The measurement of labour force participation rates in the LFS though suffers from imprecision, rendering labour market analysis a fairly daunting task. The inappropriateness of the concepts used to measure labour supply and data inadequacies that can encapsulate labour market realities have been widely discussed in the literature both internationally and in Pakistan. In the context of a pervasive household enterprise system, it is difficult to demarcate economic and non-economic activities; besides household enterprise activity is characterized by the absence of any formal or explicit employment contract. Survey respondents can either get recorded as unpaid family helpers
or self employed, imparting a great deal of arbitrariness to the classifications of ‗employed‘, ‗unemployed‘ and ‗out of labour force‘. The categorization of labour as working or not working in
such a fluid situation tends to generate results which at times appear to be related to definition and data cleaning issue. For instance, shares of agriculture in total employment, size of the unpaid family helpers and female labour force participation rates move somewhat in tandem. The data can be misinterpreted, out of the 4.5 million increase in the employment during 2003-04 and 2005-06 yielded by LFS nearly more than half of this was due to increase in the unpaid family helpers in the total employment. Keeping in view these limitations the activity rates, employment structure and unemployment is discussed below.
a) Labour Force Participation Rates
The labour force participation rate has also increased from 30.4% in 2003-04 to 32.2% in 2005-06. The increase has also been recorded in both male and female participation rates and is comparatively higher in age group 40-44 (reported around 60.1%)30. Agriculture remains the largest job providing sector; however, its share in GDP is declining. Service, finance, transport, trade, manufacturing and electricity have larger proportions of regular employees. The proportion of casual and piece rate workers is higher in agriculture, mining, and construction. According to some estimates the share of working age population (15-59 years) has increased from 51 percent in 1998 to over 57 percent in 200631.
The labour force participation rate in Pakistan is lower than other countries. Recent Labour Force Survey 2006-07 has rather shown a decrease in labour force participation rate to 31.8% over last year LFS 2005-06. This could be attributed to a number of factors. In NWFP, the reduction in labour force participation is disquieting as militancy and terrorism is rising which has no doubt affected businesses and employment opportunities. Off course, this could be one of the factors; however, it must be noted that the decline in LFP in all the four provinces indicates that decline in
30
LFS 2005-06 31
one province is not offset by an increase in the other one. Therefore, one can conclude an overall decline in economic activity.
b) Crude Activity Rates
The labour force, defined to be the sum of employed plus unemployed was estimated to be 50.78 million for the year 2006-07 in a population of close to 160 million, giving a worker to population ratio of 0.32 referred to as the crude activity/participation rate (Pakistan Economic Survey 2007- 08). A fluctuating trend over the years in the crude activity rate, partly because of the changing age structure, rising educational enrolment and varying definitions is yielded by the data. The overall low level of crude activity rate is mostly because of low representation of women in the workforce; since they have principal responsibility for the housework – including feeding and tending of cattle, tailoring, weaving, i.e., provision of many goods and services that are either purchased from the market or supplied by paid employees in developed countries. It is only through deeper probing that these activities get recognized as work which is also reported by LFS generally termed as augmented labour force participation rate but not utilized for further analysis of labour market data.
c) Age-specific Labour Force Participation Rates
The age specific activity/labour force participation rates which iron out the age structure effect, summarized in Table 5, indicate that the overall refined activity rate for those aged 10 years and above experienced a rise from 43.3 in 2001-02 to 46.9 in 2005-06. An inter-temporal comparison is reflective of a rise in the activity rates of females and teenagers as well as youth during 2001-02 to 2005-06. It is not possible to comment on the extent to which it is a response error, but, as discussed already, the share of the unpaid family helper in total employment has also risen in 2005-06 in comparison with the situation in 2001-02. Thus rising activity rate during the past few years could be possibly due to rise in the share of unpaid family helper.
Table 5: Age-specific Labour Force Participation Rate 2001-02 – 2005-06
2001-02 2003-04 2005/06
10 years and over Both 43.3 43.7 46.9
Male 70.3 70.6 72.0 Female 14.4 15.9 18.9 10-14 years Male 17.2 18.5 20.68 Female 6.3 6.7 9.21 15-19 years Male 57.6 59.0 60.87 Female 13.8 14.5 16.91 20-24 years Male 87.0 85.7 87.63 Female 15.9 18.1 20.67 25-34 years Male 96.6 96.2 97.03 Female 16.1 18.3 21.62 35-44 years Male 97.5 97.4 97.57 Female 19.9 21.0 25.07 45-54 years Male 95.6 95.6 96.37 Female 19.4 20.9 24.76 55-59 years Male 88.2 89.7 90.62 Female 14.5 18.6 22.84
60 years & above Male 56.6 58.4 59.38
Female 11.4 12.9 14.09
Disaggregated by gender we notice substantial variations. An overwhelming proportion of adult males in the age group 25-59 years are found to be active with an activity rate higher than 90% while those in the age group 10-19 and elderly (60 years and above) display lower activity rates (see table 5 below). This curvilinear relationship between age and the labour market participation is depicted mostly by males. In case of the females there are differentials but not very sharp, both teenagers and the elderly (over 60 years of age) exhibited participation rates lower than those of prime aged females. However, the female activity rates generally varied in a narrow range from 9% (for 10-14 age group) to 25% for the age cohort 35-44 years in 2005-06. The refined activity rate for females aged 10 years and over has risen from 14% in 2001-02 to 19% in 2005-06; an escalation shared by all age cohorts, which in case of teenager is somewhat puzzling given the claims of rising female school enrolment. It may be noted that one fifth of the male children (10-14 years) and 9% of the female children are in the labour force indicating a disturbing level of child labour.
d) Employment Structure
Employment, according to LFS has risen from 39.6 million in 2001-02 to 48 million in 2007. It may be added that both the activity rate and data on population size which are used to arrive at the absolute size of employment are not problem free. Given the widespread household enterprise system and the dominance of informal nature of activities, some employment categories such as unpaid family helpers and self- employed may simply mask the non-utilization of labour wherein they are not in fact productively engaged but are reported as working in the survey. Distribution by employment status indicates a relative stability in case of employers being 0.88% of total employment in 2005/06. In contrast there was a decline in the share of wage employees from 39.85% in 2001-02 to 37% in 2005-06. The share of unpaid family helpers rose from 20% to 26% during 2001-2006. A rise of the relative share of unpaid family helper males could be on account of difficulties in classifying responses or simply reflects their non-engagement in ex-house activities due to non-availability of job opportunities though unpaid family helpers can be utilized in the activities like dairy and livestock activities in rural areas, the rise in the size of urban family enterprise has to be investigated further. One finds a decline in the share of self employment from 38.50% in 2001-02 to 35% in 2005-06.
e) Industrial Composition
The sectoral (industrial) employment composition underwent a change with the transformation of the economy. Pakistan's experience has not been any different. During the period 1950-70 employment grew with a persistent decline in the share of agriculture in total employment from 65% to 55%, 50% in 1993-94, 47.25% in 1997-98 and 43% in 2006-07. Compared with its share of 21% of GDP in 2007, a less than average productivity work opportunity is being offered by agriculture. The share of mining and manufacturing in total employment displayed a rising trend during 1950-70 from 9% to 15.6%. Since then as a fraction of total it has declined, during 1990‘s from 12% to 10% subsequently, rising to 13.8% of the total employment in 2006-07 in contrast to its 19 percent contribution to the GDP. Sectors of the economy, other than agriculture and manufacturing, registered a continuous rise in their shares, accounting for 43% of total employment in 2006-07 (in contrast to 27% in 1969-70); though for the recent sub-period (see table 6 below) there is relatively stability of the industrial structure of employment.
The industrial employment structure for males differs substantially from that for females. Almost two-thirds of the latter are engaged in agriculture compared with 38% of males in rural areas. In
general, however, there is concentration of females in agriculture in rural areas and services in urban areas.
Table 6: Distribution of Employed Persons of 10 Years Age and Above by Major Industries
Years Agri- culture Mining & Manufacturing Construction Cons- truction Electricity & Gas Distribution Trans- Port Trade Others 2000-01 48.42 11.55 5.78 0.70 5.03 13.50 15.02 2001-02 48.42 11.55 5.78 0.70 5.03 13.50 15.02 2002-03 42.09 13.91 6.05 0.81 5.90 14.85 16.39 2003-04 42.09 13.91 6.05 0.81 5.90 14.85 16.39 200405 43.05 13.80 5.83 0.67 5.73 14.80 16.12 2005-06 43.05 13.80 5.83 0.67 5.73 14.80 16.12 2006-07 43.37 13.93 6.13 0.66 5.74 14.57 15.49 2007-08 43.37 13.93 6.13 0.66 5.74 14.57 15.49 Source: Pakistan Economic Survey 2007-08
f) Unemployment and underemployment
The ‗unemployed‘ since 1990-91 redefined in LFS covers those without work or currently available
for or seeking work. The unemployment rate has been on the rise (see table 7 below). It was 5.9% in 1997-98 rising to 8.3% in 2001-02, experiencing a modest decline to 7.8% in 2003-04 with further decline to 6.3 in 2005-06. This fall could be rendered as a statistical puzzle because of the increase in the share of unpaid family helpers. Still the level of unemployment was higher in 2005- 06 than early 1990s.
Table 7: Unemployment and Underemployment Rates, 1993-94 to 2005-06
Period
Unemployment Rate Underemployment Rate
All Areas Rural Urban
Working Less than 35 hours/week – all areas
1993-94 4.8 4.2 6.5 13.2 1994-95 5.4 4.8 6.9 12.2 1996-97 6.1 5.7 7.2 11.5 1997-98 5.9 5.0 8.0 12.9 2001-02 8.3 7.6 9.8 13.4 2003-04 7.7 6.7 9.7 14.9 2005-06 6.2 5.4 8.0 15.1
Source: Labour Force Surveys.
Unemployment rates in general have been higher in urban areas than in rural, though the numbers of unemployed are much larger in the latter than the former. Similarly one finds a higher level of unemployment among the females than the males. There was substantial variation in the unemployment rates by gender which suggests that 5.4% of males and 9.3% of females were recorded as unemployed in 2005-06 (see table 8 below). Age specific unemployment rates yielded a high level of unemployment among teenagers and the elderly (60+) for males. In the case of females the unemployment rates rose up to the age of 24 and then declined and again rose to an alarming 36% for those 60 years and above. Overall, the unemployment rates are high among teenagers (entering the labour market) and the elderly (beyond retirement age). This U-shaped relationship, wherein almost one thirds of the unemployed are teenagers, suggests stability during adult working life as well as lack of mobility as a manifestation of the nature of job scarcity. Table below provides age specific unemployment rate for 2001-2006.
Table 8: Age-Specific Unemployment Rates (%) by Gender 2001-2006
Age group 2001/02 2003/04 2005/06
Male Female Both Male Female Both Male Female Both
10-14 13.6 10.4 12.8 16.3 17.5 16.5 8.8 5.7 7.9 15-19 12.8 14.9 13.2 15.4 23.9 16.2 10.0 9.8 10.0 20-24 9.3 15 10.3 9.1 20.6 10.9 6.9 9.4 7.4 25-29 6.1 12.5 7.1 5.1 13.2 6.3 4.3 7.3 4.9 30-59 2.9 8.7 4.0 2.7 11.4 4.2 3.8 11.7 5.3 60 + 10.3 44.2 14.5 8.9 45.6 13.7 10.2 36.0 14.2 Total 6.6 12.8 7.7 6.7 16.6 8.3 5.4 9.3 6.2 Source: Tabulations based on Labour Force Survey data.
Unemployment rates for adult male were lower in 2005-06 compared with the situation in 2001-02. In the case of females, the unemployment rates ran contrary. The composition of the unemployed suggested that around half of them belonged to the age cohort 15-24 (the youth) whereas the share of the elderly was 12%. In fact, the youth, particularly the educated among them, suffer from a disproportionately higher burden of unemployment.
g) Educational Profile of the Employed
According to Labour Force Statistics (LFS), 2005-06, 53.1% of the labour force is considered literate while literacy stands at 43.95% in rural and 69.8 % in urban areas. Therefore, the majority of illiterate labour force is concentrated in the rural areas. Approximately, 65% of male and 40.6% of female respondents were reported as literate. The educational profile of the employed is suggestive of a decline in the share of illiterates from 60% in 1993/94 to 47% in 2005-06. All the remaining educational categories experienced a rise in their relative shares during the recent sub period. Those with matriculation (10 years of schooling and higher educational attainments) increased their relative share from 15% in 1993-94 to 21.7% in 2005-06 in the total employment.
Table 9: Unemployment Rates by Gender and Level of Education
Education Level 2001/02 2003/04 2005/06
Both Male Female Both Male Female Both Male Female
Illiterate 6.6 5.2 11.0 7.5 5.6 15.0 5.7 4.6 8.0 Primary 7.4 5.8 20.2 8.0 7.0 20.0 6.0 5.5 NA Middle 9.8 8.6 16.2 9.3 8.6 22.7 5.8 5.4 NA Matric 10.4 9.3 21.2 9.7 8.1 25.3 7.6 7.0 14.62 Intermediate 12.5 9.7 21.9 10.0 8.3 20.3 8.1 7.0 NA BA & above 8.8 6.9 23.0 8.9 7.7 16.5 7.0 6.2 12.5 Source: Tabulations based on Labour Force Survey data.
h) Education Specific Unemployment Rates
In case of females, the data for 2001-06 suggest a positive association between the level of education and the rate of unemployment, in contrast to 8% unemployment rate of the illiterate females the matriculates and the graduate females were suffering from 14.62% and 12.5% respectively for the year 2005-06 (see table 9 above). Similarly male graduates and post-graduates exhibited higher levels of unemployment compared to illiterates in 2005-06. This association between levels of education and unemployment rates is yielded by all the labour force surveys as reflected by the table below. An inter-temporal comparison indicated a curtailment in the unemployment rate of the educated male, during 2001-06. While 9% of the graduates were reported to be unemployed in 2001-02 the corresponding proportion for 2005-06 was 7%. For the year 2005-
06 the unemployment situation for the educated eased somewhat, compared to 2003-04 there was a decline in their unemployment rate as given below in the table.