ISLAMABAD, Dec 3: Lack of political stability to bear the short-term costs of reforms have increased poverty and currently 35 per cent of the households in the country are below the poverty line.

This was revealed in a report on “Human Development in South Asia” by Mahbubul Haq Human Development Centre. This increase in poverty is largely attributed to macro- level factors, such as decrease in overseas remittances, high unemployment rate and low growth, the report said.

Poverty increased from 21 per cent in 1990-91 to 35 per cent in 1998-99. Worsening employment situation during the 1999 explains the rapid rise in poverty during this period.

The real wages of the employees in the public sector have declined due to high inflation and inadequate adjustment to the cost of living in the nominal wages. Earnings of the workers have remained low in the 1990s.

The reduced access of the poor to the labour market shown by declining real wages and high unemployment rate has resulted from declining rates of economic growth and low employment elasticity in different sectors, said the report.

Adverse changes in income distribution also explains the rising poverty in the same period. The estimates revealed that the income distribution had worsened during the 1990. The income share of the rich increased, while that of the poor declined all over Pakistan in the both the urban as well as rural areas.

The gap between rich and the poor is widening day by day and it needs to be abridged, otherwise sustainable development will not be possible, the report said.

Pakistan’s major failure in the 1990s has been the continuing macro-instability, massive slow down of growth and the rising poverty. Lack of attention to governance issues and institutional reforms has also played a major role in backsliding of the reform process.

Pakistan needs to continue with the ongoing reform programmes, but it must make sure that the poor are protracted from short-term costs. The social sector expenditures, particularly on education and skill-training, should be increased to improve the quality of life.

The report added that there was a considerable consensus on the fact that Pakistan’s earlier success in reducing the poverty had been reversed during the 1990s. As per the data collected, the poverty level during 1980s decreased in both urban and rural areas decreased.

Continued overseas remittances and the introduction of safety nets in the form of Zakat and Usher explain the progress made in the reduction of poverty by 1987-88.