Azhar Mahmood is young and unemployed. A fresh graduate in business administration from a private university in Lahore, he is worried about his future in the country’s shrinking job market.

“Many of my seniors from the university are still without jobs. I wonder if I’ll find one,” he says, adding: “I’d rather go abroad than waste my time here looking for a job that doesn’t exist. I don’t want to be part of the swelling pool of the unemployed in Pakistan. That is not what my parents have spent so much money for on my education.”

But not everyone is lucky enough to leave the country to find a job abroad. The majority can’t even dream of it and either becomes part of the growing pool of educated unemployed or settles down for the low-paid, low-quality jobs after failing to find an ‘option’ equal to their educational qualifications or skills.

Sajid Iftikhar had to settle for such a position after a year-and-a-half-long search for a ‘decent’ job in a bank or a private firm. However, it wasn’t the future his middle-class parents had imagined for him — an MBA in finance working as an accountant for a small customs clearing firm for Rs20,000 a month paid in cash. He himself is not sure if he should celebrate his first job or mourn the loss of time and money invested in his education.

He is not alone in this frustration; there are innumerable young, educated Pakistanis, who have specialised in certain fields but are either unemployed or have consented to work for much lesser salaries than they deserved or expected.

Youth unemployment and under employment has risen steeply during the last five years on the back of a slowing economy, which is not creating enough jobs to cater to an (unofficially) estimated 1.3 -1.5 million new entrants into the job market every year. Monis Rahman, Chairman of Naseeb Networks, which operates the country’s largest job website — ROZEE.PK — points out that there is a huge over-supply of job seekers relative to the number of jobs available. “Since 2008 we have received around 24m applications for 121,000 jobs advertised on our website. At least 20% of the applicants are fresh graduates, 70% are job hoppers looking for a better opportunity and 10% are unemployed,” he notes.

The major reason for the growing demand-supply gap in the job market, of course, remains the economic slowdown. “The economy has expanded at an annual average rate of below three per cent in the last five years on the back of drying private investment because of growing energy shortages, high cost of capital and deteriorating security conditions. This kind of growth rate is not enough for an economy to generate jobs to absorb such large number of new entrants into the job market,” notes a leading economist, who requested anonymity. “The economy must grow at a rate of six to eight per cent to absorb the number of new job seekers every year.”

The Labour Force Survey 2011 shows the unemployment soared to six per cent from 5.6% a year earlier. The unemployment rate increased in the urban areas from 7.2% to 8.8% but decreased marginally in the rural areas from 4.8% to 4.7%. This finding is in line with the flow of additional funds into the rural economy as a result of higher commodity prices and job losses in the urban areas, owing to industrial slowdown and rolling blackouts.

The survey depicts a very realistic picture of unemployment in the country that cannot be rejected out of hand. Economists agree that the survey’s estimates of the unemployment rate are not totally off the mark.

“We have a very large informal economy operating outside the government regulations and oversight, which is estimated to be as big in size as our officially reported economy of $210 billion. While the official economy has slowed down and lost its ability to create new jobs, the informal sector has thrived and generated jobs. But these are low-quality, low-paid jobs.”

Monis notes that there is also a mismatch between the jobs produced in the organised sector and the qualifications, training and skills being imparted to students at our educational and training institutions. “We are seeing a large unmet demand of highly skilled professionals which can be challenging to find even though many people are looking for jobs. At present, for example, there is a significant undersupply of software and mobile software programmers and an over-supply of accountants in the market compared to available job opportunities.”

Unless strategies to create productive and well-paid work opportunities are developed, the economy will continue to add people like Azhar to the pool of the unemployed or produce underemployed, working poor with jobs that allow people like Sajid to survive but not thrive.