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Decent work deficits in Pakistan May 3, 2013

Posted by nishankmotwani in : Guest authors, Pakistan, Uncategorized , trackback

Aly Ercelan

The labour movement in Southasia has often expressed its deep concerns of development priorities being abandoned. Economic growth is indeed necessary. But increasing inequality prevents rapid eradication of income poverty and vulnerability. The excluded population rises not in numbers but also as share of a (growing) population. Policy failures are visible on several counts. Most of all is a missing active social policy that would not just mitigate the adversity, but offset the profit bias inherent in neo-liberal economic policy — of promoting capital-intensive growth and cheap-labour led export expansion (which privilege foreign capital by subsiding their consumers, and probably even subsidise the arms trade). This note discusses Pakistan.

Claiming divine will or peoples sovereignty, Islamabad asserts prosperity and progress in Pakistan, ‘achieving’ large food exports including cereals from a country filled with hungry citizens. Our interest in such assertions is focused upon inequality and poverty as consequences of neoliberal policies for output and employment growth. The primary concern remains the state structures whose oppression produces and sustains mass impoverishment and exclusion. When generations already feel abused then deadly terrorism will undoubtedly remain as a curse even upon our grandchildren.

Some bare facts can be useful in setting out issues that call for serious analysis. Over the decade, the market value of domestic output rose considerably faster than employment (including the self-employed), as reported in the Pakistan Economic Survey and Labour Force Survey. Compared even to “real” economic growth (in GDP at constant prices), employment growth remained feeble – so that several million jobs were ‘lost’ because employment did not grow as rapidly as did output.

This is not a piddling job deficit in view of vast numbers without employment, huge numbers as unpaid family labour and substantial numbers that remain overworked. Progress in earnings also lagged behind output growth.

Social justice requires the first priority to reducing inequity i.e. to poverty eradication — but which cannot be attained by reliance upon rapid economic growth without sharply decreasing inequality. More jobs indeed. But also decent wage for millions of unskilled jobs has to be the policy objective.

That the decade failed in reducing inequality can be illustrated in a number of ways. For one, the share of money wages in market output declined substantially because sluggish increase in wage employment was not offset by the increase in wage rate. Furthermore the share of nominal labour earnings in output stayed stagnant – i.e. when self-employed and unpaid family labour is added to wage earners. It is likely that inflation in wage goods was higher than general inflation, which would convert stagnation into a decline of labour’s share in output.

Had growth been equitable then distribution of income by industry and occupation should have also become less unequal at least if inequality in growth could not have been reversed in favour of low-paid employment. However, the Household Integrated Economic Survey reports pessimistically for the recent situation. The lowest monthly earnings were for ‘Elementary Occupation.’ Earnings could have been higher by at least Rs 1,000 if growth had been equal across occupations. The situation becomes even more depressing upon noting that this unskilled, low wage occupation did not decrease its sizable share in employment.

In a sectoral disaggregation, along with Agriculture the Construction sector (which employs many of the urban working poor) reports the lowest income (per earner) well below poverty-line income. In the absence of increasing inequality Construction workers would have added more than Rs 1,000 to monthly earnings.

Eradicating impoverishment requires faster than average income growth for the poorer households. This does not appear to have been achieved. Households with a single earner as Elementary Occupation would result in the household being quite impoverished. Similarly vulnerable to poverty would be workers in Agriculture and in Construction sectors.

For the bottom 40% of population (ranked by consumption expenditure) monthly household income (from all sources) per capita rose over the decade. Had inequality not increased, and household earnings followed the more than doubling of national income per capita (in $), the bottom quintiles would have gained several thousand rupees per capita — offering many the possibility to escape poverty. Policy failure is sharper if we exclude steadily expanding foreign remittances (mostly from workers but money laundering is not unlikely, and sectarian financing cannot be ruled out).

A macroeconomic policy that is unfriendly to labour is most visible in the fact that (annual) income per capita even a decade ago was at a level which should have eliminated poverty but for the high level of inequality. Now that income has more than doubled (to reach nearly $ 1,400), there is even yet less excuse for mass despair from persistent impoverishment, deprivation and exclusion.

Universal Social Protection remains a fading dream for even the unemployed and underemployed. Old women remain dependent on the small numbers of men who are covered by a pension much lower than minimum wage. Even children are ignored in their right to quality education, and to be protected against hazardous labour. Whichever the citizen category, the absence of protection imposes intolerable burdens upon tens of millions of children, women and men, and even premature death of infants (at least 1 in 10 among undernourished and malnourished families).

With (much) external ‘assistance’, the recent government claims (in the election manifesto of PPP) to have achieved a monthly transfer of Rs 1,000 to 5 million women through the Benazir Income Support Program. To place it in perspective, consider a better employment policy focused upon females: e.g. full time at minimum wage for female labour force. This would entail ‘empowering’ unemployed and underemployed with full time work for over 12 million women; ensuring minimum wage (even the inadequate Rs 8000 per month) that would enable an additional Rs 3000 per month on average for nearly 10 million underpaid working women. Who knows how many children could then escape hazardous labour?

Arranging for just a social pension at minimum wage to old-age women and men would benefit over 4 million females of age 60 and more without high targeting costs. More importantly a commitment to decent work would enable dignity for deserving citizens, instead of being patronizingly and shamelessly stigmatised ‘deserving poor’ by a state itself responsible for mass impoverishment.

Economic commentary is again crying hoarse about the perils of default in foreign debt servicing, advising an immediate new deal with the IMF. Tragically, far too few are gravely concerned with accumulated human (and ecological) deficits of the state forced upon its citizens year after year.

Agrarian Reforms are critical to secure and decent livelihoods of the millions working under the shadow of debt bondage and forced labour. Yet major political parties stick to sluggish, limited redistribution of state land. Economic Democracy remains suspended, due largely to the failure of federal institutions of governance to enforce fundamental rights acknowledged in the Constitution; provinces and communities also fail to resist unfair acts in predatory governance. The Senate remains weak in enforcing the will of federating units; recent constitutional amendments keep its authority feeble in fiscal matters.

Output, Earnings and Income include inflation. Output is annual Gross Domestic Product. Employed include unpaid family workers. Workers include labour in part time and in excessive working hours. Working Age is taken as men and women with age of 20-65 years. Employed Earnings are per worker, and include unpaid family workers. Income is from all sources, including remittances and imputed income for occupation of owned dwelling. Poorest are the bottom group ranked by consumption expenditure, containing 20% of households but 25% of persons in 2010/11. Data is from the Pakistan Economic Survey; Labour Force Survey; Household Integrated Economic Survey.

This note excludes issues that deserve separate notes, including growth and inequality impacts within and among locations such as rural-urban, and provinces.  Similarly a separate note is required for understanding the characteristics of significant expansion in female employment. 

Official survey data can be accessed via http://www.pbs.gov.pk. The author work for social movements through PILER and PFF. Comments are welcomed at awarakhi@yahoo.com


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