The unemployment in Pakistan has been higher during the last two years than it was during the first eight years of the last decade, according to a study conducted by the Asian Development Bank (ADB)

Overall unemployment rate in the country declined from 8.3pc in 2001-02 to 7.7pc in 2003-04. According to the Pakistan Economic Survey 2006-07, the rate of unemployment fell further to 6.2pc in 2005-06. Despite reduction, the rate of unemployment during this decade has been higher than what it was recorded in 1999 at 5.89pc, in 1998 at 5.89pc, in 1997 at 6.12pc, in 1996 at 5.37pc, and in 1995 also at 5.37pc.

Clearly, the benefits of growth have not been shared through employment creation. The growth may have been based on capital- and technology-intense processes that are labour-saving. Labour-displacement after privatisation may have also contributed to unemployment.

Irrespective of what the factors were behind unemployment and regardless of the trend, a big question that always arises is about how correct the actually stated rate of unemployment is. For, the underemployed could be included in the employed to overstate the denominator of the labour force comprising employed and unemployed. An overstated denominator would understate the rate of unemployment. The denominator is certainly overstated if the definition of the employed includes “all persons 10 years of age and above who worked at least one hour during the reference period” according to Pakistan Labour Force Survey 2003-04. In this survey, a week of seven days before the date of enumeration has been used as the reference period.

If employed covers children of 10 years and above, then child labour is also used amongst the employed. Work of one hour during a week is underemployment that gets counted as employment according to our official count. The denominator is, therefore, overstated. The actual rate of unemployment is, therefore, considerably higher than what is stated. For, employed should ideally comprise all adults in the working age group who work, at least, 40 hours a week with adequate compensation so that they do not need to supplement their income. This would, however, reduce the number of employed and increase the official rate of unemployment.

Even though the Pakistan Labour Force Survey 2003-04 treats underemployed as those working less than 35 hours per week involuntarily and are available for additional work, it contradicts the definition of employed discussed above. The definition of underemployment may, therefore, be used to determine the extent of underemployment in the country. Even if the rate of underemployment is stated separately, it does not mean that the underemployed are excluded from the employment calculation for as long as employed is defined according to the afore-mentioned definition.

The unemployed are defined as all persons 10 years of age and above who are without work, are seeking work, and are available for work during the reference period that, in Pakistan Labour Force Survey of 2003-04, is seven days before the date of enumeration. Would this imply that all those without work who gave up looking for work as they could not find any would be excluded from “unemployed” if they did not seek work during the reference period of seven days before enumeration?

If that be the case, then we are talking about “discouraged workers” who are excluded from unemployment calculations in developed thriving economies. In such economies, such discouraged workers are a small proportion of the unemployed whose inclusion or exclusion will not distort the unemployment calculations much. In the case of Pakistan and with unemployment calculations designed after developed economies’, the exclusion of discouraged workers from the unemployed will understate the actual level of unemployment significantly and, thereby, the rate of unemployment too.

Unless the above concerns are factored into the unemployment calculations, the true rate of unemployment will never be known in quantitative terms. The state of unemployment is, however, not hidden from any one.

The extent of rural-urban migration creating huge pressures on urban management itself shows the extent of unemployment in rural areas that induces migration of families. These migrants would much rather live in shanties in urban areas than in their mud homes that they, at least, have in their native villages. It is for the sake of work that they withstand all kinds of rough living conditions — almost inhuman - in urban areas where they do not even have protection from inclement weather.

The upshot is that the informal sector grows to the extent that the informal sector accounted for 41.25pc of employment in 2005-06 up from 39.84pc in 2003-04 (PES 2006-07). The contribution of non-agricultural informal sector to employment was comparable not to the non-agricultural formal sector but to the agricultural sector’s that accounted for 43.05pc and 43.37pc of employment in 2003-04 and 2005-06 respectively (PES 2006-07).

The contribution of the non-agricultural formal sector has actually declined from 17.11pc in 2003-04 to 15.37pc in 2005-06 (PES 2006-07).

Fewer jobs are, therefore, being created in the non-agricultural formal sector which should explain why there is a bee line for foreign visas sought by many of our qualified youth. Unless the economy enters into a virtuous cycle, the push for migration will only intensify. That is, migration from rural to urban areas and from urban areas of Pakistan to not only developed marlets but also to the Middle East. It is, therefore, difficult to find, retain, and utilise talent where it is needed the most.

To stem the tide of migration is to begin by stemming the tide of rural-urban migration by making rural life attractive enough for potential migrants. That is, to create jobs in the rural agricultural sector.

Best way to engage the rural population in rural areas is to give them land on which they may grow and develop along with the land. Peasant farming engages the whole family. So, all working hands of the peasant family would be engaged. Improvement in their economic lot would throw up demand for basic labour-intensively manufactured goods that would further enhance the level of employment. As peasant farming graduates to mixed farming and then to commercial farming, the two sectors of agriculture and industry would grow in sync followed by integration with services. There will then be scope and opportunities for all to exploit in the homeland.

Unless this scenario develops, growth may take place without creating jobs required essentially to sustain growth over the long haul.