Believe it or not: Employment trends – PBS data that cannot be relied on

Old-fashioned calculation methods swell the ranks of employed.


Shahbaz Rana April 13, 2014
The latest PBS’s report, Pakistan Employment Trends 2013, bizarrely presents low unemployment levels even in the years when the expansion in national output was below or close to the population growth rate.CREATIVE COMMONS

ISLAMABAD:


No data can be more inaccurate and misleading than the one produced about employment trends by the Pakistan Bureau of Statistics (PBS) in coordination with provincial bureaus. There seems to be no correlation between growth and unemployment, presenting a unique case study for economic theorists.


The latest PBS’s report, Pakistan Employment Trends 2013, bizarrely presents low unemployment levels even in the years when the expansion in national output was below or close to the population growth rate. In 2012-13, the population growth was 2%.

The report also exposes triviality of the official data that is compiled by relying on faulty definitions, just to show that unemployment trends are consistent with previous years.

To start with, the definition of employee says, “anyone over the age of 15, who worked at least one hour during the reference period and was either paid-employed or self-employed”.



The mandarins sitting at the helm of affairs in the PBS also treat a person as employed who is jobless but helping his family member in routine work. The contributing family worker is one “who works without pay in cash or in kind on an enterprise operated by a member of his household or other related persons”.

By banking on these outdated definitions, the PBS produces interesting data on the country’s unemployment rate.

In 2006-07, when the country’s economy was booming and growth touched 5.5%, unemployment stood at 5.1%, according to the PBS. Next year, the pace of growth slowed down to 5% and unemployment rate too dropped to 5%, making it a classical case study for the economists.

Then in 2008-09, the country’s economy was in tatters. Pakistan was on the verge of default and a $500 million loan from the Asian Development Bank released on September 30, 2008 helped the new PPP government avoid default on international payments.

In this financial year, economic growth slipped to 0.4%, probably a very rare phenomenon. But the good news was – for the policymakers only – that joblessness inched up slightly to 5.2%.

In 2009-10, the country was struck by devastating floods that submerged one-fifth of total land. That year, the pace of growth increased to 2.6% and unemployment hit 5.3%.

Next year, the PBS said, the economy recovered from the widely destructive floods and national output expanded 3.7%. On the other hand, unemployment rate was 5.7%.

The PBS did not produce jobs data for financial year 2011-12. Last available figures were for previous fiscal year 2012-13. In that period, the economy grew 3.6% but jobless rate also rose to 6%.

Informal economy

“Two parallel economies are running in Pakistan – one is a formal economy and another is informal economy that is providing cushion even in times of distress,” said Dr Rashid Amjad, former vice chancellor of the Pakistan Institute of Development Economics and a professor at the Lahore School of Economics.

Amjad attributed the low unemployment levels in times of economic slowdown to distress employment (people who are forced to work due to hard times), increasing female participation in rural areas and the informal economy that was creating jobs at a time when economic theories suggested that the unemployment rate should be in double digits.

The PBS’s insistence on counting contributing workers and own-account workers – say self-employed workers – as employed is keeping the unemployment rate low.

Own-account workers make up 35% of the total employed, constituting the third biggest force in total employment. The share of agricultural sector was the highest at 42.2% last year.

Vulnerabilities

In terms of vulnerabilities, nine out of 10 employed in the agricultural sector are considered vulnerable that speaks volumes about authenticity of the official data. Vulnerable employment is measured as the proportion of own-account workers and contributing family workers in total employment.

The government needs to restructure the PBS in a bid to ensure transparency and enhance confidence of data users in jobs figures. This will also help in framing economic policies that could address people’s problems instead of widening the divide between the haves and the have-nots.

Published in The Express Tribune, April 14th, 2014.

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COMMENTS (1)

Kashif | 7 years ago | Reply

Hi,

Can you inform why unpaid family workers should not be counted in employed labor force? Also, can you tell how other countries treat such workers?

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