Unemployment rate low while quality of employment not high: WB

Employment is a key challenge in Pakistan as the unemployment rate is low at six percent while the quality of employment is not high, says the World Bank (WB).

The Bank in its latest paper "Labor Market Analysis Using Big Data; the Case of a Pakistani Online Job Portal" stated that among the employed people, three-quarters work in informal sectors; 36 percent and 24 percent are self-employed and family workers, respectively; and only 12 percent are wage workers with a written contract.

The youth, despite being more educated, face a three times higher unemployment rate and are more likely to work in informal sectors than older people.

Facing a youth bulge - a large influx of a young labor force - in coming years, the Pakistani economy needs to create more jobs by taking advantage of the relatively well-educated young labor force. However, the higher unemployment rate of the educated young labor force raises the concern that skill development in the current education and training system does not respond well to skill demands in industries.

The paper examines various aspects of the labor market, including skills demand and supply, returns to skills, gender preference, and jobseekers' and employers' behaviour in job application and selection. Further, it provides unique, granular pictures of labour markets by using novel online job data. The data of Rozee.pk enables to analyze labour markets in real time on both employer and worker sides and understand skill demands and supply based on rich text information.

Rozee.pk, founded in 2007, is a leading online job portal in Pakistan. This paper analyzes a data set consisting of 5 million jobseekers and 108,000 registered employers corresponding to 412,000 jobs posted on the platform.

The online job portal examined in this paper represents a high-skill segment of the labor market in Pakistan.

Job postings in the job portal offer higher salaries than the national average, and jobseekers are younger and better educated than the average labour force in the country. This focus on a high-skills segment is relevant to tackle the ongoing labor market issues of Pakistan such as the youth bulge and the higher unemployment rate of better educated people.

One of the key findings is that there is an insufficient number of jobs in which bachelor and graduate degree holders are expected to use their skills obtained from higher education.

The labour market tightness at the postsecondary degree level is low. Because a new batch of fresh graduates of colleges and postsecondary education enter the labour market every year, there is more competition for entry-level jobs than for professional-level jobs that may focus on more mid-career experienced workers.

Due to the limited availability of job vacancies relative to the number of jobseekers, fresh college graduates tend to face more difficulties in finding jobs than those who are already working. However, this varies by industry.

Jobseekers with an ICT specialization tend to find it easier to find jobs through Rozee.pk than jobseekers with other industrial specializations because the tightness of the ICT sector is highest among all sectors. This is because the relative number of available jobs to the number of jobseekers is larger than other sectors.

The analysis of short-listing shows that matching between applicant qualifications and job requirements is important and that over qualification does not necessarily lead to any advantages.

A keyword analysis of skills requirements shows that the employers tend to specify programming-related skills (63% of expressed keywords) followed by sales-related skills (12%). The needs for programming skills, or more broadly, ICT skills, are validated by other parameters in this paper. The wage offers in terms of both initial wage and wage growth trajectory show that ICT is one of the most attractive sectors for postsecondary education graduates.

Programming related skills are demanded not only in the ICT sector, but also in all other industries as well. In sum, matching skills in terms of skill levels (or educational qualifications) and industry specialization is one of the important findings of this analysis.

On the contrary, many overqualified applicants tend to apply for jobs that require lower educational requirements than their educational backgrounds due to low tightness of the job market for the highly educated segments. Skills mismatch is a prevalent phenomenon in many countries, and such mismatches can be in forms of educational levels, industry specialization, and quality of skills. In this regard, job matching processes and methods have considerable room for improvement. While the higher skills segment of the job market seems to have opportunities to learn about job availabilities through Rozee.pk, the service does not cater to the middle- to low-skilled population.

Recent technological advancement, with the spread of mobile phones or smart phones, and accessibility of middle-income and lower-income households have drastically improved worldwide. In Pakistan mobile phone subscriptions per 100 people increased from 8.3 in 2005 to 73.4 in 2017.

The analysis in this paper indicates that the costs are high for many jobseekers, so they cannot afford sufficient job searches. Female jobseekers may lack resources and thus can only apply for a few jobs. Because of high job search costs, poor workers as well as low-skilled workers may use informal job searches through social networks, which is cheap but likely to lead to poor match quality.

Job portals can provide very useful knowledge for policy makers. Policy makers will be able to understand real-time labour market situations in particular industries and locations. The granularity of job portal data, such as data store time stamps by minutes and seconds, and job locations by GPS code, will be useful for discussing highly precise labor market conditions, and such work can be further explored as a subsequent research to this paper. Real-time text information in job postings and resumes helps identify rapidly changing skill needs and supply, which will lead to providing demand-driven training and job placement services.

The paper shows there is a great potential for Pakistan to shift its labor market policy making to a real-time data driven one as enabled by big data and technology.

Online job portal data have unique features that can supplement traditional data such as labor force surveys in four respects. First, online job portal data provide real-time information, whereas traditional data are published after a time lag of months to even a year.

As technologies and economic conditions are rapidly changing, real-time information of labor markets is becoming more important. Second, the data provide rich, granular text information about skill demand and supply. For example, included in the data are the job's title, description, and qualification requirements and jobseeker's education, skills, professional experience.

Third, the data include information about actual labor market transactions and the job matching process, which are invisible in traditional labor force and enterprise surveys. With this information, it becomes possible to analyze what affects, and can improve, job matching.