UNFPA-backed study points out low productivity, wages in Pakistani labour market

People of Pakistan work for a lower proportion of their lives than other countries, while in jobs they are less productive and yield lower incomes.

This has been revealed in a groundbreaking National Transfer Accounts (NTA) research jointly carried out by the Pakistan Institute of Development Economics (PIDE) and United Nations Population Fund (UNFPA).

The study reveals that the economy of Pakistan heavily relies on unpaid labour, especially by women, which is often overlooked. It calls for a serious debate as the world over, people work longer with increasing age and are more productive.

One of the study's key findings is the spending patterns of households across Pakistan. Based on the latest dataset, the study analyses household consumption of goods and services, excluding health and education, including durable and non-durable goods, providing a detailed glimpse into the spending habits of Pakistani households.

The study shows that in Balochistan, people mainly depend on paid income activities, and self-employment earnings usually start after the age of 50. On the other hand, self-employment in the province of Khyber-Pakhtunkhwa begins at a younger age. Most of the population in Balochistan depends upon government schooling while in Punjab, a majority relies on private schooling. Most of the higher education relies upon public sector universities.

According to the NTA methodology, two-thirds of the mixed income is allocated to self-employed income, referring to earnings from labour for self-employed individuals.

This approach highlights the economic value of labour that is not traditionally compensated through wages or salaries. The pattern of labour income across all four provinces is consistent, increasing with rising labour force participation and peaking in the age group of 35-50.

The study emphasises the economic contributions of unpaid labour and highlights the need for policies that recognise and support these essential yet unacknowledged segments of the workforce.

The NTA study reveals the lifecycle deficits and public consumption patterns across its provinces, offering critical insights into the broader economic scenario. The study analyses the economic lifecycle, comprising consumption, labour income and the resulting deficit or surplus.

A crucial finding of the study is the aggregate lifecycle deficit, which is the difference between total consumption and labour income. In this regard, the study finds that the age where the labour income starts and ends exceeding the consumption is nearly the same across all provinces, i.e., between 27-30 and 60-63. This consistency across other provinces highlights a common economic challenge.

The total consumption includes private and public consumption, with private consumption encompassing durable and non-durable goods at the household level. The study's data shows that the highest level of other consumption is found in Punjab and Sindh, with nearly Rs 60,000 per annum, Khyber-Pakhtunkhwa is around Rs50,000, and Balochistan hovers near Rs30,000 per annum.

This disparity in consumption levels across provinces underscores Pakistan's varied economic landscapes. By understanding these consumption patterns and lifecycle deficits, policymakers can tailor region-specific strategies to address unique economic challenges and opportunities in each province.

The study underscores the importance of increasing public spending on health. The current out-of-pocket expenditure on health far exceeds public expenditure in all provinces, often pushing households into poverty. There is an urgent need for enhanced public healthcare funding.

The study also suggests encouraging fertility decline along with policies promoting balanced family sizes. Additionally, creating better employment opportunities is vital. The study reveals that surplus income, where present, is insufficient to cover deficits at younger and older ages, let alone for savings or investments.

This situation calls for policies that foster gainful employment, particularly in the provinces of Khyber-Pakhtunkhwa and Balochistan, where the per capita surplus is minimal.