Unemployment in Pakistan seemed to be on top of the worries list of Finance Minister Hafeez Shaikh, when he delivered the budget speech. But wait a minute, why should he fret so much over joblessness.
Either he did not go through the Economic Survey FY10 or he doesn believe in the job numbers provided by the Federal Bureau of Statistics. The latest survey says unemployment rate in Pakistan is just 5.5 percent, which should ideally make the economic managers proud, instead of being apologetic.
The survey shows Pakistan being blessed with the tenth largest labour force in the world, quoting CIA World Factbook as the source. There, however, is a yawning gap between the unemployment statistics of FBS and CIA, as the latter sees it as high as 15.2 percent.
If CIAs numbers are to be believed, Pakistan will have to be placed at 152nd position on the employment list, as opposed to the 49th place based on FBS numbers.
What justifies such huge difference is a tough question and can be best answered by the FBS authorities. But what makes Pakistans employment number look so healthy deserves some attention indeed.
You are considered employed in Pakistan if you work free for your family, according to the Labour Survey 2008-09 conducted by the FBS. This portion of employed workforce is referred to as unpaid family workers, who are described as those who work without pay, in cash or in kind, for an enterprise operated by a family member or relative.
Oddly enough, the FBS defines an employee as a person who works or receives remuneration in cash or in kind. Bear in mind that workers falling in this category do not come under the self-employed umbrella either.
Employment as a term by the government, refers to either paid employed or self-employed. Yet, the FBS classifies unpaid family workers as employed.
Not that the term unpaid family workers is used only in Pakistan when tabulating employment figures - but it skews the number in Pakistan far more than anywhere else.
US employment data, for instance, has two different methodologies; one, which includes unpaid workers and the other which doesn . But the end result gives almost the same value, given negligible participation of unpaid family workers.
In case of Pakistan, however, if the unpaid family workers are excluded from the employment list, it would give nightmares to the government, as it would lead to a massive 34 percent Afghanistan-like unemployment.
So while the government may not be fudging the employment numbers, something needs to be done to make the numbers look a bit more realistic.
Unemployment as good as 5.5 percent would naturally lead to complacency in any other country, as it is often considered the natural rate of unemployment. Such low unemployment is also a sign of overheating economy, a state from which Pakistan is far off. Surely, a revisit to labour force methodology is required for better policy making even at the central bank, given the trade-off between inflation and unemployment (not output), over the interest rate movement.
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EMPLOYMENT STRUCTURE IN PAKISTAN
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mn Existing Excluding
methodology unpaid family
workers
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Employers 0.47 0.47
Self employed 17 17
Unpaid family workers 14 0
Employees 18 18
Total 51 35
Labour force 54 54
Unemployment rate (%) 5.45% 33.94%
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Source: Economic Survey 2009-10
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