The Sate Bank of Pakistan (SBP) has reported that underemployment in the country had increased from 13.4 percent to 14.0 percent during FY02-04.
In its third quarterly report's special section, it says; "Based on available information, it appears that the underemployment has increased from 13.4 to 14.0 percent during FY02-04".
During the period, available indicators suggest that underemployment has increased in Pakistan. However, the bank says that two points are important in this regard: first, it was mainly because of the increased participation by female group; and second, it was not due to a slowdown in economic activity.
In Pakistan, underemployment is defined as "... all employed persons who during the reference period satisfied the following three conditions: first, working less than 35 hours per week; second, doing so on involuntary basis; and third, seeking or being available for additional work."
The proportion of employed people available for additional work has increased for both male and female groups, but the latter group saw a larger increase. Specifically, the proportion of employed females available for additional work had jumped from 6.8 percent in FY02 to 10.0 percent in FY04. This increase of female interest in working for a greater number of hours is a welcome development, SBP says.
The bank says that in Pakistan, a large proportion of the employed labour force works less than 35 hours and may, therefore, be considered as being underemployed without knowing how many were doing it voluntarily or involuntarily. This distinction is essential to compute the exact level of underemployment in the country. As defined in the Pakistan Labour Force Survey (LFS), employed persons working less than 35 hours are considered to be underemployed, but only if they are willing and available for additional work.
However, data constraint in the LFS does not allow a clear computation of the underemployment rates directly, but some supporting LFS data does provide some insights, the Bank says.
According to the latest available LFS (for FY04), around 5.8 million or 14.0 percent of the total employed were working less than 35 hours a week. Considering all employed working below 35 hours per week as underemployed, the underemployment rate in FY04 works out at 12.9 percent.
However, the actual underemployment rate is probably much lower. Specifically, the proportion of total employed available for additional work, including both working below and above 35 hours in a week, was 8.6 percent (or 8.0 percent of labour force) in FY04. This suggests that underemployment in FY04 was either at 8.0 percent or lower.