Unemployment declining. Or is it?

A few days ago, this column wrote on certain inexplicable numbers in the economic survey, so here are some more nuggets to refresh your appetite. The publication on employment and labour force is thinned in pages in the latest economic survey, but even in slimmer publication, there are some new marketing pamphlet material on Prime Minister youth loans and training programs which are more on paper, than in reality.

Let’s contemplate on some of the basics of labour force and employment. The population is growing fast and it is showing that young population is growing even faster. According to a study by the World Bank, Pakistan requires to grow by 7-8 percent for employing fresh youth entering employment age; but the growth has been mired between 3-4 percent for the past many years. This would imply that half the youth in the age of employment is probably unemployed.

Ironically, unemployment rate has hovered around 6 percent for the past five years. Either, majority of the work force is not interested in working or there is something wrong in the computation of statistics. The latest numbers of labour force and employment are available for FY15 based on the surveys of PBS and the data provided by the Ministry of Planning, Development and Reforms.

Data for the last two years in which GDP growth picked up is missing whilst virtually all initiatives on PM youth loans etc, have been taken in the last two years (FY16-17). However, the survey states that the initiative of projects and programs to utilize the abilities of youth has yielded the unemployment rate to decline from 6.2 percent in FY13 to 5.9 percent in FY15.

How on earth could the impact of high growth and initiative taken in just last two years (FY16-17) improve employment participation in previous years (FY14-15)? Do the incumbents have ‘back to the future’ technology to do that?

On a more serious note, how can unemployment fall when the economy is growing at suboptimal pace and the youth bulge is a huge reality? Let’s dissect the numbers to find anomalies. Since there has not been a census for almost two decades, all the numbers published by various stakeholders are estimate and based on surveys.

The first dichotomy which is hard to digest is the sudden slowdown in the growth of labour force lately. It grew by an average of 1.38 million during FY08-12, and dropped to 0.57 million in FY13-15. Yes, the population growth has slowed down a bit from an average of 3.56 million a year in FY08-12 to 2.83 million per year in FY14-16; but the drop in labour force is much higher.

One may wonder what happened to the youth all of a sudden. Why are they not willing to work? The delta of labour force divided by the delta of youth entering employment age averaged 0.48 in FY08-12 while, it was 0.18 and 0.32 respectively in FY13 and FY15. Why is this declining? Is the country’s youth not willing to work or is there something wrong in computation of labour force addition? Whatever is the case, the anomaly explains why the unemployment is not increasing.

The other perturbing fact is the deteriorating quality and falling productivity of the labour force. According to a World Bank study (2012), majority of jobs that have been created are low quality and concentrated in low productivity unskilled daily labour and low productivity household enterprises.

There is low level of human capital accumulation in the working age population and the young adults (15-29 years). According to the World Bank, two-fifth of the working age population has no education. In FY17, 22.3 million kids (female: 44%) are enrolled in primary education while 7 million (female: 44%) are in secondary education. The number falls whilst female participation declines as the level of education increases- 3.9 million (female: 44%) are at higher stage (1X-X), 1.9 million (female: 44%) in higher secondary and mere 1 million (female: 6%) in degree colleges.

Let’s try to evaluate how many kids are out of school: a total 29.4 million kids are enrolled in primary and secondary education in FY17, while population estimate of children between 5-14 years is 42.2 million. This implies that 12.8 million kids are out of school assuming that all the primary and secondary school children are between the ages of 5-14 years. That is a generous assumption as there might be children in secondary school above the age of 14 years. And if we take the age between 5-16 years, according to National Education Management Information System (NEMIs), there are 22.6 million kids who are out of school.

These are scary statistics and narrate that quality of employment would further deteriorate when these out of school kids enter employment age. And of course, unemployment would surge too. Is someone asking why the extreme views are growing within the society?