social and family ties,
and parents being unwilling to disrupt their children’s education by changing schools.

• Example:
• when a family lives in Hesperia, CA, an half hour drive to Los Angeles. The commute is too far to
find suitable employment and the living expenses in LA are also too high to survive on mini-wage
with the entire family. This causes the unemployed because, individuals cannot afford or has no
means to commute to a bigger city.
 Length on Unemployment
1. Long Term Unemployment
• Long-term unemployment is defined as referring to people who have been unemployed for 12
months or more. Thus, these people called Long term Unemployed.
• being unemployed for a long period of time can have substantial impacts on individuals.
• Jobs skills, certifications, and qualifications lessen over time.
• Long-term unemployment can also result in older workers taking early retirement.

2. Short Term Unemployment

• Short-term unemployment is any period of joblessness that lasts fewer than 27 weeks. The
unemployment period is temporary.
• often includes the time needed to switch from one job to another.  Also, if an individual is searching
for employment the search period is relatively short.
Unemployment Rate
By Usama Saeed
19011519-003
 Unemployment Rate

• Unemployment rate, percentage of unemployed individuals in an economy

among individuals currently in the labour force. It is calculated as
Unemployed Individuals /Total Labour Force × 100
• Where unemployed individuals are those who are currently not working but
are actively seeking work.
 Determination of Unemployment

• The unemployment rate is determined at the national level and at state or

regional levels via labour-force surveys conducted by the national statistical
institute in each country.
• Organizations such as the Organization for Economic Co-operation and
Development (OECD), the International Monetary Fund (IMF), and
the World Bank also calculate and record the national unemployment rates
of large numbers of countries throughout the world on an ongoing basis.
 Unemployment Rate As Economic Indicator

• The unemployment rate is a useful measure of the underutilization of the

labour supply. It reflects the inability of an economy to generate
employment for those persons who want to work but are not doing so, even
though they are available for employment and actively seeking work.
• Itis thus seen as an indicator of the efficiency and effectiveness of an
economy to absorb its labour force and of the performance of the labour
market.
 Unemplyoment Ratio & Economic Health

• The unemployment rate is one of the primary economic indicators used to

measure the health of an economy.
• It tends to fluctuate with the business cycle, increasing
during recessions and decreasing during expansions.
• It is among the indicators most commonly watched by policy makers,
investors, and the general public.
 Banks & Policy Makers

• Policy makers and central banks consider how much the unemployment rate
has increased during a particular recession to gauge the recession’s impact
on the economy and to decide how to tailor fiscal and monetary policies to 
mitigate its adverse effects.
• In addition, central banks carefully try to predict the future trend of the
unemployment rate to devise long-term strategies to lower it.
Impact of Unemployment Ratio on Investment

• Investors and the general public use the unemployment rate to understand
the state of a county’s economy and as a measure of how well the
government is running the country.
• A high unemployment rate means that the economy is not able to generate
enough jobs for people seeking work. High unemployment not only brings
about deeper social problems and prolonged suffering for families but also
makes the country less attractive to foreign investors, thereby decreasing
the investment funds flowing into the country.
 Unemployment Rate in Pakistan
• The causes of high rate of unemployment are lack of education, lack of
capital, lack of proper skill, Poverty, and High rate of population growth
in Pakistan.
Reasons of Unemployment
By Qaseem Hussain
19011519-031
 Reasons of Unemployment

• Backwardness of Agriculture Sector.

• Backwardness of Industrial Sector.
• Defective Education System.
• Bad Governance.
• High Age of Retirement.
• High Population Growth Rate.
• Afghan Refugees.
• Unfair justices and lack of accountability.
• Physical health problems
• Gender discrimination
 Reasons of Unemployment

• Backwardness of Agriculture Sector

• The biggest reason of unemployment in Pakistan is concerned with the backwardness
of agriculture sector. Agriculture is the biggest sector of our economy that contributes
19.3% to GDP and 35.89% people get jobs from this sector directly or indirectly.
• Backwardness of Industrial Sector
• Industrial sector is the second largest sector of our economy and contributes 19% to
national income. But due to high taxes, high cost and low quality causes less export.
 Reasons of Unemployment

• Low level Education System

• In Pakistan, the education system is defective and there is no educational planning.
Qualified people get job easily and nonqualified faces problems.

• Bad Governance
• The bad governance in Pakistan has worked for corruption, nepotism, extortion, and
embezzlement.
 Reasons of Unemployment

• High Age of Retirement

• The age of retirement in Pakistan is 60 years and it is high age of retirement. More
Graduates enter the industry and senior employees still work.

• High Population Growth Rate.

• According to the statistical the population of Pakistan is increasing at the rate of 2.0%.
 Reasons of Unemployment

• Afghan Refugees
• Afghan refugees are another problem that effect the unemployment when the afghans
migrated in 9/11 incident. The total registered refugees as of 2020 is 1.4 million.

• Unfair justices and lack of accountability.

• Unfair regulations of competition in public and private sectors have disheartened the
competitors.
 Reasons of Unemployment

• Physical health problems

• people who are suffering from disabilities may have it hard to find a job.
• Gender discrimination
• there is still a huge gender gap between men and women in some countries.
Effects and Solutions of
Unemployment
By Hassaan Ahmad
19011519-034
 Effects of Unemployment

• Mental health issues

• For the people who made their work their single purpose in life. It is difficult for their
mental state since they just basically lose their whole life once they become
unemployed.
• Physical health issues
• Mental issues related to unemployment may also translate into physical health issues
like headaches or more serious things like cardiovascular diseases
• Lower life expectancy
• people who are unemployed for a quite long time may lose their will to live at one point
since they often lack social contacts and do not feel like a valuable member of society
anymore.
 Effects of Unemployment

• Homelessness
• cities with high rents, people who become unemployed may struggle to keep their
homes since they may no longer be able to pay their rent.
• Drug use
• Unemployment can also lead to substance addiction. People who mentally suffer from
unemployment a lot may try to fight their emotional issues by using substances of all
sorts.
• Social isolation
• Losing your job may also lead you into social isolation. Since we spend so much time in
our jobs, many connections and friendships result out of it.
 Effects of Unemployment

• Poverty
• Unemployment, especially long-term unemployment, may also lead to a significant
level of poverty. Since most people rely on their jobs in order to be able to pay their bills,
once these people lose their jobs, they may no longer be able to afford the things for
their daily life and may suffer from significant poverty.
• Adverse effects on children
• Children who come from families with unemployed parents often have a greater risk of
unemployment themselves since parents often have a great influence on their children.
 Solutions for Unemployment

• Better education
• In order to fight unemployment, it is crucial to improve education levels of people so that it
will be easier for them to find a job. This education should start early in school and teachers
should pay close attention and take care of every child to ensure good educational
progress.
• Motivation programs
• Jobless people who are not willing to work at all have to be incentivized to get a job. This
could mean that their social security levels may be lowered if they do not take action to go
back to work.
 Solutions for Unemployment

• Create jobs
• An intuitive measure to fight unemployment is to create jobs. Jobs can be created in
several different ways. The creation of jobs often involves raising the incentive for
companies to employ people and open branches in weak economic regions.
• Fight discrimination
• We should also try to fight all sorts of discrimination as a society. This also includes
gender inequality. In countries where women are still repressed and not seen as equally
important as men, governments and celebrities should speak up and show the general
public that women are as important as men and therefore job discrimination due to
gender is not a senseful behavior.
 Solutions for Unemployment

• Programs against drug addiction and homelessness

• Before homeless people and drug addicts are able to get and maintain a job, these people
often need support from social workers or programs in order to find their way back into
society.

• Fiscal and monetary measures in a financial crisis situation

• In case unemployment is due to a financial crisis, central banks should take appropriate
measures in order to get out of this crisis situation by applying fiscal or also monetary policy
measures.