By Muskan Naveed ISLAMABAD, Mar. 2 (INP-WealthPK): The population of Pakistan was estimated to be 215.25 million by the National Institute of Population Studies in 2020. The population of the country is growing at a rate of 1.80%. It is currently the fifth most populous country with the ninth largest labor force. Unemployment is regarded as one of the problems of the Pakistani economy but is it real? The unemployment rate is essentially the proportion of unemployed workers out of the labor force – which is the population minus the people who are not of working age, physically disabled or engaged in household activities or rely on assets like land and property without working. The unemployment rate of Pakistan was 4.65% during 2020, and while this figure might be cited as a reason for concern, a regional comparison may indicate Pakistan’s position to be better than its peers. The unemployment rate in Bangladesh stood at 5.30% during 2020 with expectation of reaching 6% by the end of 2021, while in India unemployment was 9.3% during the beginning of 2021. Inflation and unemployment In economic theory, the relationship between unemployment and inflation is referred to as the Phillip’s curve. The Phillip’s curve – a negative-sloping line – shows that there exists a negative relationship between these two macroeconomic indicators. If unemployment is low, it indicates that there is a high supply of workers and a high supply means the cost of employment – or wages – would be low due to people being willing to work even at lower wages and, in turn, the inflation would be low. While various research papers have confirmed the establishment of the relationship between inflation and unemployment in Pakistan, most of the times there is a divergence between theory and practice. The new draft bill for the State Bank of Pakistan lists price stability – or the control of inflation – as the primary objective of the bank while the tertiary objective pertains to fuller utilization of resources – including increasing employment. While the Phillip’s curve may not be followed perfectly in real world, there still exists a trade-off between inflation – or growth – and unemployment which is why even economic theory cites an unemployment rate of 3%-4% as optimal. Real wage growth In economic parlance, an increase in nominal or money wage does not necessarily point towards the betterment of workers, which is why real wage is given more importance. Real wages are essentially the nominal wages adjusted for inflation. With the passing time, a currency loses its value due to inflation so it is important that the rise in money wages is higher than the inflation or, in other words, the real wages are growing. The latest labor force-related data available for Pakistan is through the Labor Force Survey of 2018-19. Per the survey, the real wages in Pakistan have been growing. The average monthly wage stood at Rs6,612 in 2007-08 while the figure rose to Rs21,326 in 2018-19. This shows an average wage increase of 11.2% during the decade while for the same period the average inflation skirted near 8.9%. Unleashing the potential of the youth bulge Pakistan’s demographic dividend is often the subject of talks on multiple forums as nearly 60% of the population lies in the youth bracket. Like all governments, the current government of Pakistan is also placing emphasis on unleashing the potential of the youth bulge with the “Kamyab Jawan” initiative. Kamyab Jawan or literally translated to successful youth is a comprehensive program with six sub-components: Prime Minister’s Hunarmand Programme (Skill for All) Prime Minister’s Youth Entrepreneurship Scheme (YES) Prime Minister’s Startup Pakistan Prime Minister's Green Youth Movement (GYM) Prime Minister’s National Internship Program Prime Minister’s Youth Engagement Platform (Jawan Markaz) Moreover, the China-Pakistan Economics Corridor has also boosted employment and is expected to further continue doing so. According to a report, the project, valued at nearly $50 billion, is estimated to increase the GDP growth rate of Pakistan by 1.5% - creating the employment opportunities needed for the growing youth bulge.