Households united

Pakistani families are sticking together. The latest Household Integrated Economic Survey (HIES) recorded average household size at 6.35 members in 2013-14, a decline of nearly one percent compared to 6.41 members recorded in the 2011-12 HIES. Urban household size declined by two percent to 6.09 members in this period, whereas rural households averaged 6.49 members, a fall of 30 basis points.
The mean household size is still large and the decline too slow – it was 6.58 in the 2007-08 HIES. It also remains high compared to the region (see the illustration). Among the factors that could be at work here is the continuing population growth, besides marriage within families. As per Pakistan Demographic and Health Survey (2012-13), about 75 percent of Pakistani women were married within their close relations. The first-cousin-marriage phenomenon constituted 49 percent of all Pakistani marriages.
Another reason could be economic adversity. Given that Pakistan has been stuck in a low-growth mode for over seven years now, economic hardships may have forced household to close ranks. After all, there are significant economies that result from shared housing, cooking and transportation, besides social interactions.
Consider the case of Punjab, which has been struck hard by power and gas outages since 2009. The latest HIES shows that Punjab’s mean household size had increased from 6.08 members in 2011-12 to 6.14 members in 2013-14 (all other provinces recorded small declines in this period). Punjab’s average earners per households also declined in this period by 13 percent to 1.96 earners in 2013-14, below the national average of 1.94.
While socioeconomic forces may be at work here, it must be noted that stubbornly large household size can be a drag on economic growth. A rising trend towards nuclear families, which is the opposite of joint families, can bring about higher demand for housing units, automotives, electronic appliances, and economy-pack consumer goods items.
Smaller families can thus fuel growth in construction, automotive, durable-goods and FMCG industries. That, in turn, can support dozens of dependent industries, thus helping to utilize excess capacity in an economy. Needless to add that higher “consumption” enhances an economy’s ability to create jobs.
That is not to say that the large household phenomenon is an anathema to growth. The 2013-14 HIES shows that Pakistan’s average monthly household income had increased by 23 percent over previous reading to Rs27553. Those in touch with economic news cycle would know that consumer goods giants have been raking in historic profits; the leading automaker has just had a phenomenal year; and real-estate developers are also having a ball. It’s another matter that the GDP growth continues to remain dismal.
A shift towards nuclear families may unlock significant economic activity. Yet that seems difficult if one looks at the current situation. Urbanization usually promotes smaller families. Yet, as the illustration shows, Pakistan’s urban households are larger than their rural counterparts, across all five income quintiles.
This, coupled with HIES data that average monthly household income had grown by 12 percent in urban areas compared to 27 percent in rural areas between 2011-12 and 2013-14, indicates that urbanites have been the lot that has struggled most. Now, rural monthly household expenditures grew at a higher pace (28%, versus 16% for urban areas), but urbanites saw a wider chasm between expenditure and income growth.
One cannot conclude that economic troubles alone are behind Pakistan’s large family sizes; culture may also be at work here. In-depth investigation is required as to the forces behind the anomaly that is large urban households irrespective of income group. The dilemma is that large urban households may not fuel growth, but they can provide a shield against poverty.