institute for policy reforms

More educated are unemployed than illiterate in Pakistan

LAHORE: The rate of unemployment in educated people is twice than that of illiterate people, according to a report released by Institute of Policy Reforms (IPR) referring the Pakistan Bureau of Statistics findings of the latest labor force survey 2014-15.

It said that between 2012-13 and 2014-15 only 1.3m workers apparently entered the labor market. Historically, the number used to be 1.5m workers per annum. Therefore, given the conditions in the labor market, almost 1.7m potential workers have either opted not to join the labor force or there has been a major understatement of the labor force size by PBS, it observed.

According to IPR, between 2012-13 and 2014-15 the number of jobs created was 1.4m. 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 3.6m. However, if the number of discouraged workers is included and the normal increase in labor force allowed for, the total number of unemployed rises to 5.3m.

According to IPR, the reported unemployment rate is just under 6 percent. Apparently, it has fallen slightly from the level in 2012-13.

“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 is observed in the case of highly educated workers with either degree or postgraduate qualifications. Similarly, the 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. After 2012-13, the unemployment rate has improved the most in Khyber-Pakhtunkhwa. However, employment growth has been the fastest in Punjab,” the report added.

IPR fact sheet stated that significant changes have occurred in the 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. It said that only one-third of the additional jobs are in the services sectors, which largely fall in the informal economy. The prospect of finding `decent work` is much higher in the formal sector. Currently, about 27per of the workers are engaged in the formal sector, the report revealed.

IPR further added that an important development is the trend towards increased labor force participation rate of women in Pakistan, which is currently one of the lowest in the world. It has risen significantly after 2008-09 by almost three percentage points, to reach 22per. Meanwhile, the labor 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, while that for unskilled workers 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,” the report elaborate.

IPR in its fact sheet revealed that in the context of the employment situation, one disturbing feature is the number of ‘idle’ males aged between 15 to 29 years. These individuals are neither undergoing education nor searching for a job. There are over one million such idle young males. “They are perhaps more vulnerable to crime and / or militancy. It is unfortunate that the youth employment programs launched by the government have not been so successful in inducing productive engagement in the labor force,” it reported.

As far as child labor is concerned, IPR revealed a significant positive trend is the decline in the number of child workers by over 14per since 2012-13. “The Punjab government, in particular, is making efforts to reduce child and bonded labor in brick kilns. A special incentive is being offered for instead sending the child to school,” it added.

“For a sustainable unemployment, the growth rate of the GDP will have to rise to over 6 percent. Simultaneously, the state and the private sector will both have to invest more in improving the skill endowment of the labor force,” the report concluded.

Neo Monitoring Desk

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