While the methodology is not fully known nor is known the representative scale of the Pakistan Social and Living Standards Measurement Survey 2004-05, suffice it to say that there is more to poverty and unemployment than mere calorie intake or rate of unemployment. Let us take poverty first.
Calorie intake may measure ‘absolute poverty’ to a certain extent but not ‘relative poverty.’ Also, according to The Copenhagen Declaration, absolute poverty is “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information.”
If absolute poverty is defined as above, then 6.7 per cent claimed reduction in poverty on the basis of calorie intake is not even reduction in absolute poverty. It is only betterment of calorie intake.
If this is the case, it would be premature to claim an improvement in the poverty index. For, calorie intake is just one component of the overall absolute poverty level and is also nowhere near the measurement of relative poverty.
Relative poverty is measured by percentage of population below the poverty line and also by poverty gap. Poverty line may vary from country to country in terms of nominal income. But, it is usually considered to be the food budget multiplied by three for a family of four so that other basic needs of shelter and clothing are also taken care of to the extent that the head stays above water. To this extent, it comes closer to The Copenhagen Declaration and shows again that our official definition of poverty on the basis of only calorie intake captures the state of poverty inadequately.
To demonstrate that Pakistan has improved on the score of relative poverty, the poverty line should be made known first on the basis of the above formula. Then, we need to know the percentage of population below the above-determined poverty line. And, we can call the situation improving only if the percentage of population below the poverty line is decreasing.
However, even if the percentage of population below the poverty line drops, it is ‘economic distance’ that will still be relevant to know. That is, inequalities. For, there is no point in lifting the people above the poverty line if they do not make steady progress towards integration with the country’s mainstream.
So, relative poverty may be falling but income inequalities may be increasing as measured in terms of the Gini co-efficient and the ratio of the income share going to the richest 20 per cent divided by that of the poorest 20 per cent.
So, despite a decrease in relative poverty, the nation will not be getting richer if inequalities increase and this economic distance becomes increasingly difficult to bridge. That is why, in the European Union, poverty is described as ‘economic distance’ or inequality. If income gap widens, it reflects a poverty of policy outlook in the country.
It is, therefore, not so simple to claim reduction in poverty in a country. Calorie intake may improve but not absolute poverty based on a host of other factors. Absolute poverty may decrease but relative poverty may increase. And, relative poverty may decrease but economic distance in terms of income as well as consumption inequalities may increase. Credible poverty reduction claim is, therefore, a major challenge in Pakistan.
Further down, it is the poverty gap that really reflects the status of poverty and poverty profile in the country. That is, it determines the extent of resources required to lift the population up to the level of at least the poverty line. Two countries with the same percentage of population below the poverty line might be having very different poverty profiles and would, therefore, require different levels of resources to lift the population up to the levels of their country-specific subsistence. So, same percentage of population below the poverty line may yield different poverty gaps depending upon the poverty profiles.
It is poverty of food, shelter, clothing, water and sanitation, healthcare, information, education, jobs, and opportunities that needs to be dealt with. Countries poor in above respect will remain poor for as long as they are characterized by poverty of thought, intellect, morality, intention, will, sentiment, and passion to redress the situation.
If pursued honestly, ethically, and passionately; headway can be made on all counts of poverty. Otherwise, there will be repeated attempts made to camouflage the situation by even massaging data collection and the data. It is not impetuosity that is needed to show results overnight or over a year or two and that too results that will not sell too well.
Rather, policy makers ought to militate against the conventional status-quo reinforcing paradigm to break path towards a direction that would lead to poverty eradication and inclusive socio-economic development in the foreseeable future irrespective of whether the incumbent policymakers would be in the office or not at the time when the fruits are borne. It is this kind of vision that leads to strategic direction-setting for times to come and not a view limited by one’s term in the office.
That poverty reduction must somehow be shown whether or not actual reduction has taken place smacks of both lack of maturity and conscience which is the least expected from the incumbent policy makers in the highest offices of the country.
Same is the case with unemployment. The rate of unemployment may have gone down somewhat but one needs to know if percentage changes are of relevance in a society where discouraged workers abound. That is, unemployed or underemployed people who give up looking for work in the formal sector because they think none is available. If the figure of unemployed does not reflect these discouraged workers, the numerator in the unemployment rate formula is clearly understated and so would the rate of unemployment be.
The rate of unemployment would be further understated given the fact that the denominator including the employed is overstated as it also includes the underemployed. Calculating the unemployment rate with the help of formula suited for Western economies operating closer to full employment would give a picture rosier than it actually is in our country. A 0.9 percentage point reduction in unemployment is, therefore, hardly a cause for glee in our economy that is not throwing up enough new opportunities to absorb all the job aspirants according to their skills and potential.
High actual and not official rates of unemployment add to economic woes and keep the people poor also when the cost of living is rising fast. CPI increased to 11.1 per cent during the first six months of the current year as opposed to 10.4 per cent during the same period last year. The analogy of toothpaste used by government officials sounds a really precarious note as toothpaste once it comes out does not go back in the tube. It is not difficult but impossible to put the toothpaste back in the tube.
Are we being told that inflation rate will not be reduced like toothpaste that does not go back in? With rising price level especially of staples and other food items, people are left poorer. To talk of poverty reduction against such a backdrop adds an even more amateurish note to the entire claim of poverty reduction that is hardly credible and tenable anyways as discussed herein.