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Social Problems — Unemployment

📖 What is unemployment?

  • Unemployment = the percentage of people who are not currently working but are available for work and actively searching for it
    • People sitting idle at home who are not looking for work are NOT counted as unemployed
  • 📌 Exam tip: look up Pakistan's current unemployment rate and quote the latest figure before the paper
  • ⚠️ A "burning," interrelated issue: unemployment breeds other social problems — poverty, suicides and crime all rise with it (all social problems are interrelated)

📚 Theories on unemployment

  1. Marxist theory — capitalism is the biggest driver of unemployment; unemployment (the "reserve army of labour") is a structural feature that keeps wages low and disciplines the workforce
    • In an expansion phase capitalists hire rapidly; in a crisis phase they lay off in the thousands (example: mass hiring in the boom, then mass firing during COVID-19)
    • Capitalists are driven by profit alone — no sympathy or regard for workers' compulsions
  2. Keynesian theory — unemployment results from low demand for goods (insufficient aggregate demand)
    • Chain: inflation makes goods expensive → people's demand falls → firms produce less → fewer workers needed → unemployment rises
    • Addressed through government spending / fiscal stimulus to revive demand
  3. Economic deprivation model — links unemployment to broader relative deprivation and its social/psychological effects on individuals and communities.
  4. Social Darwinism / "survival of the fittest" — frames unemployment as the individual's own responsibility: those who failed to upgrade their skills, education and knowledge with the times are "not fit to survive" in a competitive market
    • The job market is an arena of competition — only those who commit and make themselves fit survive
    • (A partial, victim-blaming view — useful to state, then critique, since it ignores structural causes)
  5. Latent function theory — unemployment can have hidden/unintended social functions (e.g. providing a disciplined labour reserve, or, for the individual, forced skill re-orientation) — a Mertonian "latent function" framing.

🏷️ Types of unemployment

  1. Frictional — short-term, between-jobs unemployment.
  2. Cyclical — tied to economic downturns/business cycles.
  3. Structural — mismatch between workers' skills and available jobs (e.g. due to technological change).
  4. Seasonal — tied to seasonal industries (agriculture, tourism).
  5. Disguised unemployment — workers appear employed but contribute little/no marginal productivity (common in agrarian Pakistan — too many family members working a small landholding).
  6. Open unemployment — clearly visible, actively seeking work but unable to find it.
  7. Under-employment — working fewer hours or below one's skill level than desired.

🔍 Determinants of unemployment in Pakistan

  1. Weak law & order → collapse of investment
    • Poor security drove away foreign investors (FDI dried up), and even local investors pulled out and invested abroad → fewer businesses, fewer jobs
  2. Political victimization & the nationalization legacy
    • Industrial elites uprooted and shifted their businesses (some even to Bangladesh); Bhutto-era nationalization (early 1970s) of large private firms created a lasting trust deficit
  3. Population growth outpacing job creation
    • Far more people available to work than there are jobs
  4. Commercialization of education
    • Private universities mass-produce the same degrees (MBA, BBA, computer science) far beyond market need → an oversupply of graduates chasing too few jobs
  5. Inflation
    • Prices rise → demand falls → production falls → firms lay off workers
  6. Energy crisis
    • Small and medium industries that couldn't afford generators during load-shedding simply shut down (large firms could absorb the cost)
  7. High retirement age + extensions
    • Retirement at 60 (some private up to 65), plus extensions and contractual re-hiring, blocks a largely young population from getting a chance
  8. Decline of the agricultural sector
  9. Low education / skills mismatch
  10. Marital-status effects (e.g. on women's labour-force participation)
  11. Changing economic mode (industrial/service shift)

💡 Remedies

  1. Support small enterprises & young entrepreneurs
    • Government economic packages, loans and incubation centres so people can start their own businesses (every giant — Amazon, Google — began small); new businesses then create jobs
  2. End the trust deficit with the industrial sector
    • Reassure investors (who fled nationalization/privatization shocks) that such policies won't be repeated, so industries return
  3. Invest in the agricultural sector
    • Pakistan's traditional strength — reviving it cuts unemployment and raises GDP/production
  4. Reform (intervene in) the education system
    • Research market demand and produce only as many graduates as the market needs in each field — stop saturating it with surplus MBA/BBA/engineering degrees
  5. Reduce the population growth rate
    • Community- and government-level family planning (and bringing religious scholars on board — see the Population Growth page) so job supply can keep pace

✅ Revision checklist

  • Define unemployment precisely (available AND actively seeking work)
  • Match each theory to its core claim — Marxist (expansion/crisis + COVID), Keynesian (low demand), Social Darwinism (fitness)
  • Define all 7 types of unemployment with a one-line example each
  • List at least 6 Pakistan-specific determinants with an example each (FDI flight, nationalization/Bangladesh, education commercialization, energy crisis, retirement extensions)
  • List the remedies — incubation/economic packages, ending the trust deficit, agriculture, education reform, family planning