AS pointed out by the annual report released for the fiscal year 2006-07 by the State Bank of Pakistan, employment growth ratio in agricultural and manufacturing sectors “seem to be inconsistent in terms of their sectoral share in the GDP.” A quick look at the report and the data provided therein is enough, however, that the ratio not only “seem to be inconsistent”; but it is, indeed, inconsistent and seriously so.

The two sectors contribute almost identically to the nation’s gross domestic product, with the share of agriculture at 20.9 per cent being slightly higher than that of manufacturing which stands at 19.1. The share in job growth in the two sectors, however, is anything but identical; agriculture at 43 per cent leaving manufacturing far behind at 13.9 per cent.

The tone of the SBP report suggests that the authorities do not have a clear idea of the reasons behind the phenomenon. Talking of the disproportionate growth in jobs, all the report says is, “This is perhaps due to the concentration of population in the rural areas where agriculture is the dominant sector of employment.”

The reasoning, however, leads to another inconsistency in the report when a few paragraphs later, it says that the reduction in unemployment, “is more pronounced in urban areas compared to the rural areas, where unemployment declined from 9.7 to 8 per cent in the urban areas, while it declined from 6.7 to 5.4 per cent in rural areas during 2004-06.”

While the SBP report has not dilated upon what this lopsided growth means in practical terms, Dr Faisal Bari, Associate Professor of Economics at the Lahore University of Management Science (LUMS) and a Visiting Fellow at the Islamabad-based Mahbubul Haq Foundation, believes the data actually has a “negative connotation.”

According to him, the ratio of crop area has at best remained static. In several areas, especially in Sindh, the agricultural area has, in fact, gone down on account of water scarcity and salinity. That being so, there should be that many less job opportunities in the sector. “If there is still such a high growth in sectoral employment, it means we are putting more people to cultivate less area.”

This, in turn, makes him draw two basic conclusions. One, that the agriculture sector is not being encouraged to go for technology input which is the only way to “rationalise its current labour-intensive status”. Two, that most of the job growth will actually turn out to be short-term in character because the country has had better rainfall in the last few years which may have given boost to activity in the sector. The agriculture sector would see a serious and prolonged slump once the country hits the inevitable dry curve of the weather cycle, as was the case till a few years ago.

Keeping aside all the scepticism that accompanies official figures, even if the figures quoted by the SBP are taken on face value, Dr Bari says the data should make the authorities think again about policy direction and implementation strategy if they are serious about bringing down unemployment in real terms.

Those at the helm of affairs should particularly worry about the incapacity of the foreign direct investment to create enough jobs. The SBP report itself indicates that a huge chunk of the money coming in is directed towards non-exportable sectors, and not towards the manufacturing sector.

Besides, whatever we have in the name of a functional industry, there are factors that are pulling it down as well. Dr Bari quotes the example of recent happenings within the national textile industry to underscore the other side of the coin.

Seen together, it is a rather grim situation that is developing. With not many new jobs not being created by the much-trumpeted foreign investment, and with existing jobs facing the dreaded chopping block, it is anybody’s guess to foresee where the job market is heading.

As things stand today, Pakistan has an active labour force of 50.5 million. Quoting the National Economic Survey, the SBP report puts the number of unemployed at 3.1 million. The reason put up by the authors of the report sound a bit too over-simplistic. “Over the years, Pakistan has been recording a comparatively high population growth rate along with an increasing labour force … Labour force which was standing at 25.78 million in 1981 increased to 50.5 million in 2006 … the declining unemployment rate shows that the economic growth over the last five years has created job opportunities for this rising labour force. However, a gap can still be observed,” it says.

The apparent way out of this tight spot, says Dr Faisal Bari, is to concentrate on sectoral growth so that more and more people may have access to employment opportunities on a long-term, sustainable basis. This, he stresses, is only possible through sufficient and consistent inputs in the manufacturing sector.