Short-Term Employment Functions in Manufacturing Industries: An Empirical Analysis for Pakistan

Abstract

The most challenging issue facing Pakistan today is the high rate of growth of population and labour force which is a major obstacle to the development of the country. The current problem of unemployment is becoming serious and is deeply rooted in the economic, social and political conditions of the economy. The consequences of rapid industrialisation on employment generation in Pakistan has also been very disappointing. The manufacturing sector in Pakistan has grown at an average annual rate of around 6.0 percent during the 1970s and 8.7 percent during the 1980s. Manufacturing output has risen from 16.5 percent of the GDP during the 1970s to 19.1 percent during the 1980s. The manufacturing sector has failed to generate sufficient employment for new entrants in the labour force. Over a period of 18 years from 1969-70 to 1986-87, only 14.0 percent of the total labour force could get employment in the manufacturing sector. A low creation of employment opportunities is also manifest in the fact that the growth rate of employment in the manufacturing sector has declined considerably from 2.4 percent during the 1970s to 1.0 percent during the 1980s.