The rate of unemployment in Pakistan is increasing every year because of some wrong policies of the Pakistani Government. Unemployment refers to the labour force that is without work but seeking a job or work. The rate of unemployment in Pakistan is increasing very speedy over the last twenty years.


Unemployment is a condition in which someone has the ability or skills for a specific field of work but cannot find an appropriate job. The unemployment rate is also measured by dividing the total number of employed by the number of people who are unemployed. Unemployment is a horrible and serious social and economic issue. It destroys an individual, his family, and also the country. The economic status of any country can be measured through the unemployment rate in that country.

Sources of Unemployment

Latest technologies and inventions cause unemployment because new machinery by the latest technology exceeds the need of employed people. The recession cycle increases it and decreases the economy. Government policies also cause changes in the economy as well as unemployment.

Types of Unemployment

There are many types of unemployment. Some of them are given below.

  1. Demand Deficit unemployment
  2. Frictional unemployment
  3. Structural unemployment
  4. Voluntary unemployment

Demand Deficit

When the demand for a product is reduced in the market the companies try to cut off its maximum supply and as a result, they reduced its production. The workforce decreases and the employees are laid off. Basically, the recession cycle causes the demand deficient. The recession cycle is a business cycle that occurs when a business contracts. Businesses contract due to many reasons such as financial crises, trade shocks, supply shocks, and natural disasters.

Frictional Unemployment

The type of unemployment that occurs when a worker quit his job and is looking for a new economy job is called frictional unemployment. In frictional unemployment, there is a will of an employee to quit a job and seek another, better than before.

Structural Unemployment

It happens when the skills of a worker do not meet the requirements of an organization. Sometimes jobs are available but people are unable to achieve them due to geographical differences for that job. For example, a job is available in the United States of America and a person present in India cannot avail of this job because of geographical change, visa entry process, and some other issues.

Voluntary Unemployment

When a person decides to leave a job with his intention because this job is not fulfilling his needs is known as voluntary unemployment.

Short term unemployment

The period of unemployment that lasts from one week to 4 weeks is called short-term unemployment. There are many causes of short-term unemployment like a person is sick and unable to work, he hardly gets his income from his boss. A sudden change in any work or a break after completing work.

Long term unemployment

The period of unemployment that lasts from more than 4 weeks to 24 weeks or higher is called long-term unemployment.

Hidden Employment

Official statics are given with less effort and underestimated. Many employments are hidden or often not counted. Many countries only count the people which are looking for a job regardless of the reality that they already stick to a job but seeking an economy job.

Effects of Unemployment

Unemployment decreases the net worth of the people. It has a negative effect on economic growth. It also harms the resources of a country. Due to it, individuals are unable to earn money and as a result unable to meet their financial needs. They fail to pay rent and nourish their family. Thus, it creates many family problems. It may lead to homelessness. It causes many diseases like depression, cardiovascular diseases, anxiety, and even suicide. In addition, it leads to a higher rate of medication, poor diet, tobacco, smoking, and much more. It leads to very serious health problems like being mentally and physically weak.

Unemployment vs Poverty

Unemployment means being unable to get a job when there is no opportunity for a person to hold a job. But poverty is the condition of having nothing to eat, wear, and live. Long-term unemployment leads to poverty. There is a strong link between poverty and unemployment. It is directly proportional to poverty.

The rate of Unemployment in Pakistan

The unemployment rate in Pakistan in the year 2000 was 0.63% with a decrease of 0.01% and a decrease regularly till 2007. The rate of unemployment was 0.65% in 2010 with an annual increase rate of 0.11%. After 2010 it continuously increased till now. The unemployment rate in 2015 was 3.57%, in 2016 was 3.78%, and in 2017 was 3.94% with an annual increase rate of 0.16%. This rate increased in 2018 and was 4.08%, in 2019 3.98% and in 2020 was 4.65% ever high with an annual increase of 0.67%.


The unemployment rate can be decreased by producing new jobs for young people. The creation of new jobs according to the unemployment rate and the rate of the labour force also decreases the unemployment rate. Government should take steps to create facilities for the people to avail new jobs. Government should expand the monetary policy. Lower interest rates lead the economy to the upper level. Lower taxes may result in a high rate of purchasing and increased demands for many products. A lower interest rate means expansion of businesses and people invest more in the market. Government should start economically friendly programs for direct investment. Hiring direct employees results in boosting the economy. Contracts to companies for the development of products give better results. To demolish it completely, education should be free at the matric or inter level. In a few years, these students work for their families and country.