Punjab can achieve full employment and absorb the entire existing stock of unemployed by consistently growing at an annual rate of 6-6.5pc over the next several years, claims the Punjab Economic Report 2017.

The size of Punjab’s total labour force is estimated to be about 36.92 million — around 35.3pc of the provincial population and a little above 60pc of the aggregate labour force of Pakistan — with as many as 2.3m, or just less than 6.4pc, looking for work.

“The growth in the provincial labour force over the last eight years has averaged at around 2.25pc per annum. This means that the gross provincial product (GPP) will have to grow by around 4-4.5pc to absorb new entrants into the labour force,” says the report, launched last week after a break of 10 years. “An additional growth of two per cent will be required to absorb the existing stock of unemployed individuals (in the province). This implies that an annual growth rate of 6-6.5pc in the provincial GPP may be sufficient to achieve the target of full employment.”

If by 2018 the provincial government is able to resolve its energy shortages, the report argues, it will add an additional 2pc to the growth rate. This means the provincial government is in a strong position to meet the target of full employment.

The report draws heavily on the findings of the Pakistan Labour Force survey to examine the provincial job market and employment trends, besides analysing the state of Punjab’s economy and the challenges facing it.

It says the labour force in Punjab in the eight years between 2007 and 2015 grew at an average rate of around 2.8pc while the employment rate was slightly slower at around 2.3pc.

Over the last eight years, the report claims, Punjab had created around 5.5m jobs (against a total number of 6.1m workers entering the labour market during this period). In other words, about 600,000 (or 10pc of new workers) had joined the ranks of the unemployed because of the provincial economy’s failure to absorb them. Punjab’s economy, says the report, had grown by an average annual rate of 4.4pc.

Though the report tries to give a broader province-wide perspective of the labour force and employment situation, it does not analyse the job market in different sub-regions of Punjab despite significant differences in their economies and nature of employment opportunities.

Trends: The report highlights several significant trends in the provincial labour force. For example, Punjab’s labour force is primarily rural and skewed towards male participants. In 2015, there were 26.3m male participants, of whom 65.8pc were based in rural areas. Similarly, out of the 10.6m female participants, 84pc were from rural areas.

The provincial government will have to respond more quickly or the opportunity to capitalise on the demographic dividend will be lost

Agriculture remains the largest employer in Punjab, absorbing 44.7pc of the provincial labour force. The percentage of people employed in agriculture in Punjab has increased by almost 1.5pc from 2007 to 2014 while at the national level the share reduced by 2.4pc.

This increase has come about owing to a 4pc increase in female employment in the urban agriculture sector and in spite of a reduction in the share of agriculture in GPP.

Overall, the non-agriculture sectors, manufacturing and services, employ 55.3pc of the provincial labour force, with the share of formal employment increasing marginally from 13.1pc in 2007 to 14.1pc in 2015.

The informal sector still remains the second-largest job provider by employing 41.1pc of the total workforce. As a consequence, the average monthly income in Punjab is lower than that of national level on all (income) splits, as a large portion of the labour force is in low-paying jobs.

Further, the report shows that the rural economy is producing more jobs for women than the urban sectors. In terms of employment in the rural areas, the probability for males and females to be employed is almost identical with employment ratios equalling 94pc.

However, in urban areas the employment ratio of males is 93.3pc and for females it is around 83pc, down from around 86pc in 2006-07. This suggests that employment opportunities for female workers in the urban sectors of Punjab are decreasing over time.

On the whole, the male participation in the labour force is close to 50pc compared with female participation of just around 20pc. Many attribute this low female participation to cultural, religious and a lack of employment opportunities for women.

The labour force in the province in later years is estimated to be greater than earlier years as the total employment in the age group 10 to 24 is lower in 2015 compared with 2007. Consequently, the number of unemployed people is rising in this age group.

“This could be explained by three possible reasons: Firstly, the unemployed are leaving the labour force because of being persistently unemployed. A second reason may be that a slight effect of ageing is beginning to show. A third reason could be the stronger enforcement on child labour and increasing number of years spent in education or training,” cautions the report.

“In either case, the government will have to respond more quickly before the demographic dividend becomes a demographic disaster or the opportunity to capitalise on demographic dividend is lost,” it says.

Overall, the labour force is more literate now as compared to 2007. The literacy rate has increased from 57-62pc and most of this change has come about from increasing literacy in the female population.

Published in Dawn, The Business and Finance Weekly, December 25th, 2017