October 27, 2003	Monday	Sha’aban 30, 1424

The Federal Bureau of Statistics has just released the Labour Force Survey (LFS). This document is important as it announces a statistic most directly relevant to the lives of the ordinary people—the rate of unemployment.

So what is the new LFS saying? Not much, if we know that it is new only in the sense that it has been published this week. It is not talking about the last quarter, July-September 2003. It is not even talking about the previous fiscal year, 2002-03. The data relate to the year before that, the fiscal year 2001-02. To not an inconsiderable extent, it is already history.

According to this history, the labour force in the country increased from 39.4 million in 1999-2000, the year of the previous LFS, to 43.17 million in 2001-02, the year of the present LFS. Thus those able and looking for work increased by 9.6 per cent. As the number of jobs increased by 9 per cent, from 36.32 million to 39.6 million, unemployment increased between the two surveys.

The rate of unemployment is simply the number of the unemployed expressed as percentage of total labour force. In 2001-02, the rate of unemployment was 8.3 per cent, up from 7.8 per cent in 1999-2000. The number of unemployed rose from 3.08 million to 3.57 million.

These unemployment rates are low and, in public eye, may even be suspect. There is nothing wrong with these figures. Nor with the concept and definition of employment, as the one used is internationally acceptable. The difficulty lies in the way economies are organised.

In countries with unemployment insurance, the problem is a simple one of counting those showing up at insurance counters. But in countries like Pakistan, work—any kind of work—is survival. So those working for hours less than the normal work week,the so-called underemployed,also report themselves as employed, despite probing by the questioners.

A way around this difficulty is to apply the thumb rule that anyone working less than 15 hours during the reference week, is counted as unemployed. This moves up the rate of unemployment from 8.3 per cent to 9.7 per cent during 2001-02.

For the benchmark year 2000-01 of the Ten Year Perspective Development Plan 2001-11 published in September 2001, the Planning Commission by using the same definition had estimated an unemployment rate of 10.4 per cent. The LFS unemployment rate of 9.7 per cent in the following year shows that the Planning Commission estimate was not too far out of the line.

In 2000-01, agricultural output had shrunk by 2.7 per cent. It shrank again by 0.1 per cent in 2001-02. With one-fourth of the country’s GDP contributed by agriculture, its negative growth during these years hugely impacted on the state of employment. The LFS 2001-02 places 42.1 per cent of the employed labour force in agriculture, a significant reduction from 48.4 per cent in the LFS 1999-2000.

The rural unemployment rate including those working less than 15 hours increased from 8.3 per cent in LFS 1999-2000 to 9.3 per cent in LFS 2001-02. For the urban areas the corresponding figures were 10.4 per cent and 10.7 per cent.

While the urban unemployment rate remains higher than the rural unemployment rate, the gap has become nearly insignificant.

Some interesting facts for researchers to pursue include the increased share among the employed of those categorised as “legislators, senior officials and managers”, a decline in the rate of unemployment among women in urban areas from 31.9 per cent to 28.2 per cent, and that the percentage (68.3) of employed in rural informal sector is higher than the percentage (61.1) in urban informal sector.

The LFS 2001-02 collected information on occupational safety and health for the first time. The largest occupational group suffering occupational injuries/diseases was that of skilled agricultural and fishery workers (37.6 per cent).

Again, 41.4 per cent of the unpaid women family helpers suffered occupational injuries/diseases.

Without detracting from the usefulness of the LFS 2001-02 published in 2003-04 one has to admit at the end that its relevance to policy would have been enhanced if the results were available in 2002-03.

(The writer is Chief Economist, Government of Pakistan.)