Demographics look challenging

Economic survey is here and it is statistics galore. What usually get lost in the ‘economic’ discourse are the demographics. After all, is the whole point of sound economic management not population welfare? This piece will look at broad demographic trends gleaned from the survey and comment on it in the context of the demographic dividend.

First up, what is happening to the population, on face value, is not too bad. Compared to 2016, life expectancy improved for males (by three and a half months) to 65.8 years and for females, too, (by 6 months) to 68.2 years in 2017. The population growth rate and total fertility rate (TFR) continue to be on a consistent decline, a long-term trend which is positive (see the illustration).

But a TFR of 3.0 in 2017, as reported in the survey, is still high, and it may take another at least another decade for it to reach the replacement rate of 2.1. The survey is talking about a growth rate of 1.86 percent on a population of 199.71 million. That means 3.71 million new babies being born every year. And therein lays the catch.

As per the population pyramid used in the survey, roughly 11 percent of Pakistan’s population fell between ages of 0-4 years, whereas 21 percent resided in 5-14 age-bracket. Add in the senior citizens (60 years and above), and we are looking at a dependency ratio at 39 percent of the population. The remaining, 61 percent, is the working-age population, which is supposed to work and provide for the dependents.

The youth bulge is reflected in the population pyramid’s bloated bottom half. Some demographers expect Pakistan’s working-age population to peak around 2050. Ensuring that the growing population share of working-age population is aptly utilized in productive economic sectors is what the demographic dividend is all about. Question is, what has been the government doing to capitalize on that window?

The economic survey mentions a host of ‘employment expansion policies’, such as the PM’s Youth Program. The six schemes therein include youth business loan, interest-free loan, and youth skill development schemes. The survey also cites Rs8 billion in PSDP allocations for population welfare programs. Also mentioned is 0.84 million new workers – mainly of low skill profile – going overseas, mostly to the Middle East, in 2016. Then, of course, is the talk of decade-high FDP growth of 5.3 percent.

But in the absence of reliable labour force statistics, it is hard to comment on the impact such policies and events have been having on unemployment in the country. How many folks are willing to bet that the government claim in the survey – “the unemployment rate has decreased from 6.2 percent in 2012-13 to 5.9 percent in 2014-15” – is correct? The survey didn’t publish this year its usual commentary on labour force dynamics.

In any case, the window of opportunity is still there, but time is running out. This is where the still-high TFR is a saving in disguise in the sense that it expands that window of opportunity. The planners have a twofold challenge to i) invest resources in quality education of the current and future crop of school-age kids, and ii) take steps to improve labour productivity to unleash an era of high economic growth for the working-age folks already in the market. A lot more needs to be done.