A decade of change & stagnation

By Umair Javed
Published in Dawn on September 20, 2021

LAST week, the Pakistan Bureau of Statistics released findings from the Labour Force Survey of 2018-19. LFS is probably Pakistan’s best sample survey dataset on a range of important developmental indicators, going back at least 38 years.

The LFS is of particular interest to anyone interested in what can be called Pakistan’s structural transformation. How is the nature of the economy changing, what does the present condition (and future) of work and labour look like, and are there any changes taking place in the make-up of the labour force itself.

To make the analysis more meaningful, it is worth comparing data on these outcomes over a longer time period. For this piece, we will look at trends emerging over the period of a decade from 2008-9 to 2018-19. Barring a few years, this period has been characterised by stagnant economic growth and volatile political and security conditions. It has also seen decisive demographic change with urban migration and expansion of cities into their rural hinterlands.

In 2008-9, approximately 45 per cent of Pakistan’s labour force was associated with agricultural work. In terms of composition to GDP, agriculture (including crops, livestock, fishing, and forestry) contributed 21.9pc. Data from the same year shows that manufacturing and services sector collectively emp­loyed 55pc of workers, and contributed 78.1pc to GDP.

Over a decade, three more women out of 100 aged between 19 and 39 have acquired college degrees, compared to only two more men out of 100.

In the 10 years since, the structural displacement of labour has continued. The most recent LFS data displays that the share of workers in agriculture has dropped by nearly 6pc to 39pc, while the Economic Survey of Pakistan data shows the contribution of agriculture to overall GDP has also dropped to 19pc. Manufacturing and services now employ 61pc of the working population and contribute 71pc to overall GDP.

While this transition is expected at Pakistan’s current level of development, what is worth parsing through is the trajectory of ex-farm labour absorption. In 2008-9, approximately 20pc of all labour was engaged in manufacturing, mining, construction work, and utilities-related employment. By 2018-19, this number stands at nearly 24pc. This indicates that labour displaced from rural areas is being at least partly absorbed by sectors with higher value-added potential, rather than in low value-added services. The biggest indication of this is that employment in wholesale and retail trade (otherwise the second biggest sector in terms of employment in the country) has actually declined from 15pc to 14pc over this decade.

Another question worth asking is whether this shift in the economy and its associated change in the labour force has been accompanied by the creation of more stable, better remunerated employment that is taking place at scale. This distinction is usually captured by the share of informal employment in non-agricultural work, which includes owner-operated businesses as well as enterprises that employ less than 10 individuals (including contributing family workers). In 2008-9, 73.3pc of all non-agricultural work was informal in nature. This number remains stubbornly high a decade later as the share of informal work remains at 72.4pc.

Within the informally employed workforce, the sectoral/industry divisions have seen some internal shifts, with a greater share being employed in construction and transportation/storage. The share of informal workers in retail and wholesale trade and manufacturing has declined by a couple of percentage points each during this period.

A common feature of economic growth taking place at scale is the attendant rise in waged employment, compared to self-employment. At the height of industrial capitalism in the middle of the 20th century, waged employment (both white and blue collar) reached upwards of 70pc in various countries of the West. Looking at only urban areas, the share of waged employees was recorded at 35pc in 2008-9. A decade later, this figure has increased to just under 40pc, showing a decisive (even if slow) shift in that direction. However, this change has taken place at the expense of contributing family workers, whose numbers have declined, while the numbers of self-employed have also increased over this period.

Lastly, and most importantly, one needs to interrogate whether the structural shift from agricultural work to urban sectors is opening up equitable forms of labour force participation, especially around gender lines. Census and related LFS data shows us that education/skill attainment across men and women has largely converged in urban areas. In the present, nearly as many town/city residing women (10pc) as men (11pc) have higher education degrees. In fact, women have achieved education at a higher rate than men since 2008-9.

Over a decade, three more women out of 100 aged between 19 and 39 have acquired college degrees, compared to only two more men out of 100. In some urban centres, there are more women enrolled in higher education than men, and subsequent labour data will eventually show parity and then a shift in educational attainment ratios.

What, then, is really revealing is that urban labour force participation rates for women have largely remained stagnant over this entire time period at just around 10pc. Importantly, this does not mean women are not working — the data does not capture unremunerated domestic and care work that women are frequently required to do in their homes. All it shows though is that a large mass of educated individuals remains outside compensated employment. Even if a majority of these individuals ‘choose’ to not opt for remunerated work, a substantial minority is likely not allowed to.

Some can make developmental arguments around this, pointing to how there’s no way Pakistan can grow by excluding such a large and educated cohort of citizens. But there’s an even more basic rights argument to be made here: by not easing access to work for nearly half of the citizenry, we’re depriving them of significant access to the opportunities and advantages that come with financial independence.

Your Comment:

Related Posts

03

Dec
Print Media

Suddenly Migrants with Skills are Wanted: New York Times

By DAMIEN CAVE AND CHRISTOPHER F. SCHUETZE Published in The New York Times on November 27, 2021 Wealthy world dangles visas and residency to fill labor shortages As the global economy heats up and tries to put the pandemic aside, a battle for the young and able has begun. With fast-track visas and promises of permanent residency, […]

22

Nov
Print Media

Pakistan: Staff Concluding Statement of the 2021 Article IV Mission and Staff-Level Agreement on the Sixth Review under the Extended Fund Facility

Published in International Monetary Fund on November 21, 2021 A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the[…]