2 EFFECTS OF UNEMPLOYMENT IN PAKISTAN:

Unemployment not just effects an individual it effects a whole nation. Written below are some of the Effects of Unemployment.

2.1 Economic Effects:

Lower GDP of the economy: A rise in unemployment rates can cause negative multiplier effect. For example, the High unemployment rate indicates the economy is operating below full capacity and is inefficient; this will lead to lower output and incomes, which will lead the people both employed and the unemployed to be unable to purchase as many goods so they will purchase few goods, which will lead them to contribute to spending less causing lower contribution to the economy of the nation and lower output of income of a nation. Which is happening in Pakistan as we speak. Corona virus also played a major role in the increasing the rates of unemployment.

Increased borrowing by government: Higher unemployment will cause a fall in tax income because there are fewer people paying tax and also spending less (hence lower VAT). Also, the govt will need to spend more on unemployment and related benefits. At the same time, governments no longer collect the same level of income tax—which leads them forcing these governments to borrow money, which defers the prices and impacts of unemployment into the longer term, or cut back on other spending. Which is happening in Pakistan as we speak.

(Pakistan's External Debt is increased to 113803 USD Million in the third quarter of 2020 from 112858 USD Million in the second quarter of 2020 according to State Bank of Pakistan.)

2.2 Social Effects:

Political instability: The rate of unemployment also effects the political stability of a nation amount of mass unemployment within the 1930s led to social unrest. In Germany, a percentage of 6 million was a crucial think about the increase of Hitler and therefore the National Socialist German Workers' Party.

Alienation and increasing crime rates: There is a positive effect of inequality on political violence. Tensions among youth due to inequalities can cause the outbreak of conflict. generally, countries with good economic outcomes have a lower risk of armed conflict outbreak.

Areas in which there is high unemployment (especially youth unemployment) tend to possess more crime and vandalism. It can cause alienation and difficulties in integrating young unemployed people into society. Crimes acts as a sort of tax on the economy: it decreases foreign domestic and direct investments, it reduces competitiveness of firms', and creates uncertainty and inefficiency by reallocating resources.

Youth unemployment is associated with political violence and armed conflict in developing countries. However, the level of education lowers the magnitude of the effect. Countries with high educated people are less prone to political violence.

Migration from Pakistan due to unemployment: Income inequalities and poverty are the most causes of international migration. The Pakistani workers were found in several countries of the planet. Nearly half 1,000,000 economic workers are working overseas, mostly in Middle Eastern countries due to oil boom. The fluctuation behavior of international migration in Pakistan was mainly attributed to the economic conditions at their homes and also due to the host countries..Pakistan is over populous country mired with unemployment, abject poverty and inflation.The percentage within the country is almost 4.5 percent, nearly one third of the population lives below poverty level which is further exacerbated with 10-12 percent food inflation. The production of those workers leaves the economy, which reduces the gross domestic product (GDP) and moves the country away from the efficient allocation of its resources.

(Cost of food in Pakistan increased 16.60 percent in October of 2020 over the same month in the previous year. source: Pakistan Bureau of Statistics)

2.3 Individual Effects:

The impact of unemployment can be felt by both the workers as an individual and the national economy and can create a ripple effect.

"The country isn't the earth beneath our feet, it is the people."

Loss of human capital: If people are out of labor, they miss out on 'on the work training' this is often an important component of human capital and labor skills; high rates of unemployment can reduce labor productivity. If someone is out of labor for 2 years, they miss out on the newest working practices and trends. Being unemployed also can affect the attitude of the unemployed causing them to become less likely to get employed in the future.

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Stress and health problems of being unemployed causing loss of human capital: Unemployment causes workers to suffer financial difficulties which will cause emotional destruction. Amongst studies of unemployed men, signs of depression, mental anxiety, and health problems are noticeably higher.

A case study of research on Lahore's youth from 2018 shows that due to unemployment youth is confronting problems such as increasing level of discomfort, contraction in social circle, inferiority complex, hindrance in personal growth, low self-esteem, increasing level of anxiety, unhappiness and mental health problems.

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