Coping with Rising Unemployment

By Asad, S. Hasan | Economic Review, April 2001 | Go to article overview

Coping with Rising Unemployment


Asad, S. Hasan, Economic Review


The government has no blueprint to flight urban unemployment barring a few institutions like Klhushali Bank, Small Business Finance Corporation and Youth Investment Promotion Society advancing loans. But these facilities pale before the nagging problem of growing urban unemployment. Every year at least 400, 000 join the urban labour force for which finding gainful employment is a herculean task.

Unemployment is a scourge more acute in developing than in developed countries because of the galloping population growth. Pakistan unfortunately had one of the highest rates of population growth of over 3 per cent tapering to 2.6 per cent during 1981-98 censual period, aggravating the unemployment problem. According to a recent national urban poll conducted by Gallup Pakistan, 38 per cent of urban Pakistanis are of the view that the nations foremost problem is unemployment followed by 14 per cent stating inflation as a plight. Every year population increases by 3 million resulting in addition to labour force of 0.8 million. Out of the total population of 138 million, 40 million are in labour force.

On the other hand, flagging economic growth of 4.1 per cent in the second half of 1 990s, down from 5.1 per cent in the first, has slowed the absorptive capacity of burgeoning labour force, making the labour market extremely tight. The official unemployment statistics reveal 6.1 per cent unemployment, 7.1 percent in urban and 5.7 per cent in rural. The total number of unemployed is 2.4 million, 0.9 million in urban and 1.5 million rural. Although unemployment has accelerated recently, official statistics reveal it constant at 6.1 per cent over the last four years, which appears incredible. How does the government expect people to believe these figures when European countries experience unemployment in excess of 10 per cent? Independent analysts put unemployment figure sat 15 per cent to 40 per cent particularly in the cities where population leaps by more than twice the average growth rate.

Unemployment breeds political turmoil, law and order problem, weaponisation, crimes of all sorts and discontentment particularly among the youth. In the respect, the situation is alarming where hardly a day passes without suicide in desperation forjob. Jehadis fighting in Afghanistan often happen to be unemployed youth. Drug addiction is also an offshoot of unemployment. A sociologist has rightly pointed out: "If you are fighting unemployment, you are, in fact, fighting crime". In a nutshell, it is the root of all our problems.

The failure of successive governments to propose and follow a sound economic itinerary reflects an almost apathetic stance on their part. There is a general consensus that poverty has increased and income distribution worsened in the 1990s. The incidence of poverty has increased significantly in the 1990s. The incidence of poverty has increased significantly in the 1990s -- rising from 17 percent in 1987-88 to 22 percent in 199293 and further to 33 per cent in 1998-99. The conundrum is further compounded by the lack of skill oriented education, a point recently raised by General Musharraf.

The economic managers have lately realised at the instance of IMF that the public sector banks, utility corporations, national airline and other government departments could no longer bearthe burden of heavy over-staffing. …

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