Pakistan’s labour force

Very recently, in April 2022, as the dust of the political drama starts settling and the country finds herself in a new uncomfortable equilibrium, the Pakistan Bureau of Statistics has put out the Key Findings Labour Force Survey 2020-2021. This report is insightful and useful. Amongst a host of patterns that emerge, this piece will focus on labour force participation, patterns of employment and gender pay gap, with a specific focus on agriculture. PBS has gathered data from over ninety-six thousand households to get a representative sample. The sample is divided across the four provinces along the rural urban split. Over the two-year span 2018-19 to 2020-21, the country has employed an additional 3.21 million people which outstrips the increase in the labour force of 3.01 million over the same period.
Punjab has the highest proportion of employed persons normalised by population, while KP has the weakest performance. At the national level, thrice more men than women are employed. We also find that the proportion of people in the labour force, normalised by the country’s population, has increased slightly from 32.1 percent to 32.3 percent. Refining this and normalising the labour force by the working age population of Pakistan (age ten years and above), we find that the labour force participation rate has stagnated between 2018-19 to 2020-21. The LFPR is currently at 44.9 percent. This means that of all people who are of working age in Pakistan, almost forty five percent of them work. The ratio of LFPR is three to one, in favour of men against women.
While Pakistan has a youth bulge, the highest LFPR is observed for the age group of 45-49 years. The LFPR of the age group 25-29 years is at least four percentage points lower. This reminds us of our struggle to create meaningful employment for the country’s youth. Despite the fact, the most heartening finding is the drop in unemployment rate across time which is observed for both genders and along the rural-urban divide. The unemployment rate, which measures the proportion of unemployed people in the total labour force, is down to 6.3 percent. In line with older data, we see that rural unemployment is lower than urban unemployment. Twice as many women in urban Pakistan are unemployed compared to women in rural Pakistan. This is so because close to seventy percent of women are employed in agri-based activities while the proportion of women working in more urbane activities like manufacturing, construction, and wholesale plummets to abysmal levels. While this might seem benign enough, it is worth pointing out the wage difference.
Using ILO’s framework, the gender pay gap in agriculture in Pakistan is still very high—36.24 percent. The good news is that this is lower than 2018, when the gender pay gap was 40.69 percent. To put another way, in 2020-21, for every hundred rupees that men employed in the agriculture sector earn, women earn around sixty-three rupees only. This is up from women earning fifty-nine rupees for every hundred rupees that men in the agriculture sector earned in 2018-19. Again, while the gender pay gap is atrociously high, over the period of analysis it has declined and that is an absolutely positive achievement. The overall gender wage gap has almost halved over the period of analysis. So, in 2020-21 for every hundred rupees that employed men earn, women earn around eighty-one rupees. This is up from women earning seventy rupees for every hundred rupees that men earned in 2018-19.
This report paints a rosy picture of the labour force in Pakistan. But some macroeconomic issues continue to manifest. Low LFPR among the youth, urban unemployment which exerts additional pressure on the cities, gender pay gaps and disproportionate size of the informal economy. Moving forward, serious attention has to be paid on generating meaningful employment across the country, specifically in KP which has the highest rate of unemployment.