Unemployment:

Individuals (persons) who are able and willing to work but do not get paid job are called unemployed. It is a situation where some people are willing and able to work, but are unable to find paid employment.

Unemployment rate:
The condition when there are jobless workers who are actively looking for a job or who have been laid off from a job, expressed as a percentage of the total labor force. The proportion of the civilian labor force ten years or older that is actively seeking employment, but is unemployed and not engaged in the production of goods and services. Formula: Total unemployed persons / Total Labor force * 100 Note: Not whole population but only labor force. Labor Force: It includes persons who are able to job (ten years of age according to Pakistani definition) called labor force.

Types of Unemployment:
Frictional Unemployment Structural Unemployment Seasonal Unemployment Cyclical Unemployment Disguised Unemployment

1- Frictional Unemployment: Unemployment that occurs because of people moving or changing occupations or when workers are entering the labor force and between jobs. Frictional

unemployment also applies to individuals who have been out of the labor force for many years then decide to restart a career. For example, college graduates that have never been in the labor force before are considered frictionally unemployed until they manage to find a job or a person has given exams of CSS and waiting for a high job. 2- Structural Unemployment: When skills do not match with people, ultimately people are jobless. Structural unemployment arises when then the skills of workers do not match the skills that employers require. For example, if a company institutes a new computer system, workers that are not skilled with the system might be unable to fulfill job duties. When structural changes come and due to sudden changes, capability does not match. 3- 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 Examples: 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.

4- Cyclical Unemployment: There come ups and downs in economy or in a country, due to which employment opportunities are affected. There is a cyclical relationship between demand output employment and unemployment. 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 the unemployment rate 5- 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.

Examples: 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 requires 4 laborers but people engaged in this activity is 6 then this unemployment for 2 labors is called disguised unemployment

Social Causes of Unemployment:

Increase in crimes Income decrement GDP less Low motivation level Aggregate demand less Resources will be initialized (underutilized)

Solution
Decrease the direct investment Increase in expenditures Discourage Taxes Increase Political Stability Discourage Sales Tax Govt. support to struggling industries Provide training and education to the unemployed Job information availability Decrease unemployment benefits

Unemployment rate in Pakistan: 5.7%in 2010-11 (Recent Economic survey of Pakistan)