Over 31 per cent of Pakistan’s youth are unemployed

Maulana Fazlur Rahman, Chief of the Jamiat Ulema-e-Islam-Fazl and head of the Pakistan Democratic Movement recently said that flawed policies of “incompetent” rulers had paralysed Pakistan’s economy. While Fazlur Rahman made his pitch on the poor state of Pakistan’s economy for political reasons, the fact remains that economic conditions are going downhill partly due to the faulty policies pursued by Prime Minister Imran Khan. One aspect of this was recently revealed in a report published by the Pakistan Institute of Development Economics (PIDE) on the employment situation. This report states that over 31 per cent of the Pakistan’s youth are currently unemployed and of this figure, 51 per cent are females, while 16 per cent are males, with many of them holding professional degrees. The report concludes that youth engagement is therefore imperative, more so when they comprise the largest chunk of the population.

Pakistan’s employment situation

Pakistan is the sixth most populous country in the world with a population of 219 million. Given the current rate of the growth of population, it is estimated to reach 280million by 2030. At present, 63 per cent of the population is below the age of 30 and a staggering number of young people are not in education, employment, or training. The first year of Pakistan Tehreek-i-Insaf (PTI) government in power, saw an increase in unemployment in the case of both males and females, with the male unemployment rate rising from 5.1 per cent to 5.9 per cent and female unemployment rate jumping from 8.3 per cent to 10 per cent. Just how bad the situation in Pakistan was witnessed last year, when 15 lakh people applied for the job of peons in the High Court and among them, were M.Phil degree holders.

PIDE has also shown, based on the Labour Force Survey (LFS) published by the Pakistan Bureau of Statistics, that graduate unemployment in Pakistan was very high. Over 31 per cent of the youth with degrees, including professional ones, are unemployed. It is also seen that rural graduate unemployment is much higher than urban. The LFS shows that one-third of youth, in both rural and urban areas, are disconnected from the system, as they are neither employed nor enrolled. It further states that the disconnect is higher for young females, with 60 per cent of them neither working nor studying.

The PIDE report reveals that a large part of the working-age group is not even part of the labour force. These people are either discouraged workers or have other means of income to support them, the report stated. It also claims that despite pronouncements and policy initiatives, the female labour force participation rate remains shockingly low. Despite talk of the youth bulge and reaping the demographic dividend, the unemployment rate is the highest for the young new entrants in the labour force. It is well known that it takes about a decade or more for youth to be employed.

The challenges of the Pakistan’s economy

For a moment though, it is worth recalling that underlying this development is the poor state of Pakistan’s economy, which suffered in the aftermath of the outbreak of the Covid-19 pandemic. This was compounded by inefficient economic administration by the PTI government under PM Imran Khan. The adverse economic impact of the pandemic posed several challenges to the government, including decline in domestic demand, decrease in business activities, decline in import and export and reduction in production due to supply chain disruption. One of the obvious impacts of these developments was a decrease in employment, particularly among people belonging to the vulnerable employment group.

Pakistan’s economy, therefore, faces multiple challenges today. The first is the current account deficit, followed by fiscal imbalance. Low agricultural productivity and industrial output come next in that order and finally comes, the flawed structure of political economy. The current account deficit has officially reached 5.3 per cent of GDP. Fiscal imbalance is expected to rise to 8.2 per cent of GDP. Pakistan’s economy may be showing signs of recovery as stated by the World Bank, but notably, inflation last year was over 10 per cent. Cooking oil prices have gone up 130 times since Imran Khan took over as Prime Minister and the cost of fuel has gone up 45 times to PKR 145 a litre in a year. The Pakistani rupee has also taken a pounding, losing 12 per cent to the dollar since July 2021; not helped by a US$5 billion trade deficit and despite forex remittances growing nearly 10 per cent to US$12.9 billion. Thus, to put it mildly, the economy is virtually bankrupt.

Last year, PIDE told the Senate Standing Committee on Planning and Development that 40 per cent of educated (undergraduate or graduate) women were also unemployed countrywide. PIDE studies (in 2021) also showed that unemployment rate in Pakistan had reached 16 per cent, which was contradictory to claims of it being 6.5 per cent put forth by the Imran Khan-led government. PIDE highlighted the rising rate of unemployment and said that at least 24 per cent of educated people were jobless. LFS figures show that Pakistan’s joblessness had jumped from 5.8 per cent in 2017-2018 to 6.9 per cent in 2018-2019.

Experience shows that jobless people could be dangerous to Pakistan’s well-being. Writing in Pakistan Today, Zoha Aziz warns that unemployed youth of Pakistan are getting frustrated and falling a prey to drug addiction, theft, violence, and many other social harms. More ominously, terrorists, drug traffickers and smugglers are engaging them in evil activities. Another negative effect of unemployment is people getting depressed. According to statistics, 136 people committed suicide in Pakistan last year, just because they were unemployed. That unemployment is so high in Pakistan demonstrates the inability of the leadership to effectively address the underlying causes for the problem. That is perhaps why the opposition in Pakistan is planning to move a no-confidence motion against PM Khan. The challenge of course will be to do a mid-course correction to the economy. Given the difficult times for Pakistan, even a change in leadership at the top is unlikely to save the economy from eventually falling.