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This chapter helps in bringing forward urban-rural differences using major development indicators like population demography education and public health. Despite the high rate of urbanisation during the last three decades Pakistan predominantly remains a rural country with over 60 percent of the population living in rural areas according to the official definition of urban and rural areas. Though the overall fertility rates in Pakistan have declined over the years they still remain significantly high particularly in rural areas. Similarly the natural population growth rate which represents the difference between births and deaths is also higher in rural areas. Nonetheless the urban population is growing at a relatively higher rate due to rural-urban migration. According to estimates for the year 2010-11 over 10 percent of the urban population consists of migrants. The life cycle consumption model suggests that different age groups in a population have different economic needs.

The share of the working population in Pakistan has increased over time from 48.5 percent in 1981 to 53.4 percent in 2011. In terms of the age composition of the population the country is experiencing a youth bulge where the share of the youth has increased from 17 percent to 21 percent during the same period. The youth bulge can be used as an opportunity to convert the demographic transition into a demographic dividend and accelerate the pace of economic growth by providing them skills and employment.

As far as the key indicators of education and health are concerned there exist significant urban-rural gaps on all fronts. The majority working age population (54 percent) in rural areas is illiterate as compared to 28 percent in urban areas. Similar gaps are also observed in the mean year of schooling of the working age population. However the gaps have reduced over the years and are relatively narrower in the younger age groups also. Similarly urban-rural and gender gaps are evident in net enrolment rates at all levels of school education. Moreover the provision of water and adequate sanitation services remains a challenge for the government.


This chapter quantifies the size of the rural economy of Pakistan and profiles its characteristics. As of 2010-11 the size of the rural economy is estimated to be Rs 8.7 trillion. In fact Pakistan is effectively a 50-50 economy with half of the economy in the rural areas and the other half in the urban areas. This is in comparison to the shares in population of 66 percent and 34 percent respectively. During the last decade the rural and urban economies of Pakistan have not only been of more or less the same size but have also shown the same annual growth rate of just above 4.5 percent. However the provinces where the rural economy has expanded faster than the urban economy are Sindh and Khyber Pakhtunkhwa. As far as the structure of the rural economy is concerned contrary to general perceptions the agricultural sector does not dominate the rural economy at the aggregate national level. It has a share of 38 percent as compared to a share of 41 percent of services. However in two provinces

Punjab and Sindh it still has the largest share. The share of rural areas in industrial activity is as high as 42 percent with particularly large shares in mining and quarrying (64 percent) construction (65 percent) and small-scale manufacturing (48 percent). Among provinces the share of rural industry is the highest in Khyber Pakhtunkhwa at 74 percent with Balochistan at 50 percent Punjab at 47 percent and Sindh at 23 percent. It is interesting to note that the rural areas have considerable (41 percent) service activity as well. With regard to income inequality the urban per capita income is 1.9 times the rural equivalent for the country as a whole. The province with the biggest differential is Balochistan with the ratio of 3.3 followed by Sindh at 2.0 Punjab at 1.8 and Khyber Pakhtunkhwa at 1.6. Remittances play a significant role in raising rural incomes especially in Punjab and Khyber Pakhtunkhwa.


This chapter presents an analysis of the pattern and structure of employment in rural areas of Pakistan. As per estimates based on the Labour Force Survey the magnitude of the labour force in Pakistan has increased from 38.5 million to 50.8 million during 1999-00 to 2010-11 with an annual average growth of 3.1 percent. The majority of Pakistan's labour force (35 million or 68 percent) works in rural areas. Labour force participation rate in rural areas is 57 percent with high male-female disparity. Participation rate for females is only 31 percent as compared 84 percent for males. A significant feature of the labour force in rural areas is the prevalence of unpaid family contributors who work without pay in cash or in kind on an enterprise operated by the member(s) of their households or by other related persons. Unpaid family helpers constitute over 10 percent of the total labour force in rural areas. In addition stark gender differentials in favour of males are also evident.

For instance in rural Sindh and Balochistan more than 90 percent of employed females were unpaid family helpers (as compared to 27 percent males).

The analysis of rural employment indicates that rural economies are generally mixed where rural populations earn their living from interdependent agricultural and non-agricultural activities. Rural labour markets largely comprise of unskilled labour with little formal education or training. The majority of the rural population (both males and females) derive their earnings from agriculture which is subject to risks of weather and price volatility that tend to affect the overall demand for labour. These fluctuations in labour demand and labour productivity throughout the agricultural cycle cause seasonal migration and seasonal employment patterns persistent underemployment prevalence of casual over permanent employment. In the non-agriculture sector people largely work in the informal sector and are usually less educated. Consequently they are less paid than those employed in the formal sector. At the same time they are confronted with unpaid work

underemployment and seasonal employment that tend to create huge fluctuations in employment particularly among females. The provision of decent and productive employment in rural areas remains a challenge due to prevailing deficiencies including low pay poor-quality jobs that are unrecognised and inadequate social protection. It is argued that public- private partnership can play an instrumental role not only in generating employment opportunities but also in accelerating economic growth.


Access to education is generally gauged with reference to the gross and net enrolment rates based on the relevant age group. According to estimates based on Pakistan Social Living Standard Measurement Survey about 36 percent (10 million) children of the primary age group (5-9 years) were out of school in the year 2010-11. The situation at the secondary level of education is even worse. The out-of-school incidence of primary age children is more prominent in the case of girls (42 percent) as compared to boys (31 percent). There are both supply-side and demand-side factors inhibiting parents to send their children to schools. The supply-side issues include availability of school in vicinity availability of teachers quality of teaching and infrastructure. The demand-side factors mainly include the cost of education and children helping parents in their work.

The results show significant differences in respondents' opinions among provinces. For instance education is considered costly only by 7 and 6 percent of respondents in Sindh and Balochistan whereas the corresponding percentages are 17 and 16 for Punjab and Khyber Pakhtunkhwa. Overall about 26 percent children were out of school due to economic reasons while about 32 percent girls were not attending schools due to parents' refusal to send them to schools. The analysis also indicates a strong negative correlation between the level of enrolment and incidence of poverty. A multivariate analysis is also carried out by estimating logistic regression function for school participation of 5-14 age cohort children. An important finding of this analysis is the significant role of female headed households in the decision to send children to school. Similarly the education level of the spouse as opposed to the head of household is more effective in influencing the decision to enroll.


The state of the health sector in Pakistan is characterised by poor health indicators low level of public spending and ineffective delivery of service provision. The country lags behind in all important indicators when compared to other countries in South Asia and some other regional countries. Life expectancy at birth in Pakistan is estimated to be 65.7 which is the lowest among the countries in comparison. At the same time infant mortality (59) and mortality under 5 years of age (72) are the highest. Maternal mortality rate is 260 per 100000 which is again highest in the region. Prevalence of communicable diseases is also high which accounts for about half the deaths in the country. In 2012 the incidence of tuberculosis (TB) in Pakistan is estimated to be 231 cases per thousand of population per year which is the highest in South Asia and the third highest in Asia. Similarly malaria remains a major public health hazard in the country and its incidence has risen over the last decade.

Public spending on health is very low and it has declined (in terms of percent of GDP) from 0.72 in 2000-01 to 0.35 in 2012-13.

The situation of rural areas is particularly poor. Large disparities exist among urban and rural areas in terms of health outcome indicators such as malnutrition infant mortality maternal mortality and immunisation. Geographic coverage and accessibility of public health services in rural areas is also very poor which has serious implications for people's health. Federal and provincial governments have made attempts to introduce alternate models of service delivery in the form of public-private partnerships that have achieved some success. Moreover vertical programmes of the federal government have also played an important role in supplementing the efforts of the provincial governments. However the dismal situation of health indicators demands that a more concerted effort needs be made possibly in every domain of the health sector.


This chapter presents latest estimates of poverty incidence multidimensional poverty multiple deprivation and income inequality based on the data of the Household Income and Expenditure Survey 2010-11. It is estimated that about 39 percent of the rural population of Pakistan was poor in year 2011. The incidence of rural poverty is the lowest in Punjab and highest in Balochistan. The magnitude of rural poverty is almost equal in Sindh and Khyber Pakhtunkhwa. The trend in rural poverty appears to be negatively correlated with growth in agriculture GDP. Analysis of socio-economic correlates of poverty indicates that family size and dependency ratio are important determinants of rural poverty while female headship of households is also positively correlated with poverty. The analysis clearly demonstrates that education of the family head directly or indirectly influences poverty levels. Moreover ownership of land livestock and non-residential property are all negatively correlated with poverty incidence.

The analysis of multi-dimensional poverty covers non-income variables such as literacy and schooling housing and ownership of physical assets. The estimates show that the incidence of multi- dimensional poverty in rural Pakistan was 44 percent in the year 2010-11. As expected highest incidence (75 percent) is observed in Balochistan followed by Sindh (57 percent). Income inequality in rural Pakistan is high as measured through the Gini Coefficient. In 2010-11 the value of the coefficient is estimated to be 0.37 which has increased from 0.35 in 2004-05. Punjab has the most unequal distribution of rural income followed by Khyber Pakhtunkhwa. Interestingly Balochistan the province with the lowest income level in the country has comparatively the most equal income distribution.


There is no clearly articulated social protection framework in Pakistan. Various social security schemes and cash assistance programmes are developed largely as a series of ad-hoc responses to problems raised by particular circumstances or recommended by international donor agencies. The Asian Development Bank (ADB) has developed a Social Protection Index (SPI) for Asian countries on which Pakistan stands at the penultimate position with a value of 0.07 just above Papua New Guinea.

The estimates of the coverage of public transfers and the extent of private philanthropy reveal that only 1.2 percent households are receiving social assistance from public and private sources. Although the rural share is relatively large (0.4 urban and 1.6 rural) a minute percentage reveals extremely trivial access of poor households to the social assistance intervention. All existing social security schemes are in the formal sector of the economy and designed for the employed labour force and retirees. These schemes generally provide benefits regarding contingencies of sickness invalidity maternity old age and work related injury. A major shortcoming of these schemes is that a sizable majority of workers remain uncovered through these programmes. The uncovered segment include workers from the agriculture sector from the informal sector and those in the formal sector who are either employed temporarily through contractors or working in establishments with less than ten workers.

The agriculture sector which constitutes about 61 percent of the labour force is not only excluded from the social security net but is virtually exempt from existing laws pertaining to the protection of workers in terms of working conditions conditions of employment health and safety at workplace. Thus the rural poor who comprise the majority of the poor population are not entitled to protection against various risks through social security instruments. The phenomenon clearly indicates a serious flaw in the design of social security schemes and necessitates developing special schemes for the rural poor like social insurance old age benefits and agriculture insurance along with risk management and disaster risk reduction measures.


Rural areas are not only engines of economic growth their populace is also the custodian of natural resources such as water bodies forests and other biodiversity. Investment in rural development minimises haphazard rural to urban migration by providing opportunities for people to live and work in their villages with some degree of satisfaction. However over sixty years of battering natural resources have brought the country to a point where drinking water is a scarce commodity and ground water has depleted to frighteningly low levels. The forest cover is one of the lowest in the world and soil and coastal areas have been eroded exposing them to devastating impacts of natural disasters. The Environmental Performance Index (EPI) ranks 163 countries on 25 indicators that cover ecosystem productivity and environmental public health. Pakistan's performance is relatively good or satisfactory in some indicators such as greenhouse gas emissions per capita (including land use emissions)

CO2 emission per electricity generation and marine protection. On the other hand the country ranks poorly with regard to most of the indicators related to water pollution forestation agricultural water intensity and pesticide protection.

Water and land degradation are among the most important issues concerning sustainable development in Pakistan. Water availability on a per capita basis has been declining in the country at an alarming rate " from about 5000 cubic metres per capita in 1951 to about 1100 cubic metres at present. Multiple factors are contributing to stress on water resources including rapid urbanisation increased industrial activity and dependence of the agricultural sector on chemicals and fertilizers. As far as land degradation is concerned 70 percent of Pakistan's total area is arid or semi arid; and therefore highly vulnerable to desertification. Pakistan's agricultural production is least sustainable in South Asia with 80 percent of its crop land being irrigated but nearly half of this is water logged and 14 percent is saline. A five-point process is recommended for sustainable development: halt degradation reverse losses regenerate grow sustainably (adopt sustainable agricultural practices)

and inclusively and adopt green policies. The inclusiveness of sustainable growth requires that poor marginalised and remotely situated groups must be particularly catered to. For sustainable growth to be implemented environmental issues must be thoroughly integrated within economic policies and institutional reforms.


Pakistan spends a very low share of its GDP on the social sectors. Since the responsibility of social service delivery lies mainly with provincial governments one explanation for the low level of spending was the weak fiscal position of provinces due to their low share in divisible pool taxes. This situation has been rectified by the 7th National Finance Commission (NFC) Award of 2010 that substantially enhanced the share of provinces in the divisible pool of taxes. It provided fiscal space to the provinces to focus more on social sectors particularly after the 18th Amendment to the Constitution that further enhanced the responsibility of provincial government to deliver social services.

The analysis of urban-rural distribution of public spending on education reveals that a sizeable amount of public resources is diverted to social services particularly towards education since 2004-05. The focus of the government in term of expenditure has shifted towards rural areas. Within the education sector the focus was on secondary and primary education which experienced a very healthy growth in public expenditure during the post-NFC period. However this increase in public spending did not correspond with an increase in enrolment both in rural and urban areas which resulted in a sharp increase in per unit cost of provision of primary and secondary education. Moreover there are wide disparities in public spending on education across provinces.

The analysis of the health sector indicates that public expenditure on curative health grew by 30 percent during the pre-NFC period while the pace of growth declined to 21 percent during the post-NFC period. The major beneficiary (of more than two-thirds) of public expenditures on curative health was the rural population. The government spent Rs612 per person per year on the urban population and Rs780 per person per year on the rural population in 2012-13. However an alarming finding is the greater focus of the government towards curative health at the cost of preventive health despite the resurgence of polio the incidence of chicken pox and dengue. Public spending on preventive health declined in real terms by more than 5 percent per year during the post-NFC period which has disproportionately affected the rural population.
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Title Annotation:urban-rural differences
Publication:Annual Review Social Development in Pakistan
Article Type:Report
Geographic Code:9PAKI
Date:Dec 31, 2013
Previous Article:Emerging Issues from the 18th Amendment.
Next Article:Views of a Leading Social Sector Personality.

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