As Pakistan’s economy slows down, its job market has begun to shrink. Several sectors have reported layoffs, while finding jobs can become more difficult for newcomers in the short to medium term.
“Textile and technology sectors have reported job cuts amid the economic slowdown,” said Fahad Rauf, Head of Research at Ismail Iqbal Securities, last week.
“Some Pakistani exporters have reported cancellation of export orders (by international buyers) in the backdrop of global recession fears.”
The central bank has stated that, although the rate of employment has improved and the rate of unemployment has decreased in the past three years, these rates are still below the required levels due to slower economic growth.
Pakistan’s economy is expected to slow down to 3-4% in the fiscal year that started on July 1 compared to 6% growth in the past two consecutive fiscal years, according to the central bank’s latest monetary policy statement.
“The rate of employment has contracted due to slowdown in the economy,” said BMA Capital Executive Director Saad Hashemy.
The job market has begun to contract due to a significant increase in global commodity prices as a result of the Russia-Ukraine conflict. Pakistan, which is heavily reliant on imports to fuel its economy, has been particularly affected. However, there are signs that the rapid decline in global commodity prices in recent days will help the economy to recover and provide opportunities for those who are looking for work.
The price of crude oil (West Texas Intermediate) fell to $95 per barrel in the international market on Tuesday, compared to around $120 per barrel about a month ago. The labour force increased from 65.5 million in 2017-18 to 71.76 million in 2020-21, and the number of employed people increased from 61.71 million to 67.25 million during the same period, according to the Economic Survey 2021-22 unveiled about a month ago.
“The unemployment rate slightly decreased from 6.9% in 2018-19 to 6.3% in 2020-21. This shows that 4.51 million people from the labour force could not get a job in FY2021.”
The agriculture sector is a major contributor to the gross domestic product (GDP), playing an important role in the development of the economy.
The share of employment in the agriculture sector decreased from 39.2% in 2018-19 to 37.4% in 2020-21, according to the Labour Force Survey 2020-21.
This sector is the key source of raw material supply to different sectors of the economy, especially the industrial sector.
A significant portion of employment that was previously in agriculture has shifted to the industry and services sector due to technological transformation. The services sector is the fastest-growing sector of the economy and its share of employment was 37.2% in 2020-21. The construction and manufacturing sectors are considered major sources of economic growth and development. The expansion of these sectors can generate millions of jobs for the unskilled, semi-skilled and skilled workforce.
Furthermore, these sectors also play an important role in generating income in the formal and informal sectors.
“Share of employment in the construction sector has increased from 8% in 2018-19 to 9.5% in 2020-21. This increase shows that job opportunities are being created in the country,” the Economic Survey said.
The wholesale and retail trade sector accounted for 14.4% of employment in 2020-21. There was no change in the employment level in transport/storage and communication over the same period, and the share of employment in the community/social and personal service sectors increased from 14.9% to 16%.0%
The overall employment-to-population ratio, as measured by the Labour Force Survey 2020-21, is 42.1%. This ratio is higher for males (64.1%) than for females (19.4%).
The employment-to-population ratio is defined as the number of employed persons expressed as a percentage of the working-age population (10 years and above).
Province-wise comparison also shows the same pattern. In Punjab, the employment-to-population ratio is 44.2%, followed by Sindh (42.1%), Balochistan (38.6%) and Khyber-Pakhtunkhwa (36%), according to the survey.
Economy Survey data suggests Pakistan has created on an average 2.08 million jobs in each of the past three years compared to the projected 1.4 million