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Pakistan Jobs Diagnostic: Promoting Access to Quality Jobs for All

Core Content

This Pakistan Jobs Diagnostic report, published by the World Bank in 2020, provides a comprehensive analysis of the country's labor market and outlines key policy interventions to enhance job creation, productivity, and inclusiveness. The report emphasizes the importance of jobs in driving sustainable economic growth and shared prosperity, particularly in the context of Pakistan's demographic transition and its aspiration to become an upper-middle-income country by 2047.

Main Findings

• Demographic Transition: Pakistan's working-age population is growing faster than the overall population, offering potential for demographic dividends if the economy can absorb these workers into quality jobs.
• Job Quantity: Only 27% of the population was employed in 2017, with one worker supporting 3.6 individuals. A significant portion of the working-age population is out of the labor force, primarily due to low female labor force participation (FLFP) and a high number of NEET (Not in Employment, Education, or Training) youth.
• Job Quality: Productivity levels remain low, with limited structural transformation from agriculture to industry and services. Informal employment dominates, with over 40% of workers in agriculture and 26% of wage workers in formal employment.
• Job Inclusiveness: There is significant disparity in access to quality jobs between genders, urban and rural areas, and different age groups. Women face multiple barriers, including social norms, mobility constraints, and safety issues. Youth, despite higher education levels, still struggle with employment in non-agricultural sectors.

Key Policy Directions

1. Policies to Strengthen the Fundamentals of Job Creation

• Macro Stability: Address long-standing economic fluctuations by improving tax policies, reducing distortionary subsidies, and reforming public utilities and energy sectors.
• Business Environment: Simplify processes and regulations to support new business entry and capital accumulation.
• Export Competitiveness: Reduce production and information costs through initiatives that promote trade and lower tariffs.
• Invest in Physical Capital: Mobilize resources through tax reforms, FDI, and remittances to support firm investment.
• Invest in Human Capital: Focus on early childhood development, universal primary education, and skill development, especially for the poor and girls.

2. Policies to Boost Productivity

• Support Microenterprises: Provide business development services, access to credit, and managerial training to improve efficiency and growth potential.
• Formalization of Informal Workers: Implement standard contracts and social insurance mechanisms to reduce costs for firms and improve worker protections.
• Skill Development: Offer literacy, numeracy, entrepreneurial, and noncognitive skills training to enhance labor market prospects.
• Productive Inclusion: Implement graduation programs that combine basic protection, livelihood support, financial inclusion, and social empowerment.
• Migration Support: Provide resources to mitigate migration costs and risks, and adapt safety nets to urban contexts to support vulnerable workers.

3. Policies to Promote the Inclusiveness of the Labor Market

• Women's Economic Empowerment: Address gender norms, improve procedural costs for women's economic activities, and promote girls' education.
• Income Diversification in Rural Areas: Encourage secondary agricultural activities and nonfarm rural businesses to improve productivity and opportunities for women.
• Upgrade Agricultural Practices: Enhance skills and linkages for female agricultural workers to increase productivity.
• Female-Friendly Work Environments: Encourage employers to adopt measures such as separate workspaces, childcare, and transportation, supported by incentives and regulations.
• Leverage ICT: Promote ICT jobs and social sector roles (e.g., caregivers, health workers) for educated women in urban areas to improve flexibility and mobility.
• Youth Employment Strategies: Strengthen youth training and entrepreneurship programs, support the adoption of new technologies in agriculture, and provide job search assistance and wage subsidies.

Key Challenges

• Informality: A large share of the workforce is in informal or low-paying jobs.
• Gender Disparities: FLFP rates are low and stagnant, especially in urban areas.
• Youth Unemployment: High NEET rates among youth indicate a lack of access to education, employment, and training.
• Regional Disparities: Significant variations in labor market outcomes exist between urban and rural areas, as well as across provinces.
• Structural Transformation: Slow movement from agriculture to industry and services limits productivity growth.

Conclusion

The report underscores that job creation, quality, and inclusiveness are critical for Pakistan's future growth and development. It calls for a multi-level, coordinated policy approach to address these challenges, including macroeconomic stability, improved business environments, and targeted investments in human capital and women's empowerment. The report also highlights the importance of leveraging migration and technology to enhance employment opportunities and outcomes.