The challenge of unemployment

Published : Apr 09, 2004 00:00 IST

Human Development in South Asia 2003: The Employment Challenge by The Mahbub ul Haq Human Development Centre; Oxford University Press, Karachi, Pakistan.

SOUTH Asia faces five major employment challenges, says the recent report of the Mahbub ul Haq Human Development Centre, Human Development in South Asia 2003: The Employment Challenge. One, South Asia is a hugely populated region with 1.4 billion people, 60 per cent of whom are in the working-age group. Two, labour force participation is only about 66 per cent of the working-age population. Three, employment growth rates are lower than both gross domestic product (GDP) and labour force growth rates. Four, agriculture is the predominant employer, although this sector has been suffering from lack of investment and low productivity since the Green Revolution during the 1960s. Five, one-third of South Asia is in poverty; and, about half of the population in four large countries is illiterate.

South Asia currently accounts for about 22 per cent of the world's population. Except Sri Lanka, which has completed the demographic transition, the other countries are still in the midst of a population explosion. Recently, Bangladesh and India entered the fertility-declining phase of demographic transition.

In South Asia, children aged 10-14 years and senior citizens aged 65 years and above are also engaged in economic activities. Owing to this structure of the population in which the youth dominate, the working-age population growth rate will be higher than the overall population growth rate. Thus, the addition to the growth of the labour force may not decline perceptibly in the near future, though the population growth rate is projected to come down.

South Asia's labour market is characterised by pervasive unemployment and underemployment, especially among the youth and the educated; working poor who do not get adequate wages to get out of poverty; working children; and women who face discrimination across the labour market, reflecting prevailing social attitudes.

In South Asia, open unemployment is generally recorded to be low, owing to the absence of social protection plans for the unemployed and the non-existence of employment agencies often used for identifying the unemployed. Furthermore, the pervasive household enterprise system in South Asia acts as a labour market sponge. Also, the financial difficulty faced by an unemployed person forces him/her to engage in any kind of activity that may not be regarded as fully productive use of time. It is in this context that underemployment and non-productive use of labour become the real employment issues in South Asia.

UNEMPLOYMENT among the youth accounts for a major portion of the total unemployment. During 1997, youth accounted for 70 per cent of the total unemployed in Sri Lanka, 53 per cent in India and 45 per cent in Pakistan.

Employment prospects of educated youth have worsened during the past decade or so because of low or negative growth of employment in the public sector, which was the major employer of educated youth. In the case of urban India, in 1997, it was found that 41 per cent of those with higher secondary education were unemployed.

Whatever employment had occurred within the private sector was mostly in the semi-skilled or low-skilled areas. Thus, very little employment was generated for the educated.

The failure to find jobs appears to have led the educated youth towards either inactivity or further involvement in education. Data on Pakistan and India reflect these tendencies. For instance, according to the 1998-99 Labour Force Survey of Pakistan, 20 per cent of the post-graduate degree holders were out of the labour force, as they were neither working nor looking for work. Almost 50 per cent of female doctors and 35 per cent of graduates in different disciplines were reported to be out of the labour force.

The report claims that the World Trade Organisation (WTO) has failed to generate employment in the region. South Asia's unemployment levels have risen from 2.9 per cent in 1995 to 3.4 per cent in 2001 and the annual employment growth rate has come down during the second half of the 1990s as compared to the first half.

Data from the Asian Development Bank (ADB) show that unemployment has increased in Pakistan, Bangladesh and the Maldives, while it has decreased only in Sri Lanka during this period. Though the ADB data do not report India's unemployment rates, the Economic Survey of India shows that the unemployment rate increased from 5.99 per cent in 1993-4 to 7.32 per cent in 1999-2000.

The figures reveal that in most South Asian countries the employment situation has worsened in the post-WTO period. The report concludes that employment generation in South Asian countries has so far not benefited much from the WTO. Lately, some developed countries have started taking unilateral trade measures that violate the spirit of the WTO. The United States has changed its Rules of Origin Policy for the textiles sector, unilaterally imposed additional duty on steel imports, and proposed enormous increases in its farm subsidy outlays. Though some of these steps have been challenged in the WTO, so far no action has been taken.

The employment challenge in South Asia is highly discriminatory against women. Women's limited access to employment opportunities is best reflected in the gap between the unemployment rates of men and women, which shows women are 3.5 times more likely than men to be unemployed in Pakistan.

Two-thirds of South Asian women are employed in agriculture or agriculture-related activities. They work in various roles such as agricultural labourers, managers of homesteads, and sometimes even as landowners. However, they are not allowed equal opportunities in this sector in access to credit and inputs and face discrimination in wages.

In the informal sector, women form the majority of the workers. Two trends have led to the growth of female involvement in this sector. First, in the rural areas the migration of men to urban centres or abroad has provided opportunities for more female involvement in small enterprises. Second, in urban areas, the demand for cheap, low-skilled labour has increased over the years owing to export-oriented manufacturing. This trend has been instrumental in providing employment to an increasing number of women.

However, women are often hired on exploitative terms. They often work in difficult conditions for long periods. They accept low wages, and do not demand permanent contracts. As women become more active in the labour market, their bargaining power also improves. At the same time, however, as women's work gets more recognition, there is a fear that this might negatively impact on future employment opportunities for women.

The analysis in the report leads to three main conclusions about the South Asian employment challenge:

The persistent inability of the workplace to absorb workers productively can be attributed to the failure of governments in the region. This has happened on two important accounts. First, the governments did not adopt job creation as an explicit policy commitment. Second, the governments failed to improve the human development condition of the majority of the people.

Another failure has been on the part of multilateral organisations working in the region. Their efforts to improve the livelihoods of South Asians were often not backed by adequate financial resources, and their overall development policy framework focussed more on GDP growth and balancing budgets than on the reduction of poverty.

Finally, some blame for the persistent problems of unemployment and underemployment in the developing world is placed at the door of the developed world. The rich countries have failed in their promises of assisting development in the poorer countries. They have not delivered on their global commitment to allocate 0.7 per cent of their budgets for providing assistance to developing countries, and have not encouraged true liberalisation of the world economy.

Mohammad Shehzad is an independent journalist based in Islamabad.

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