Inflation and unemployment

#Inflation #unemployment

LAHORE: While the nominal wages have increased in Pakistan, more inflation has eliminated the power of labor procurement, which has reduced stagnation or real wages. Increasing unemployment has intensified economic tensions.

In recent years, Pakistan has adjusted wages to respond to the economic conditions. In the federal budget of 2024-25, the minimum wage was increased from Rs 32,000 to Rs 37,000 from Rs 37,000 to Rs 1 to 16. In Grade 1 to 16, government employees increased by 25 % salary, while grades are included. Seeing a 22 to 20 percent increase.

Despite these measures, economic challenges over the past seven years have ruined the level of employment and poverty. The International Monetary Fund (IMF) estimated Pakistan’s unemployment rate by 8.5 % in 2023, which increased by 6.2 percent in 2021, which increased by nearly 1.5 million unemployed in two years. Economic turmoil, natural disasters and external shocks have increased the crisis, highlighting the need for job creation, economic stability and social protection policies.

The proportion of the population from employment was 47.6 percent in 2023, which is less than two percent points before the crisis in 2019, which reflects the falling job opportunities. Meanwhile, the World Bank estimates that Pakistan’s lower middle -income poverty rate has reached 40.5 % in fiscal year 24, with additional 2.6 million Pakistanis such as Coid 19, 2022 floods, and economic instability. Due to the poverty line has fallen below.

Relations between unemployment and poverty in Pakistan are complicated. Although unemployment increases usually in poverty, other factors – including inflation, governance issues and global economic shocks – are also helpful in this issue. A study analyzing data from 1984 to 2016 says poverty in Pakistan responds inadequate to unemployment changes, which means that unemployment reduces unemployment due to lack of unemployment. Poverty has decreased.

To prevent further job losses, Pakistan will have to adopt a pro -employment approach that balances wages with the benefits of productivity while keeping business costs manageable. With the improvement of productivity, increasing wages can lead to more operational costs, job deductions, or inflation pressure, while stagnant wages reduce the power of labor procurement and weaken economic demand.

A more efficient strategy will include the implementation of the sector, related to the sector, rather than the minimum wage increase. Encouraging performance -based salaries, such as participating in profit and productivity, can help improve efficiency, while workers ensure that they benefit from economic growth. In order to enhance their value and employment, training programs must also be extended to the workers.

In addition to wage policies, the government also focuses on reducing non -wages costs for business by reducing the regulatory burden, offering tax credit for job creation, and improving operational spending infrastructure infrastructure Will have to be given.

Providing soft loans and tax privileges for small and medium -sized businesses that create jobs can further mobilize job hikes. Strengthen professional training centers, especially in higher student sectors such as IT, engineering and renewable energy, to align the development of expertise with industry needs, help eliminate the difference between education and employment. Will get Investing in working industries such as construction, agriculture, and lighting can create immediate job opportunities, while the development of export -based sectors, tourism and services will further expand the chances of employment. Effective, employment support policies, adopt Pakistan. In a difficult economic environment it can stabilize its labor market, reduce poverty and maintain business qualifications.