I was recently invited by the Pakistan Office of the ILO, based in Islamabad, to support the work of one of the agencies within the Pakistan government (Centre for Rural Economy) which is finalising a strategy paper on rural development based on the notion of ‘decent work’. This notion was developed by the ILO about 20 years ago and is now enshrined in the Sustainable Development Goals.
A country is supposed to make progress towards decent work when:
(1) there is measurable improvement in realizing rights at work (e.g. reduced incidence of child labour, reduced gender discrimination);
(2) there is concrete progress towards full and productive employment (e.g. increase in the employment rate, reduced informality, reduced working poverty);
(3) there is an extension of social benefits to poor and vulnerable groups as part of a transition to a universal social protection floor;
(4) there is industrial harmony reflected in well-functioning and independent unions and employer organisations, robust collective bargaining, effective tripartite consultation, low incidence of labour unrest (characterised as a state of healthy ‘social dialogue’).
The key constraint to making measurable progress towards decent work in rural areas lies in the macroeconomic imbalances that Pakistan must cope with in the medium-term. These imbalances reflect fiscal and external fragilities. In mid-2019, the government entered into a lending arrangement with the IMF under the extended fund facility (EFF). The overall package is worth USD 6 billion with a tenure of 39 months. The arrangement entails significant fiscal consolidation with an emphasis on revenue mobilisation, monetary policy tightening, devaluation of the exchange rate, structural and governance reforms to support long-run growth.
The projection for the next 3 to 5 years is one of slow growth (less than 3 per cent) according to the IMF – see Figure 1. Given a population growth of 2.4 per cent, this implies an economy that will hover on the precipice of a per capita recession for a few years. The agricultural sector is already in a per capita recession, led by sharply negative growth in the crop sector – see Figure 2. Under these circumstances, sustaining living standards in rural areas will be a formidable task. Hence, reviving growth – at least in the 5 to 6 per cent range for the national economy and 4 to 5 per cent for the rural economy – will be of utmost priority.
Source: IMF data mapper, https://www.imf.org/external/datamapper/datasets
Source: Government of Pakistan, Economic Survey, 2018-2019, http://www.finance.gov.pk/survey_1819.html
Both the government and the IMF recognize that resurrecting growth is a priority and one must go beyond the rectification of macroeconomic imbalances. There is considerable optimism placed in structural reforms (typically entailing improvements in the business climate) in supporting long-term growth, but a lot more needs to be done to improve living standards in rural communities that make up more than 60 per cent of Pakistan’s population. A rural focus is needed in a policy framework that is preoccupied with macroeconomic concerns.
The government has taken steps in the right direction by unveiling an emergency program to support the agricultural sector. The overall value of the support package is approximately Rs 310 billion (or close to 2 billion US dollars). The aim is to improve the productivity of major crops, enhance water conservation and water supply, support agricultural diversification and promote resilience to climate change. This is combined with efforts to substantially increase credit disbursement to the agricultural sector. As the Pakistan Economic Survey (2018-2019) notes, the government is also mindful of ‘SME development in rural areas and creating small cities in rural areas.’ This is in line with the idea of bringing about rural transformation rather than just agricultural development as argued in the 12th Five Year Plan.
Such an agenda of rural transformation that could serve as a pathway to decent work would be incomplete if it is not supported by sustained efforts to reduce, and ultimately eliminate, hazardous forms of child and bonded labour prevalent in agriculture and related activities. The challenge of gender disparities needs to be resolved, most notably by raising the rather low female labour force participation rates.
This alone would provide a major boost to growth and bring about a significant transformation in the world of work in rural communities. The momentum to extend social protection to excluded groups needs to be sustained. At the same time, every effort should be made to improve the state of social dialogue.
Iyanatul Islam is an Adjunct Professor at the Griffith Asia Institute and former Branch Chief, ILO, Geneva. The views expressed in this blog are the author’s own and should not be attributed to the ILO.