Demographic Transition in Pakistan: Implications For Old-Age Employment and Security

Demographic Transition in Pakistan:
Implications for old-age employment and security
Extended Abstract
Demographic transition is finally taking place in Pakistan and there is much talk about
reaping the “demographic dividend” in the country. There is, however, a need to realise that
capitalising on the dividend is not just about creating opportunities for the young. Seizing the
opportunity inherent in the dividend, to stimulate economic growth and reduce poverty, will
be about policies linked to the elderly.
Objectives and Data

Pakistan too will grow old, and care of the elderly will become important in future, with
women being most vulnerable, more so economically, because of longer life expectation. The
paper, thus, looks into the trends leading to the demographic transition in Pakistan and its
implications for the country, specifically those related to employment. Using data from
various demographic surveys and the Labour Force Surveys, the paper examines the trends
and determinants of employment, and more importantly unemployment, and explores the age
and gender dimensions to it vis-à-vis demographic transition. Issues related to old age security
would also be explored in the paper.
Basic argument of the paper

Unemployment rate shows an increasing trend with age, and in the absence of any old-age
security system, leaving the elderly in a vulnerable state. Poor state of human capital of the
labour force contributes to this vulnerability during old age. Without an educated, skilled and
economically flexible work force, the social and economic costs of aging in terms of security
of health and pensions would be difficult to endure. A major change is required to
progressively make the economically productive age approach the physical age. Employment
and employability should be the ethos of all the economic and social policies. This
necessitates major investment in human capital, and introduction of social reforms to draw in
women, since labour markets are always socially entrenched.
Preliminary Results
With fertility going down the rate of growth of the labour force is on the increase at present
giving the country an opportunity to avail the first demographic dividend.
Figure: Trends of TFR, and population and labour force growth rate over time: 1950-2050
4.00 7
W orkers growth rate

3.50
Pop growth rate 6
TFR
3.00
5
2.50
2.00
1.50
2
1.00
1
0.50
0.00 0
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
1
Lowering of the total and young dependency ratio at present sets the stage for an increased
old dependency rate in future. As shown in the figure below.
Figure: Trend of age dependency over time: 1950-2050

1.00
0.90
Total dependency Young dependency Old dependency
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
If wise policies are implemented, this can give an opportunity to reap a second dividend as
well but the situation in Pakistan gives no such hope. The unemployment rates are highest for
the elderly, especially the females. As can be seen from the figure below, unemployment rates
increase as we go up the age groups. In the absence of any social security system, this can
lead to financial crisis for the elderly.
Figure: Age specific unemployment rates

40
35
Males Female Total
30
25
20
15
10
0
10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+
Recent trends have shown that increasing life expectancy of the females is leading to an
increased labour force participation by the elderly. The male and total elderly LFPRs are
going down but that of the old females is going up. The marital status of the elderly women
contributes to this trend, with their likelihood of being alone and experiencing widowhood at
2
old age being high (51.7 percent females are widowed age 65+ as against 19.1 males). Figure
below shows the trend of old-age labour participation over years for males, females and total,
showing an increasing trend for elderly females.
Figure: Trend of labour force participation by the elderly over years by sex
2006
Total 2000
1990
1980
65+
Females
Males
0 10 20 30 40 50 60
The second dividend depends on the capital deepening resulting from the investments made
by the elderly. This, however, depends on the human capital of the labour force and in case of
Pakistan we see that the elderly active in the labour market are primarily illiterate and
unskilled individuals. The table below shows the literacy level of the elderly active in the
labour market and their poor human capital.
Table: Literacy level of the elderly active in the labour force
Literacy level Elderly males Elderly females

Never been to school 63.7 98.3
Primary 16.4 0.0
Secondary 14.7 0.0
High 2.8 1.7
Post-high 2.4 0.0
Total 100.0 100.0
This poor level of human capital is reflected in the nature of jobs they are doing and their
earnings. Most of them are employed in unskilled jobs and earning meagre amounts- with
females being at a disadvantage again. The average annual amount earned by the males is
Rupees 51658 (689 US$), while that for the females is almost six times less at 9049 (120
US$). The situation becomes even graver in the context that no universal old-age security
system exists for the elderly in the country. In a scenario where the elderly are at stake of
losing even a decent living, any hope for a second dividend can only be a dream.

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Demographic Transition in Pakistan:

Implications for old-age employment and security

Objectives and Data

Basic argument of the paper

W orkers growth rate

Figure: Trend of age dependency over time: 1950-2050

Figure: Age specific unemployment rates

Males Female Total

Table: Literacy level of the elderly active in the labour force

Literacy level Elderly males Elderly females

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