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Employment In Rural Areas.

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Rural employment in developing countries like Pakistan bears significant importance primarily on two counts. First rural areas accommodate over 65 percent of total population of whom the majority are poor; second employment in rural areas largely comprises small- sized traditional and survival-type economic activities in both agricultural and non-agricultural sectors. Therefore rural employment policies besides addressing the needs have to be precise reflecting both local characteristics and future potential. Information about economically active population pattern of employment and unemployment is fundamental for formulating economic and development policies for rural areas. It not only provides indicators of labour supply and demand but also provides information about the manner and extent to which the available human resources are utilised.

Further this information is crucial for designing government programmes that devise employment creation human resource development and poverty reduction.

This chapter presents an analysis on the pattern and structure of employment in rural areas of Pakistan. It extracts data from the Labour Force Survey (LFS) that is carried out periodically by the Pakistan Bureau of Statistics (PBS). The analysis covers the period from 1999-00 to 2010- 11 which is divided into two sub-periods almost corresponding to the political regimes: 1999-00 to 2006-07 the Musharraf period and 2006- 07 to 2010-11 the PPP government period1.

Table 3.1 Labour Force (15 Years of Age and Over) by Area - Pakistan and Provinces

###(%)

###Pakistan###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan

###Rural###Urban###Rural###Urban###Rural###Urban###Rural###Urban###Rural###Urban

1999-00###70.0###30.0###71.5###28.5###54.3###45.7###83.9###16.1###84.4###15.6

2002-03###67.3###32.7###70.2###29.8###49.0###51.0###83.3###16.7###79.8###20.2

2006-07###68.2###31.8###70.9###29.1###51.9###48.1###82.9###17.1###79.4###20.6

2010-11###68.1###31.9###70.7###29.3###52.6###47.4###82.7###17.3###77.0###23.0

MAGNITUDE AND TREND OF LABOUR FORCE

The labour force in the chapter is defined as population comprising of all persons 15 years of age and above who fulfil the requirement for inclusion among employed or unemployed" which is in line with the definition of the labour force recommended by the International Labour Organisation (ILO). In Pakistan total labour force (LF) aged 15 years and above constitutes 50.8 million in 2010-11 as shown in Chart 3.1. During 1999-00 to 2010-11 the magnitude of the labour force in Pakistan increased from 38.5 million to 50.8 million (an increase of 12.34 million) with an annual average growth of 3.1 percent.

The majority of Pakistan's labour force works in rural areas (Table 3.1). In 2010-11 shares of rural and urban labour force were 68 percent and 32 percent respectively. However these shares differ noticeably among the provinces the highest share of rural LF is observed in Khyber Pakhtunkhwa (83 percent) while the lowest in Sindh (53 percent). Overall the share of rural LF has slightly declined (from 70 to 68 percent) during the past two decades.

Chart 3.2 indicates that total labour force grew at an average rate of 3.1 percent per annum during 1999-2007 and 1.6 percent during 2007-11. During the first period growth in urban labour force remained substantially higher than its rural counterpart (4 percent compared to 2.7 percent) while it remained almost the same in the second period. The growth in labour force also corresponds to the rates GDP growth in the respective periods.

Table 3.2 reports the magnitude of rural labour force and its distribution by province. In 2010-11 63 percent of the rural labour force belonged to the province of Punjab 18 percent to Sindh

14 percent to Khyber Pakhtunkhwa and 4 percent to Balochistan. The trend in the provincial shares indicates that the share of Punjab declined from 67 to 63 percent during 1999-2011 while that of Sindh increased from 15 to 18 percent. The shares of the other two provinces remained almost stagnant.

Table 3.2 Rural Labour Force in Pakistan and Provincial Shares

###1999-00###2002-03###2006-07 2010-11

(Million)###27###29###29###35

###Provincial Shares in Total Rural LF###(%)

###67###64###64###63

###15###17###18###18

Khyber Pakhtunkhwa###14###14###14###14

Balochistan###4###5###5###4

###100###100###100###100

LABOUR FORCE PARTICIPATION RATES

Labour Force Participation rate (LFP) which is the ratio of labour force (employed and unemployed) to the working age population is a basic indicator of the currently active population or labour force supply. Chart 3.3 shows that over 57 percent of the total working age population constitutes the labour force or economically active population in rural areas. Gender-wise picture indicates that LFP rate is 84 percent for males and 31 percent for females. An impressive trend in observed in the female LFP rate which increased from 19 to 31 percent during 1999 to 2011.

Province-wise LFP rates are presented in Table 3.3. It appears that LFP rate has been highest in Punjab followed by Sindh and Balochistan while it was lowest in Khyber Pakhtunkhwa during 1999-00 to 2006-07. It remained higher than the national average only in Punjab suggesting

Chart 3.3 Labour Force Participation Rate in Rural Areas of Pakistan by Gender (%)

Table 3.3 Labour Force Participation Rate in Rural Areas of

###Province by Gender (%)

###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan

###Overall

###1999-00###55###51###47###47

###2002-03###56###50###44###50

###2006-07###60###55###44###55

###2010-11###60###61###47###53

###Male

###1999-00###87###87###82###85

###2002-03###86###88###80###86

###2006-07###85###89###79###87

###2010-11###83###90###78###88

###Female

###1999-00###23###12###14###5

###2002-03###27###8###10###8

###2006-07###35###17###11###18

###2010-11###37###28###19###11

that employment opportunities have been greater in the provinces of Punjab followed by Sindh as compared to Khyber Pakhtunkhwa and Balochistan. However during the period from 2006-07 to 2010-11 significant improvement is witnessed in Sindh and Khyber Pakhtunkhwa where LFP rate increased by 6 and 3 percentage points respectively. On the other hand participation rates in Punjab remained stagnant and declined in Balochistan during the same period. Substantial disparity exists between activity rates for males and females. Currently the gender gap in LFP rate is the lowest in Punjab followed by Khyber Pakhtunkhwa. However the gap has reduced over the years since female participation in labour force has increased in all the provinces barring Balochistan where it actually declined from 18 percent in 2006-07 to 11 percent in 2010-11. These results seem to suggest

that the difference in participation rates among provinces could be due to the characteristics of respective local labour markets and economic envir onment while the reasons for lower female rates seem to indicate perhaps societal and cultural norms as well as the availability of fewer job opportunities.

UNEMPLOYMENT RATE

The unemployment rate measures the share of unemployed population in the total labour force which is estimated to be 4.5 percent in 2010-11. It declined substantially during 2002-03 and 2006-07 (from 6.8 to 4.5 percent) but remained unchanged afterwards. The decline was largely due to downward trend in unemployment rates of females. Variations in unemployment rates are generally a function of both demand characteristics (such as sectoral structure and competitiveness) and supply side factors and are thus linked to the performance of overall economic growth. For instance GDP growth in agriculture was much higher during 2003-04 to 2006-07 as compared to the preceding period

Table 3.4 Unemployment Rate in Rural Areas by Province and Gender

###(%)

###Pakistan###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan

Overall

1999-00###6.3###6.2###2.1###11.7###5.7

2002-03###6.8###6.3###3.8###12.7###6.2

2006-07###4.5###4.3###2.3###9.2###2.2

2010-11###4.5###4.7###1.9###7.6###2.3

Male

1999-00###5.0###5.3###1.3###7.9###4.4

2002-03###5.5###5.2###2.6###10.2###4.7

2006-07###3.7###3.8###1.5###7.0###1.1

2010-11###3.8###4.1###1.8###5.6###2.1

Female

1999-00###12.2###9.5###7.9###31.1###30.5

2002-03###12.4###9.8###17.4###30.6###23.9

2006-07###7.3###5.6###7.4###23.4###9.0

2010-11###6.5###6.1###2.3###14.5###5.4

1999-00 to 2002-03). This may have contributed to lowering the unemployment rates due to increase in farm as well as non-farm activities.

Province-wise comparison indicates that unemployment rate has always been highest in Khyber Pakhtunkhwa suggesting the availability of fewer employment opportunities in the province to absorb the existing labour force.

According to the standard definition the unemployed' labour force includes all persons fifteen years of age and above who during the reference period were: i) Without work' i.e. were not in paid employment or self-employment; ii) Currently available for work' i.e. were available for paid employment or self-employment; iii) Seeking work' i.e. had taken specific steps in a specified recent period to seek paid employment or self- employment; and iv) Not currently available' for the reasons like illness will take a job within a month temporarily laid off.

This way of collecting statistics ignores hidden or covered unemployment like the discouraged workers who have given up looking for work. They are not counted among the unemployed even though they are not employed. Moreover it also does not include persons who are underemployed a situation where workers are overqualified for their jobs or work fewer hours or part-time even if they would like to work full- time. It is argued that the actual unemployment rate would be higher if these workers are accounted for. In addition the unpaid family helpers are considered employed and are thus included in the labour force. This in turn lowers unemployment rate and underestimates the true extent of unemployment. The unemployment rate by excluding unpaid family helpers and the extent of underemployment are computed in the subsequent sections.

UNPAID FAMILY CONTRIBUTORS

A significant feature of the labour force in Pakistan particularly in the 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. This section presents the magnitude of these workers and their incidence in each province as well as the type of economic activities they are engaged with.

The number of unpaid family contributors estimated for 2010-11 in rural Pakistan is 10.4 million which has increased tremendously during

Table 3.5 Unpaid family contributors (15 years of age and above)

###in Rural Areas of Pakistan and Provincial Shares

###Unpaid LF in###Share (%)

###Rural Pakistan###Punjab###Sindh###Khyber###Balochistan###Total

###Years###(Million)###Pakhtunkhwa

###1999-00###6.0###72###15###11###3###100

###2002-03###6.8###69###17###11###4###100

###2006-07###9.7###65###20###9###6###100

###2010-11###10.4###63###24###9###5###100

Table 3.6###Share of Unpaid Family Contributors in Employed Labour Force

###in Rural Areas by Gender (percent)

###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan

###Both###Male###Female###Both###Male###Female###Both###Male###Female###Both###Male###Female

1999-00###25###19###53###22###15###88###20###13###69###16###13###87

2002-03###27###18###56###25###21###81###21###17###58###20###17###65

2006-07###32###18###65###34###26###87###22###16###67###36###27###91

2010-11###31###16###64###40###27###92###21###11###63###32###27###90

the last two decades (being at 6 million in 1999-00). The increase in the number of unpaid family contributors was higher than the increase in total labour force in rural areas. Consequently the share of the former in the rural labour force increased from 22 to 30 percent during the same period. Table 3.5 also gives the distribution of these workers among the provinces. Significant variations in the provincial shares are evident. In the case of Punjab the share of unpaid family contributors has declined over the years while an upward trend is observed in Sindh.

The extent of unpaid family work is more prominent in rural Sindh where it constituted 40 percent of the labour force in 2010-11 (Table 3.6) while shares of the same segment remained at 31 21 and 32 percent in Punjab Khyber Pakhtunkhwa and Balochistan respectively. Moreover in all the provinces share of unpaid family contributors has increased since 1999-00.

Stark gender differentials in favour of males are also evident particularly in Sindh and Balochistan where more than 90 percent of employed females were unpaid family helpers (as compared to 27 percent males) in 2010-11. This suggests that the employment constraints of rural areas affect women disproportionately and compound the societal limitations on female participation outside their family. The same shares for females are also above 60 percent in the other two provinces.

The unpaid family contributors both male and female usually work in the agriculture sector. Males under this category are also engaged in wholesale/retail trade by working at places like shops businesses offices industry and restaurants/hotels. They carry out functions such as market oriented skilled (agriculture or fishery) workers subsistence (agriculture or fishery) workers and personal or protective services workers. Females also work as home based workers particularly in Khyber Pakhtunkhwa and Punjab. They perform functions such as market oriented skilled (agriculture or fishery) workers or subsistence (agriculture or fishery) workers.

LABOUR FORCE WITHOUT UNPAID FAMILY CONTRIBUTORS

Inclusion of unpaid family contributors in the employed labour force results in exaggerated estimates of various indicators which do not provide a true picture of the status of labour force and employment. As shown in Table 3.4 the size of employed rural labour force reduces

significantly from 33.1 to 22.6 million with the exclusion of unpaid family contributors. The gender composition of employment also changes drastically as the share of females declines from 26.7 to 12.2 percent. There is also sizable decline in overall LFP rate from 57 to 40 percent and it is more prominent in the case of females. Similarly unemployment rates become high in general by excluding unpaid family contributors. Particularly the increase is massive in the case of females i.e. from 6.5 to 18.1 percent. It is therefore evident that commonly used indicators present a distorted picture of the country's labour force.

EXTENT OF UNDER-EMPLOYMENT

Underemployment is another way of disguising unemployment and is a pervasive problem in Pakistan. There are three different forms of underemployment. First if someone with excellent job qualifications works at a position that requires lesser qualifications; second if someone

Table 3.7###Persons Working Less than 35 Hours/Week

###(Percentage)

###Province###Both###Male###Female

Share of Underemployed in Total Employment (%)

Pakistan###18###7###11

Punjab###19###6###13

Sindh###13###7###7

Khyber Pakhtunkhwa###23###12###11

Balochistan###5###3###2

Extent of Underemployed (Index)

Pakistan###33###31###34

Punjab###33###31###33

Sindh###32###27###38

Khyber Pakhtunkhwa###36###36###37

Balochistan###26###27###24

prefers to have full time work but settles only for part time work; third if there is overstaffing where employees are not fully utilised. The presence of persistent underemployment in a country does not clearly represent its profile of employment and unemployment. This is due to the reason that unemployment does not include part-time workers looking for full-time jobs as they are considered employed. Also it does not incorporate workers who are underpaid as compared to their qualifications. Underemployment does not allow people to work at their full potential and leads to dissatisfaction with job or employer. Similarly overstaffing requires paying people who are unproductive; this practice eventually brings a decline in national income.

According to LFS underemployment comprises all employed persons who work less than 35 hours (a specified cut-off) per week and are available for alternative or additional work during the reference period. As shown in Table 3.7 about 18 percent of the total employed persons in Pakistan are underemployed since they work less than 35 hours per week. Of these 6.5 percent are males and 11 percent are females. Among the provinces the highest proportion of underemployed is observed in Khyber Pakhtunkhwa followed by Punjab.

In order to explore the severity of underemployment a weighted index was constructed (Table 3.7). The value of this index ranges from zero to 100 where zero means no underemployment and 100 means complete underemployment. According to the estimated index if the number of hours that all underemployed persons have worked is adjusted to 35 hours per person 33 percent of them would become unemployed. Gender differentials also exist but they are not sizable except for Sindh where the value of index for males and females is 27 and 38 respectively.

CHARACTERISTICS OF EMPLOYED LABOUR FORCE

Sectoral distribution of employment in rural areas excluding the unpaid family contributors is presented in Table 3.8. The agriculture sector constituting 45 percent of the employment in 2010-11 is the largest

Table 3.8###Employed Rural Labour Force by Section

###Years###Total###Agriculture###Industry###Services

###Share Excluding unpaid family contributors###(%)

###1999-00###100###57###16###27

###2002-03###100###48###20###32

###2006-07###100###44###23###33

###2010-11###100###45###23###32

###ACGR Including unpaid family contributors (%)

###1999-2011###2.3###1.5###4.7###2.7

###ACGR Excluding unpaid family contributors (%)

###1999-2011###1.3###-0.7###4.7###2.7

segment of economic activity and employment. It includes crop farming livestock and their products fish farming and forestry. Besides this the non-agriculture economic activities also play a significant role in income and employment generation in rural areas. Among them the share of services and industry is 32 percent and 23 percent respectively. The industrial sector includes mining manufacturing construction and electricity and gas while the services sector includes wholesale and retail trade transportation/storage and communication financing/insurance/ real estate and community/social services.

The employment pattern in rural areas across Pakistan has undergone substantial change during 1999-11 the sectoral shift being the most obvious. There has been a decline in the relative share of the agriculture sector while industrial and services sectors have emerged as essential areas of income generation for rural households.

Table 3.9###Employed Rural Labour Force by Status of Employment

###(percent)

###Both###Male###Female

Employment Status###1999-00###2010-11###1999-00###2010-11###1999-00###2010-11

Regular paid employee

(fixed wage)###16###18###16###19###9###13

Casual paid employee###12###16###12###17###16###9

Paid worker by piece rate###10###9###7###7###36###26

Employer###0###1###0###1###0###0

Own account worker###23###27###23###24###30###45

Owner cultivator###27###19###29###21###7###6

Share cropper###10###8###10###9###1###1

Contract cultivator###2###2###3###2###1###0.2

Other###1###1###1###0.4###0.1###1

Total###100###100###100###100###100###100

Table 3.9 shows the composition of employed labour force in rural areas according to the status of employment. According to the estimates for 2010-11 the largest proportion of labour force (27 percent) is employed in the category of own account worker' followed by own cultivators and regular paid employees. A significant segment of labour force (16 percent) also works as casual paid employees. As compared to 1999-00 there appears to be a shift from own cultivation to paid employment. The share of own cultivation' has declined considerably while the employment share of own account worker' and paid employees has increased.

Employment of females is more concentrated in the category of own account worker' which constituted 45 percent of the female employed labour force in 2010-11. Noticeably as compared to 1999-00 the share of this category has substantially increased while that of paid work by piece rate' and casual paid employee' declined.

Table 3.10###Employed Rural Labour Force by Level of Education

###(percent)

###Both###Male###Female

Employment Level###1999-00###2010-11###1999-00###2010-11###1999-00###2010-11

Illiterate###61###46###59###42###87###71

Below Primary###3###5###3###5###1###3

Primary###23###30###25###32###5###12

Matric###8###11###9###12###5###6

Intermediate###3###4###3###4###2###3

Graduate###1###3###2###3###1###2

Post Graduate###1###1###1###1###0.1###2.2

Professional###0.3###0.3###0.3###0.3###0.2###0.2

Total###100###100###100###100###100###100

Regarding the level of education Table 3.10 shows that the share of literate population in the employed labour force has increased over time in rural areas but 46 percent of them were still illiterate in 2010-11. Illiteracy is much higher among females (71 percent) as compared to males (59 percent). The proportion of employed labour force with primary and matric level education has increased over time. The proportion of graduate post graduate and professional levels is very low. In short the trends in the education levels of labour force correspond to the general state of education and literacy in Pakistan.

GENDER SEGREGATION OF LABOUR FORCE

Table 3.11 presents gender distribution of the labour force for three major sectors i.e. agriculture industry and services. It is evident that women are more concentrated in agriculture with a share of 38 percent. Over the years the share of women's employment has shown an upward trend in all the sectors but the increase is more prominent in agriculture. Rapid change in the gender composition of the labour force in agriculture indicates relatively more segregation of tasks in this sector which is manifested in the nature of economic activities in rural areas.

Table 3.11 Sectoral Employment by Gender

###Share (percent)

###Punjab###Sindh###Khyber Pakhtunkhwa

###Both###Male###Female###Both###Male###Female###Both###Male###Female

###1999-00###100###78###22###100###94###7###100###94###6

###2002-03###100###76###24###100###88###12###100###93###7

###2006-07###100###67###33###100###87###13###100###92###8

###2010-11###100###62###38###100###87###13###100###92###8

In Punjab and Sindh economic activities in rural areas can be divided into four groups namely: only-agriculture agriculture-cum- livestock (mixed) only-livestock and off-farm activities (employed/self employed). Among these groups 60 percent of the rural economy is based on mixed agriculture and livestock group. In Punjab only- agriculture and only-livestock groups constitute 13 percent and 7 percent respectively while the off-farm groups constitute 20 percent. In Sindh 32 percent are associated with only-agriculture and the remaining work as labour (UNDP 2007-08).

Since livestock is well integrated into the family economy and it efficiently utilises family labour women's engagement with this sector has been growing over time (nearly 60 percent). Women take care of the animals and are involved in almost all aspects of animal health maintenance rearing and production. In crop farming (agriculture) women are mostly involved in agricultural support activities like weeding grass cutting cotton picking stick collection and separation of seeds from fibre and other related tasks. Moreover women's involvement is gradually increasing in such activities that were previously carried out by men for instance land preparation and work in crop production. In contrast men dominate in the work that involves use of machinery supervision and management.

SEASONAL EMPLOYMENT

Employment in the crop sector varies due to seasonality in crop pattern i.e. it fluctuates in accordance with the crop sowing and harvesting periods. As a result many workers are seasonal casual or temporary. They get employment during the sowing and harvesting periods and often migrate during the off-season to other avenues of employment such as construction and other similar occupations. However some agriculture workers are employed on permanent basis.

Table 3.12 Employment in Agriculture Sector to Population Ratio

###(aged 15+ years) in Rural Areas (percent)

Quarter###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan###Pakistan

###Both

1st Quarter###32.3###48.4###18.1###34.2###32.8

2nd Quarter###36.0###46.1###19.4###32.5###34.9

3rd Quarter###32.5###42.9###18.1###32.8###31.9

4th Quarter###33.8###38.3###18.1###33.1###31.9

Table 3.12 shows quarterly variation in employment-to-population ratio in the agriculture sector. Overall the ratio is highest in Q2 (34.9 percent) and the lowest in Q4 (31.9 percent). The trend in this ratio varies among the provinces. In Punjab and Khyber Pakhtunkhwa it is highest in Q2 while in Sindh and Balochistan it is highest in Q1. Comparing the highest and lowest shares the maximum difference of 10 percentage points is found in Sindh indicating greater incidence of seasonality. In contrast incidence of seasonality is lower in the provinces of Khyber Pakhtunkhwa and Balochistan.

The trend in these shares is largely reflective of the crop pattern in each of the provinces. In Pakistan there are two major crop seasons namely the Kharif and Rabi. For the Kharif the sowing season is April to June and harvesting season is October to December. For the Rabi sowing season is October to December and harvesting season is April to May. Major Kharif crops include rice sugarcane cotton and maize; and major Rabi crops include wheat lentils tobacco and barley. Though sowing and harvesting of major crops mainly occur in Q2 and Q4 they differ among provinces as shown in Chart 3.5.

Since Punjab produces all major crops with a leading share in production the employment to population ratio in agriculture is roughly the same in each quarter except for Q2. In this quarter the employment share is relatively high as this is also a season of cotton picking and rice threshing and husking the activities that engage more workers particularly females. In addition Punjab produces over 78 percent of the total mango and guava production and 96 percent of citrus (summer and winter season fruits respectively) which is another reason for lower fluctuations in employment share. In Sindh harvesting of crops largely takes place in Q1 and Q2. Moreover the production of dates holds a significant position in Sindh. The activities related to dates harvest start in July and last till the end of August. As a result employment share in Sindh is high in these two quarters. Khyber Pakhtunkhwa and Balochistan largely produce fruits and vegetables which are planted and harvested round the year.

Further in these provinces livestock constitutes a major part of agriculture where employment does not change seasonally.

EMPLOYMENT IN INFORMAL SECTOR

The informal employment refers to economic activities that are partially or fully outside government regulation and taxation. It consists of jobs that commonly require little capital and few skills to set up a business. Many of these jobs can be home-based since they are labour-intensive and small-scale.

Table 3.13 portrays composition of employment in rural areas of Pakistan for the period 1999-00 to 2010-11. The employment is divided into three categories. Agriculture includes both types of employment i.e. formal and informal. Aggregate employment in industry and services is divided into formal and informal sectors. The agriculture sector is obviously the major employer in rural areas though its share in total rural employment has declined from 65 percent in 1999-00 to 60 percent in 2010-11. The informal sector (non-agriculture) appears to have sizable employment with a share of 31 percent in total rural employment. Further its relative size has enlarged as compared to the estimates for the year 1999-00. Within the non-agriculture sector the formal sector consists of about one-fourth of the employment in 2010-11 whereas its share was one-third in 1999-00.

Table 3.13 Employment in Informal Sector excluding Agriculture Sector

###(Percent)

###Industry and Services

###Years###Agriculture###Formal###Information

###1999-00###65###11###23

###2002-03###59###12###29

###2006-07###58###11###30

###2010-11###60###10###31

The composition of rural informal employment with regard to various economic activities is presented in Table 3.14. There appears to be strong gender segregation of work in the informal labour market. In many economic activities females are almost non-existent while the same is true for males in some other activities. For example employment of males is concentrated in retail trade construction and transport. These three categories constitute 65 percent of the employed males. On the other hand 83 percent of the females are employed in textile and leather industries personal and household services retail trade and education. Retail trade is the only activity that has a sizable proportion of both sexes.

Generally the work force is attracted to informal economic activities as they can increase their take-home earnings or reduce their costs by evading taxation. At the same time informal employment can provide support to workers who do not find a job in the formal sector. Further it also serves as a macroeconomic cushion for formal sector employment during low growth periods when employment in the formal sector tends to shrink. In order to examine the employment effect of economic growth employment elasticity with respect to GDP is computed for each sector. Employment elasticity measures the percentage change in employment induced by percentage change in GDP. Hence it attempts to capture the responsiveness of the labour market to changes in macroeconomic conditions (represented by GDP growth).

Table 3.14 Composition of Employment in the Rural Informal Sector

###by Industry Division (Percent)

###Male###Female

Retail trade###27###10

Construction###25###0

Transport and storage###13###0

Manufacture of food products and beverages###3###0

Sale maintenance and repair of motor vehicles###3###0

Wholesale trade and commission trade###3###0

Restaurants and hotels###3###0

Textile wearing apparel and leather industries###4###54

Personal and household services###2###12

Education###0###7

Social and related community services###4###2

Other manufacturing industries and handicrafts###2###6

Other###11###10

Total###100###100

Table 3.15 reports the employment elasticities computed for agriculture formal and informal sectors for the period 1999-00 to 2010-11 as well as for two sub-periods 1999-00 to 2006-07 and 2006-07 to 2010- 11. Considering the entire period the elasticity of employment is highest in the informal sector followed by the agriculture sector while being lowest in the formal sector. The magnitude and sign of elasticity indicates that aone percent increase in informal sector output (GDP) leads to more than one percent increase in informal employment whereas a one percent increase in agriculture output results in an increase of 0.7 percent in agriculture sector employment. However one percent increase in formal sector output brings less than 0.5 percent increase in formal employment. It further shows that compared to 1999-00 to 2006-07 employment elasticity in agriculture and informal sector increased during 2006-07 to 2010-11.

Table 3.15 Employment Elasticity with respect to GDP by Economic Sector

###Period###Agriculture###Formal###Informal###Total

1999-00 to 2006-07###0.48###0.63###1.01###0.57

2006-07 to 2010-11###0.68###-0.43###1.25###0.41

1999-00 to 2010-11###0.66###0.40###1.04###0.54

In contrast elasticity for the formal sector remained negative during the latter period. This indicates that the increase in growth did not translate into formal employment growth during 2006-07 to 2010-11. It can be implied that informal employment functioned as a cushion by absorbing workers displaced from formal employment during 2006-07 to 2010-11 when macroeconomic performance of the country was slowing down.

There exists an intuitive notion that growth in employment has significant impact on poverty reduction. However if growth in employment is greater or equal to growth in per capita income then the resulting increase in employment only redistributes poverty. This means that additional persons are engaged to produce the same unit of output. On the other hand if growth in employment is less than growth in per capita income it helps reducing poverty i.e. additional persons produce additional units of output.

Table 3.16 provides average growth rates of per capita income and employment for two sub-periods during 1999-00 to 2010-11. It shows that growth in employment remained higher than growth in per capita income in agriculture and informal sectors during both the sub-periods. This indicates that employment creation in these sectors did not contribute in reducing poverty. The situation worsened during the PPP regime (2006-07 to 2010-11) when the difference in growth increased for both the sectors. On the other hand growth in per capita income in the formal sector remained nearly equal to growth in employment during 1999-00 to 2006-07 whereas during 2006-07 to 2010-11 growth in employment remained negative and that of income positive. This implies that the economic condition of only those working in the formal sector improved. But as noted earlier this segment constituted only 10 percent of the employed labour force.

Table 3.16 Average Annual Growth in per Capita Income and Employment

###Per Capita Income (%)

###Period###Agriculture###Formal###Information

###1999-00 to 2006-07###0.74###5.00###2.48

###2006-07 to 2010-11###-0.40###1.26###0.79

###1999-00 to 2010-11###0.33###3.64###1.86

###Employment (%)

###1999-00 to 2006-07###1.58###5.07###4.86

###2006-07 to 2010-11###2.19###-1.06###3.35

###1999-00 to 2010-11###1.81###2.84###4.31

###Difference in Growth (employment per capita income) (%age points)

###1999-00 to 2006-07###0.84###0.07###2.38

###2006-07 to 2010-11###2.59###-2.32###2.56

###1999-00 to 2010-11###1.48###-0.8###2.45

HOME-BASED WORKERS

Home-based work constitutes a category of work within the informal or unorganised sector performed within homes or in the surrounding areas. In home-based work the activity must lead to remuneration therefore it does not include the unpaid housework done as a family responsibility. Moreover since it is an activity undertaken at a worker's home it also does not include paid domestic work (like washing cleaning child care etc.) performed at an employer's premises.

According to the LFS over 2.1 million persons aged 15 years and above were working as home-based workers in Pakistan in 2010-11. Of this 74 percent belonged to rural areas and 26 percent to urban areas. Gender-wise 68 percent of home-based workers in rural areas and 70 percent in urban areas were women. It is interesting to note that more than 80 percent of the home-based workers in rural areas both male and female belong to the province of Punjab (Chart 3.6). Only one percent of female home-based workers were from the rural areas of Sindh and Balochistan each in 2010-11.

Table 3.17 Home-based Workers (age 15+ years) by Employment Status in Rural Areas - 2010-11

###(%)

###Pakistan###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan

###Regular paid employee with fixed wage###2.7###2.1###10.5###4.6###0.0

###Casual paid employee###3.0###2.9###0.0###4.7###2.5

###Paid worker by piece rate###8.9###10.5###2.5###2.0###0.0

###Employer###0.6###0.2###1.0###3.5###0.0

###Own account worker###72.6###74.5###41.2###73.0###68.5

###Owner cultivator###10.2###7.9###41.4###11.1###23.3

###Share cropper###0.9###0.7###3.4###1.0###3.2

###Others###1.03###1.2###0.0###0.0###2.5

###Total###100###100.0###100.0###100.0###100.0

###Female

###Regular paid employee with fixed wage###1.5###1.5###4.7###0.8###0.0

###Paid worker by piece rate###16.7###18.5###5.4###5.2###4.8

###Own account worker###77.6###75.6###89.9###89.8###95.2

###Owner cultivator###2.3###2.1###0.0###3.5###0.0

###Others###1.9###2.2###0.0###0.6###0.0

###Total###100.0###100.0###100.0###100.0###100.0

Table 3.18 Home-based Workers (age 15+ years) by Industry in Rural Areas 2010-11

###(%)

###Pakistan###Punjab###Sindh###Khyber Pakhtunkhwa###Balochistan

###Agriculture hunting and forestry###56.0###59.2###62.2###25.0###60.9

###Manufacturing###21.4###21.5###2.0###28.1###30.0

###Food products and beverages###2.4###2.4###0.0###3.9###0.0

###Textiles###1.8###1.9###0.0###2.4###0.0

###Wearing apparel and dyeing###6.9###6.6###0.0###14.8###0.0

###Wood products of wood/cork###3.8###3.4###0.0###4.1###20.6

###Non-metallic mineral products###1.6###1.5###2.0###3.0###0.0

###Furniture###4.9###5.7###0.0###0.0###9.4

###Construction###3.3###1.6###3.5###17.6###0.0

###Retail trade except motor vehicles/ motorcycles###6.7###5.8###10.3###13.0###2.5

###Health and social work###2.0###1.8###0.0###4.8###0.0

###Others###10.6###10.0###22.0###11.5###6.5

###Total###100.0###100.0###100.0###100.0###100.0

###Agriculture hunting and forestry###45.8###49.1###3.5###35.2###3.8

###Manufacturing###46.9###43.4###91.8###62.1###96.3

###Textiles###7.2###7.3###51.2###0.9###14.7

###Wearing apparel and dyeing###36.1###32.3###21.3###58.0###41.8

###Wood products of wood/cork###1.7###1.1###19.3###2.8###27.4

###Furniture###1.9###2.1###0.0###0.0###4.7

###Education###1.7###1.8###4.7###0.9###0.0

###Other###5.6###6.3###0.0###2.2###7.5

###Total###100.0###100.0###100.0###100.0###100.0

Among males home-based work in rural areas of Pakistan largely lies in the category of own account worker (72.6 percent) followed by owner cultivator (10.2 percent) as depicted in Table 3.17. The situation however differs in provinces. For example except Sindh the majority of home-based workers in other provinces were own account workers. In Sindh an equal proportion of home-based workers perform activities as own account worker and owner cultivator. Moreover compared to other provinces in Punjab a notable proportion of home-based workers also work as paid workers by piece rate. On the other hand females in rural areas of Pakistan perform home-based activities primarily as own account workers (77.6 percent) followed by paid work at piece rate (16.7 percent). The situation is similar in all the provinces.

In rural areas home-based workers are primarily engaged in activities related to agriculture and manufacturing (Table 3.18). Of the total male home-based workers in rural areas of Pakistan 56 percent were associated with agriculture sector in occupations like subsistence agriculture and fishery workers. The other 21.4 percent were linked with the manufacturing sector as craft related workers. Since Punjab dominates in locating the home-based workers it reflects the overall picture of rural areas of Pakistan. In other provinces the situation is somewhat different. In Sindh a small proportion of males was associated with manufacturing activities and over 10 percent were also associated with retail trade. In Khyber Pakhtunkhwa the proportion of males engaged in agricultural activities was far below than that in other provinces. Instead they were also engaged in construction and retail trade.

In Khyber Pakhtunkhwa a relatively greater proportion of males work in activities related to manufacture of wearing apparel and dyeing while in Balochistan comparatively greater proportion of males are involved in manufacture of furniture and other wood and cork products. Other activities among males represent wholesale trade tanning and dressing of leather manufacture of luggage manufacture of machinery and equipment land transport and various business activities.

Among females of the total home based workers in rural areas of Pakistan over 45 percent perform activities related to both agriculture and manufacturing each. A similar picture is revealed in the province of Punjab. The activities carried out by female home-based workers in other provinces are rather different. For example over 90 percent of females undertake manufacturing activities linked to textiles wearing apparel wood and products of wood/cork as craft and related trade workers in Sindh and Balochistan. In Khyber Pakhtunkhwa over 60 percent of females carry out activities related to manufacturing particularly wearing apparel as home-based workers. Other activities of females include tanning and dressing of leather; manufacture of food products beverages luggage handicrafts rubber and plastics products paper and paper products non-metallic mineral products and activities related to health and social work.

CONCLUSION AND POLICY RECOMMENDATIONS

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 are largely comprised 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. A significant quantum of people also works as unpaid labour particularly among females. 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 is a challenge due to prevailing deficiencies including low pay poor-quality jobs that are unrecognised and provide inadequate social protection. The following initiatives of public-private partnership can play an instrumental role not only in generating employment opportunities but also in accelerating economic growth.

The role of the livestock sector in the rural economy has increased significantly over time. The share of livestock in agriculture has increased from 45 percent in 1999-00 to 55 percent in 2012-13. In this connection livestock development with reference to dairy products can serve not only in enhancing milk production and its export but also employment in rural areas. Dairy companies can expand their network of milk purchasing centres at the village level. Since these companies have full-time agronomists veterinary doctors and agricultural engineers public-private partnership initiatives can be set up in providing technical training related to breeding feeding preventive health of animals and marketing of products as well as veterinary expertise by collaborating with local NGOs.

In particular women who are a crucial part of the livestock sector and who work largely as unpaid labour can be given these trainings in order to bring them into the paid labour force which leads to enhancement in their productivity.

Although there are differences in the types of technologies and infrastructure used there exists diversity among sectors in generating employment. While the manufacturing sector has a tendency to generate employment at a higher rate the services sector has a lower capability for employment creation. The agricultural sector tends to have extremely low rates of employment generation except for low-productivity subsistence agriculture. Therefore rural employment policies need to support labour- intensive manufacturing sector by emphasising small-scale and cottage industries as they require capital on a much smaller scale and use less sophisticated technologies. It is equally necessary to encourage self-employment or home-economic activities. The analysis shows that in Pakistan home-based work largely prevails in Punjab; there is a need to promote it in other provinces as well.

Improving a business environment for such enterprises is fundamental for sustainable employment in rural areas. Centres for vocational training and entrepreneurship skills can be developed to provide services such as credit skill training marketing managerial advice and technical assistance in areas like stitching embroidery handicrafts food processing and so on. The rural employment guarantee scheme is another initiative to create demand-driven employment opportunities in rural areas. This scheme can be aimed at offering employment to capable persons per rural household per year on public works programme for a period of at least three months (particularly during off-seasons) at the prevailing minimum unskilled wage rate. Activities that can be covered under this scheme may include unskilled work like water conservation provision of irrigation systems flood control construction of roads manual earthmoving shifting soil and breaking rocks. This scheme can be implemented by district level government in collaboration with local non-government organisations and community based organisations. Such an initiative can help in boosting the rural economy and enhancing overall economic growth as well as deterring the rural poor from migrating to already crowded urban areas in search of employment.

At the same time it may also provide opportunities to females to enter the labour force by ensuring them a minimum amount of paid work. Such a programme therefore contributes not only in reducing poverty but also assists in addressing infrastructural environmental and social deficiencies within rural communities.

NOTES:

1. General Musharraf took over in 1999 and declared himself the Chief Executive of the country. He became President in 2001. General elections were held in 2002 when his allied party formed the government. In March 2008 Pakistan People's Party (PPP) formed the government after general elections. Subsequently General Musharraf resigned in August 2008.
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Publication:Annual Review Social Development in Pakistan
Article Type:Report
Geographic Code:9PAKI
Date:Dec 31, 2013
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