IPR factsheet shows unemployment may be closer to 8.5%, well over government claim of below 6% unemployment
The Institute for Policy Reforms (IPR), a think tank, has released a factsheet on Employment Situation in Pakistan.
The factsheet is based on the findings of the latest Labour Force Survey of 2014-15 released by the Pakistan Bureau of Statistics.
According to IPR’s factsheet, between 2012-13 and 2014-15 the number of jobs created was 1.4 million. Accordingly, the decrease in the number of unemployed workers was 100,000. As such, by the end of 2014-15, the number of unemployed workers was 3.6 million.
However, if the number of discouraged workers is included and the normal increase in labour force allowed for, the total number of unemployed rises to 5.3 million.
According to IPR’s factsheet, the reported unemployment rate is just under 6%. Apparently, it has fallen slightly from the level in 2012-13. However, if appropriate adjustment is made the unemployment rate rises to 8.5% in 2014-15.
This enables timely monitoring of the employment situation in the country. Thirty three such surveys have been carried out by PBS. The coverage is nationwide.
The sample size in the 2014-15 survey was 42,108 households. Information is provided on the level and characteristics of the labour force and employment, level of unemployment, number of hours worked, occupational distribution and wages.
IPR factsheet focuses on developments in the labour market of Pakistan. The factsheet shows that between 2012-13 and 2014-15 only 1.3 million workers apparently entered the labour market. Historically, the number entering used to be 1.5 million workers per annum. Therefore, given the conditions in the labour market, almost 1.7 million potential workers have either opted not to join the labour force or there has been a major understatement of the labour force size by PBS.
According to IPR’s factsheet, between 2012-13 and 2014-15 the number of jobs created was 1.4 million. Accordingly, the decrease in the number of unemployed workers was 100,000. As such, by the end of 2014-15, the number of unemployed workers was 3.6 million.
However, if the number of discouraged workers is included and the normal increase in labour force allowed for, the total number of unemployed rises to 5.3 million.
According to IPR Fact Sheet the reported unemployment rate is just under 6%. Apparently, it has fallen slightly from the level in 2012-13. However, if appropriate adjustment is made, the unemployment rate rises to 8.5% in 2014-15. This is the highest rate of unemployment in the last thirteen years. An extremely worrying feature of the current unemployment situation is that the rate among literate workers is more than twice that among illiterate workers. In fact, the highest rate of unemployment, three times above the national average, is observed in the case of highly educated workers with either a graduate or a post-graduate degree.
Similarly, unemployment rate among female and young workers is also relatively high. There is little difference in the unemployment rate between urban and rural areas of the country. Since 2012-13, unemployment rate has improved the most in Khyber-Pakhtunkhwa. However, employment growth has been the fastest in Punjab.
The factsheet added that significant changes had occurred in the sectoral distribution of employment. Employment has fallen somewhat in agriculture. The positive finding is that almost two-thirds of the new jobs created during the last two years have been in the manufacturing sector. Only one-third of the jobs are in the services sectors, which largely falls in the informal economy. The prospect of finding ‘decent work’ can be much higher in the formal sector. Currently, about 27% of the workers are engaged in the formal sector.
IPR further added that an important development was the trend towards increased labour force participation by women in Pakistan, which is currently one of the lowest in the world. It has risen significantly since 2008-09 by almost three percentage points, to reach 22%. Meanwhile, the labour force participation rate for males has actually fallen by 1.5 percentage points.
While discussing the trend in real wages IPR revealed that between 2008-09 and 2014-15, real wages have increased for technicians and professionals, but for unskilled workers, wages have fallen. The skill premium is rising in the economy. Beyond a point, this could become a source of greater inequality. There has also unfortunately been some increase in the gender wage differential for similar skills in the last six years.
As far as child labor is concerned IPR added that a significant positive trend was the decline in the number of child workers by over 14% since 2012-13. Focus on this problem has increased following the granting of GSP Plus status to Pakistan by the EU, conditional on adherence to 27 international conventions. Eight of these conventions relate directly to labour.
The government of Punjab, in particular, is making efforts to reduce child and bonded labour in brick kilns. A special incentive is being offered to send the child to school instead.
The factsheet added that the overall message was that both positive and negative developments were observed in the labour market of Pakistan. For a sustainable unemployment-reducing situation to develop, the GDP growth rate would have to rise to over 6%. Simultaneously, the state and the private sector would both have to invest more in improving the skill endowment of the labour force.
