Unemployment in Pakistan: Poverty Profile Essay Example

deteriorated in the 1990s for a variety of reasons, including serious lapse in implementation of stabilization policies and structural reforms introduced in the late 1980s. Inflation rate during the first seven years of the 1990s averaged at 11. 4 percent, though a declining trend was observed thereafter. The food prices increased rapidly. Worker’s remittances have shown a consistent decline since the mid-1980s. Unemployment has increased and real wages also tend to fall.

All these factors have led to an increase in poverty in the 1990s. Pakistan’s performance in the social sectors has also been in general very poor. It lagged behind other countries of the region with the same level of per capita income. In order to accomplish rapid improvements in primary education, health, nutrition, rural water supply and sanitation, the Government of Pakistan launched the Social Action Program (SAP) in 1992-93. Whereas this study provides information on these indicators for two prides, 1992-93 and 1998-99, it would be also possible to assess the socio-economic impact of the SAP.

According to the 1998 census, two-thirds of the total population live in rural areas. There is also a large agro-ecologic diversity across the four provinces of the country, Punjab, Sindh, NWFP and Balochistan. The poverty profile of the country will not be useful for poverty reduction strategy, if it is not disaggregated according to rural/urban areas and provinces of the country. In this study, where possible, different indicators have been disaggregated according to rural/urban areas and provinces. Data on employment, education and health have further been classified by gender.

The next section presents the demographic situation of the country, particularly provincial share in the total population/households and proportion of

households headed by females. Section 3 deals with income and expenditure, including real per capita expenditure, poverty and sources of household income. Employment situation is discussed in section 4. Nutritional status, measured by per capita calorie intake and prevalence of malnutrition among children, is presented in section 5. Education is the subject matter of section 6, while health profile of the population is given in section 7.

Data and brief discussion on the access to safe drinking water and sanitation systems are presented in section 8, followed by a discussion on housing, assets in rural areas and access to services in sections 9, 10 and 11 respectively. The final section of the study summarizes the main finding of the study.

Demography

Pakistan is administratively divided into four provinces - Punjab, Sindh, North Western Frontier Province (NWFP) and Balochistan – Federally Administered Tribal Areas (FATA), and the capital territory of Islamabad.

In this study, FATA and Islamabad are respectively included in NWFP and Punjab. The population of Pakistan, which was estimated at about 33 million at the time of Independence in 1947, increased to 43 million in 1961. During the next 20 years it almost doubled and reached to 84 million in 1981. According to the 1998 census, the population of Pakistan was about 131 million, registering an increase of more than 46 million persons during the 1981-98 inter-causal period.

However, the population growth rate has declined significantly during the period of 1981-98, 2. 1 percent per annum as compared to 3. 06 percent between 1972 and 1981. This declining trend is consistent with a modest decline in fertility in the 1990s. The share of Punjab in the total population decreased

from 61 percent in 1951 to 56 percent in 1998. The share of Sindh in the total population increased from 18 percent in 1951 to 23 percent in 1998. The proportion of population living in other two provinces, NWFP and Balochistan, was 16 and 5 percent respectively, according to the 1998 census.

The variations in the share of each province in the total population overtime could be attributed to a number of factors like varying degree of in/out migration, over/under coverage and differences in the methodologies of different censuses (GOP, 2000). However, it is evident from the 1998 census that there have been a visible narrowing down of the growth rate differentials among provinces as compared to the last inter-censal period. Data showing the evolution of the country's urbanization process and urban growth.

The share of urban population in the total population increased from 18 percent in 1951 to about 33 percent in 1998. Sindh was the most urbanized province with 49 percent of total provincial population living in urban areas in 1998. The least urbanized province with only 17 percent of provincial population living in urban areas was the NWFP. The shares of urban population in the total population of Punjab and Balochistan were respectively 31 and 23 percent. Urban population of Balochistan grew at the fastest rate not only between 1972 and 1981 but also during the 1981-98 period.

The rapid rate of urbanization in Balochistan can partly be attributed to both permanent settlement of Afghan refugees and the major increase in public sector employment due to the big increase in provincial government expenditure during the 1980s (Butt 1996). Table 1 also presents distribution of households

by region and province. Absolute number of households is closely related to family or household size, which declined slightly from 6. 7 persons in 1981 to 6. 6 persons in 1998. The total number of households increased from less than 13 million in 1981 to approximately 20 million in 1998.

This increase was observed in both rural and urban areas as well as in all four provinces of the country. Because of variations in household size across the provinces, distribution of households by province is slightly different from the population distribution.  In 1998, for example, 23 percent of total population was counted in Sindh. In terms of households, its share, because of the lowest household size, was more than 26 percent. The share of NWFP in the total population was about 16 percent. But, due to relatively higher household size, its share in the total number of households was approximately 14 percent.

Distribution of urban and rural households by sex of the head of household. It 1996-97 approximately 7 percent of households were headed by females. There was little variation across provinces. Variation between rural and urban areas in the sex of household headship was slight, ranging from 6. 1 percent in rural areas to 7. 4 percent in urban areas. It is worth noting that females who head their households in Pakistan are mainly widowed/divorced or they are heading households because their husbands are working somewhere else within the country or overseas.

• Distribution of household (Million)15. 36617. 7651. 1741. 235
• Distribution of household (%)92. 993. 57. 16. 5 2

Source: Pakistan Demographic and Health Survey (PDHS) 1990-91; Pakistan Fertility and Family Planning Survey (PFFPS) 1996-97.

Real Annual Per

Capita Expenditure

The total household expenditures, as shown in Table 2 include expenditure on food, textile and footwear, transport, cleaning, recreation, education, housing, fuel and lighting and furniture. The reference period is the year preceding the survey. In order to obtain the annual per capita expenditure, the total household expenditures were divided by the number of household members.

It was then converted to real expenditure by using Consumer Price Index (CPI) at constant prices of 1990-91. The real annual per capita expenditures declined from Rs. 5437 in 1992-93 to Rs. 5372 in 1996-97. The per capita expenditures were higher in urban areas than in rural areas. They were also relatively higher in Sindh compared to other three provinces of the country, Punjab, NWFP and Balochistan.

Trends in money-metric poverty

As noted earlier, most of the studies that estimated trends in poverty in Pakistan have used a head-count measure under an arbitrarily defined poverty line. It therefore becomes difficult to ascertain the trends in poverty. Even then the results of the studies based on different methodologies (or poverty lines) have commonly been used to investigate the changes in the incidence of poverty. Two recent studies, Amjad and Kemal (1997) and Ali and Tahir (1999), have developed consistent time series on rural, urban and total poverty.

Amjad and Kemal estimated the trends by using the data sets of 8 surveys (HIES), while Ali and Tahir (1999) used 14 surveys, from 1963-64 to 1993-94. These two studies did not define a new poverty threshold. Rather they used the income poverty line defined by Malik (1988) as a bench mark and adjusted it according to inflation.

Pakistan is administratively divided into four provinces - Punjab,

Sindh, North Western Frontier Province (NWFP) and Balochistan – Federally Administered Tribal Areas (FATA), and the capital territory of Islamabad. In this study, FATA and Islamabad are respectively included in NWFP and Punjab.

The indicators of income and expenditure are drawn from the HIES (1992-93 and 1996-97). The HIES provides important and detailed information on household income, sources of income, savings, assets, liabilities, expenditure on food, durables and non-durable items by households in various geographical areas of Pakistan. Real annual expenditure per capita: Household expenditure covers expenses incurred during the survey year.

In order to obtain the per capita expenditure, we have divided annual expenditure by the number of household members. And CPI at 1990-91=100 is used to convert this in real expenditure.

Food Poverty

Food poverty is based on the calorie-based poverty line. This approach uses the Required Daily Allowance (RDA) of calorie intake. Food poverty is defined with reference to the recommended calorie intake of a person: 2550 and 2295 calories for rural and urban areas respectively. To adjust for the size and age composition of the household, an adult equivalent scale is used. The calorie requirements are then converted into minimum food expenditure, in accordance with the expenditure pattern of the poor.

The incidence of poverty is measured by two most commonly used indicators: head-count (P0), which measures the extent of poverty; and Income-gap (P1), which measures the depth of poverty.

Household Income: Household income is the material return in cash or in kind in exchange for goods and services by the household earners. It is the sum of money income and income ‘in kind’. Real annual income per capita: Per capita household income is obtained by

dividing the annual income by the number of household members. To convert nominal income in real income the CPI at 1990-91=100 is used.

Sources of income: Household income is derived from the following main sources:

Wages and alaries: This category includes employees salaries, wages and other related receipts from employers. Income from self-employment:

The operating surplus from non-agricultural and non-financial sector employing less than 10 persons and operating surplus from agriculture, withdrawal from entrepreneurial income for proprietors engaging 10 or more persons are included in this category.

Property income: This category covers incomes from rent, interest and royalties, and imputed income of owner occupied house. Transfer income: This category includes foreign and domestic remittances, receipts from Zakat and Ushr, bonuses, gratuities and pensions.

The information on employment is taken from the LFS (1992-93 and 1996-97). The LFS provides detail information on various aspects of labour force, such as, employment, unemployment, underemployment, employment status, educational attainment of employed and unemployed, sectoral distribution of employed persons, hours worked, occupation, etc. Labour force participation rate: In order to measure the labour force participation rate we used the Refined Activity Rate that is the percentage of labour force in population of persons 10 years of age and above: Refined activity rate = Civilian labour force (10 years and above) 100 Total population (10years and above)

Unemployment rate

Unemployed are persons who during the reference period were either looking for work or not looking for work because of illness; or they believe that the existing jobs do not match with their skills; or temporarily or indefinitely laid off; or waiting to report to new job; or willing to work if job is provided to them.

Unemployment rate is

computed as the proportion of unemployed persons in total labour force: Unemployment rate = Unemployed persons (10 years and above) 100 Civilian Labour Force Underemployment rate:

According to the official classification, the persons working less than 35 hours per week are considered as under-employed. The underemployment rate is computed as the proportion of underemployed persons in total employed persons. Underemployment rate = Underemployed persons (10 years and above)

Employed Labour

Force Sectoral distribution of employed persons: In Pakistan following are the major sectors: Agriculture, forestry, hunting and fishing.

1. Mining and querring
2. Manufacturing
3. Electricity, water and gas.
4. Construction.
5. Wholesale and retail trade and restaurants and hotels.
6. Transport, storage and communications.
7. Financing, insurance, real estate and business services.
8. Community, social and personal services.

This nominal wage rate is deflated with CPI at 1990-91 price to obtain the real wage rate. Dependency ratio: Children under the age of 15 years and persons over the age of 65 years are considered as dependents. The dependency ratio is computed as the ratio of persons in the ages defined as dependent to those in the ages defined as economically active (15-64 years) in a population. This indicators is computed with the help of census data of 1981 and 1998. Dependency ratio = Persons under 15 years and over 64 years

A child whose weight-for-height is minus two standard deviations (-2SD) or below the median of the reference population is classified as wasted or acutely undernourished.

Underweight (Weight-for-age): A child whose weight-for-age is minus two standard deviations (-2SD) or below the median of the reference population is considered as underweight. Three common indicators, namely, stunting (height-for-age), underweight (weight-for age) and wasting (weight-for-height) can be computed on the basis

of anthropometrical information. These indicators of malnutrition or anthropometrical measures are calculated by commonly used method of Z-scores with cutoff points of –2SD and -3SD.

Children whose height for age measurements fall below -2 Z-scores are termed as stunted, and those who are -3 Z-score are considered to have undergone a long term adverse situation of food intake possibly under unfavorable environmental conditions. The weight for height index below -2 SD suggests that a child has been wasted (thinness due to malnutrition) and those who fall below -3 SD are considered as severely wasted (severely malnourished). This index of wasting is usually indicative of a short-term effect of inadequate food intake, or may otherwise result from a debilitating disease, as a consequence of which malnutrition may develop.

Education

Adult Literacy Rate Percentage of population aged 10 years and older who can read and write with understanding (literate). Primary School Gross Enrolment rate Number of children attending class 1-5, divided by the number of children aged 5-9 years, multiplied by 100. Secondary School Gross Enrolment rate Number of children attending class 9-10, divided by number of children aged 14-15 years, multiplied by 100. Primary School Dropout Primary school dropout refers to children who dropped in grade I. Continuation rate Continuation rate is the percentage of students continuing studies to the next grade.

Number of years a newborn would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout his life. Infant mortality rate Death of infants (0-11 months) per 1000 live births. Child mortality rate Death of children (1-4 years) per 1000 live births. Maternal mortality rate Number of female deaths that

occur during childbirth, and forty days after that, per 100,00 live births. Access to primary health centre Access to primary health centre refers to percentage of rural PSUs with access to health centres, including government hospital, government dispensary, rural health centres and Basic health Units (BHUs).

Access to safe drinking water is the percentage of households having piped water inside the house. Sanitation system Percentage of households with any kind of sanitation system, including under ground drains, open drains or soak pits.

Assets Land distribution by size: Number of farms by categories/total no of farms Farm: Farm is the aggregated area of land operated by member of one household alone or with the assistance of members of other household Area Cultivated: Farm area, which was sown at least once during the census year Land distribution by tenancy: Number of farms by tenancy status/total no of farms Ownership of agriculture productive assets:

Tractors, Thresher, Tubewells, Bullock driven drills, Hand operated sprayers and lift pumps. Pure landless household A person who are primarily working in agriculture but do not have access of land either as owner or as tenant.

Access is electricity

Percentage of households with electricity connections. This paper is part of the ongoing project, Micro Impacts of Macro Adjustment Policies (MIMAP), Funded by the International Development Research Centre, Canada. G. M. Arif is Senior Research Demographer and Hina Nazli and Rashida Haq are Research Economists at the Pakistan Institute of Development Economics. The authors are thankful to Ms.

Durr-e- Nayab, Research Anthropologist and Syed Abdul Majid, Staff Economist, Saghir Mushtaq, Associate Staff Economist, for their valuable assistance in preparing the profile of poverty. The authors are also thankful to Mr. Muhammad

Sarwar and Javed Iqbal Shamsi for their excellent typing assistance. [3] Several economic and social changes in Pakistan, such as the economic crisis of the 1990s, an increase in unemployment, a decline in real wages, increases in poverty and inequality and changes in social structure, particularly kinship relationships, are considered to be the fundamental causes of the recent decline infertility and its proximate determinants (Sathar and Casterline, 1998). The highest household size, 8. 8, was in NWFP, followed by Punjab, Balochistan and Sindh.

Between 1981 and 1998 the average household size decreased for Balochistan and Sindh probably due to rapid urbanization and family break-ups, while in all other areas it has slightly increased.

The reference poverty line used by Gazdar et al. was Rs. 296 of per capita consumption expenditure monthly in 1991-92 rural prices (and Rs. 334 in urban prices). This poverty line was derived from the costs of a basic needs baskets of goods and services.

The difference in the level of poverty between the two studies could largely be due to the procedure adopted by Jafri to fill the missing data. This filling has probably increased the household consumption expenditure resulting in relatively lower estimates of poverty.  Estimates of poverty based on basic-needs approach for six years, 1986-87 to 1998-99

The estimates for the first five years, 1986-87 to 1993-94, were taken from Jafri (1999), whereas for the 1998-99 estimates of the present study were reported in the table, which shows that there was a decline in overall poverty between 1987-88 and 1990-91. Since then it is on rise. Between 1990-91 and 1998-99, overall poverty increased by 9 per cent. These estimates of poverty at the

province level should be read cautiously because the survey data on which the estimates are based may not be representative at the province level. Zakat/Usher is an Islamic system of safety net to help the needy and poor. This system was introduced in the country in 1980. However it can be argued that had the SAP not been there the situation would have even been worse.  These reasons were reported during focus group discussions.

References

1. Ali, S. S and S. Tahir (1999). “Dynamics of Growth Poverty and Inequality in Pakistan. ” 15th Annual General Meeting and Conference, Pakistan Institute of Development Economics.
2. Amjad, R. and A. R. Kemal (1997). “Macroeconomic Policies and Their Impact on Poverty Alleviation In Pakistan. ” The Pakistan Development Review, 36(1) Spring.
3.  Arif, G. M. and Najam us Saqib (2000) Education for all: the role of public, Private and NGO Schools in primary education in Pakistan, Report prepared for the ActionAid Pakistan.
4. Arif, G. M. and Sabiha Ibrahim (1998). Diarrhoea Morbidity Differentials among Children in Pakistan. ” The Pakistan Development Review, 37(3) Spring.
5. Ayad, M. et-al (1997). Demographic and Socio-economic Characteristic of Households.
6. Butt, M. S (1996). “Prospects of Pakistan Urbanisation”. Pakistan Economic and Social Review. 34-2.
7. Gazdar et al (1994). “Poverty in Pakistan Measurement Trends and Patterns”, ST/CRD, LSE , London.
8. Irfan, M and G. M. Arif (1988). “Landlessness in Rural Areas of Pakistan and Policy Options.
9. A Preliminary Investigation. ” The Pakistan Development Review, 27(4).
10. Jafri, S. M. Younis (1999). “Assessing Poverty in Pakistan,” in A Profile of Poverty in Pakistan, Islamabad: Mehboob ul Haq Centre for Human Development.
11. Labour Force Survey, 1992-93, Federal Bureau of Statistics, Statistics Division, Government
    

of Pakistan.