Pakistan’s labor market has started to contract amid an economic downturn, with some sectors reporting layoffs, while for newcomers finding a job can become a difficult task in the short to medium term.
“The textile and technology sectors have reported job cuts amid an economic slowdown,” Fahad Rauf, head of research at Ismail Iqbal Securities, said last week.
“Some Pakistani exporters reported cancellation of export orders (by international buyers) amid global recession fears.”
The employment rate has improved and the unemployment rate has decreased over the past three years (from 2018-19 to 2020-21). However, rates remain below required levels due to slower economic growth compared to the 6-7% economic expansion needed to accommodate all new job seekers in the country.
The central bank anticipated in its latest monetary policy statement released on July 7, 2022 that Pakistan’s economy will slow to 3-4% in the fiscal year that started July 1, from 6% growth in the past few months. last two consecutive years (AF21 and AF22).
“The employment rate has contracted due to the slowdown in the economy,” said Saad Hashemy, executive director of BMA Capital.
The labor market began to contract due to a sharp rise in global commodity prices amid the Russian-Ukrainian war, with Pakistan relying heavily on imports to fuel the economy.
He, however, expected that the rapid fall in global commodity prices in recent days would help the resilient national economy recover and reopen opportunities for newcomers, who would be able to find suitable jobs.
The price of crude oil (West Texas Intermediate) fell to $95 a barrel in the international market on Tuesday, from around $120 a barrel about a month ago.
“The labor force grew from 65.5 million in 2017-18 to 71.76 million in 2020-21 and the number of employed people increased from 61.71 million to 67.25 million over the same period,” says the 2021-22 Economic Survey released about a month ago. .
“The unemployment rate decreased slightly from 6.9% in 2018-19 to 6.3% in 2020-21. This shows that 4.51 million people in the labor force were unable to find jobs in fiscal year 2021.”
As a major contributor to Gross Domestic Product (GDP), the agricultural sector plays an important role in the development of the economy.
According to the Labor Force Survey 2020-21, the share of employment in the agricultural sector increased from 39.2% in 2018-19 to 37.4% in 2020-21.
This sector is the main source of supply of raw materials for different sectors of the economy, especially the industrial sector.
A significant share of employment in the agricultural sector has shifted to the industrial and service sector due to technological transformation.
The services sector is the fastest growing sector of the economy and its share of employment was 37.2% in 2020-21.
The construction and manufacturing sectors are considered major sources of economic growth and development. The expansion of these sectors can generate millions of jobs for unskilled, semi-skilled and skilled labour.
In addition, these sectors also play an important role in generating income in the formal and informal sectors.
“The share of employment in the construction sector increased from 8% in 2018-19 to 9.5% in 2020-21. This increase shows that job opportunities are being created in the country,” the economic study said.
Wholesale and retail trade accounted for 14.4% of employment in 2020-2021.
The level of employment in transport/warehousing and communication remained the same during the period under review and the share of employment in the utilities/social and personal services sectors increased from 14.9% in 2018-19 to 16% in 2020-21.
According to the Labor Force Survey 2020-21, the overall employment-to-population ratio is 42.1% and this ratio is higher for men (64.1%) than for women (19.4%).
The employment-to-population ratio is defined as the number of employed persons expressed as a percentage of the population of working age (10 years and over).
The comparison by province also shows the same trend. In Punjab, the employment-to-population ratio is 44.2%, followed by Sindh (42.1%), Balochistan (38.6%) and Khyber-Pakhtunkhwa (36%), according to the survey.
Economy survey data suggests Pakistan has created an average of 2.08 million jobs in each of the past three years, compared to an expected 1.4 million