pakistan socio economy data

8/13/2019 pakistan socio economy data

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Dr. Vaqar Ahmed

Sustainable Development Policy Institute

Implications of Growing Middle Class for

Pakistans Socio-Economy


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2

Global GDP Growth 1961 - 2010

-6-4

-2

0

2

4

6

8

10

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

%G

rowth

Middle income countries High income countries

Low income countries

Middle income countries are now drivers of global growth


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3

Regional Comparison of GDP Growth

-6

-4

-2

0

2

4

6

8

10

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

%G

rowth South Asia

High income

World

South Asian has grown at a faster pace


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4

Household Consumption Expenditure

-6

-4-2

0

2

4

6

8

10

12

197

1

197

4

197

7

198

0

198

3

198

6

198

9

199

2

199

5

199

8

200

1

200

4

200

7

201

0

%G

rowth South Asia

High income

World

Rising growth shows in higher consumption expenditures


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5

Pakistan: Changes in Population Structure

Labour force

growth higher

than population

growth

Increasingworking age

population


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Middle class:

Is a precondition of stability in the social

structures

Is a measure of mitigating inequality in a society

Easterly (2001): Nations with a large middle

class tend to grow faster

English middle class of 18th & 19th century

Todays China and India

6

What makes middle class important?


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Collier (1999): Middle class forms alliance withlower classes in order to demand an inclusivepolitical system

Acemoglu (2003): Decisive voters in democracyare from middle class

Bannerjee (2007): middle class is a source of newentrepreneurs and this class stresses onaccumulation of human capital and savings

7



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Warning:

Basu (2003): If venues for channeling middle class

human capital and savings not provided, then

tendency towards consumption expenditure puts

sustainability of growth in danger

8



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9

How big is middle class in Pakistan?

Class Proportion (%)

Lower lower (< $1.25) 21.3

Lower ($ 1.25-2) 34.8

Lower Middle ($2-4) 32.4

Middle Middle ($4-10) 9.8

Upper Middle ($10-20) 1.3

Upper (>20) 0.4

81.5

millionpeople

Method 1: Expenditure from PPP $2 to $20 per person per day


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32.5

million

people

Method 2: Computation by Weighted Composite Index

Class Categorisation Proportion (%)

Lower lower Destitute 41.9

Middle lower Aspirants 23

Upper lower Climbers 15.8

Lower middle

Fledgling middle

class 8.5

Middle middle

Hard-core

middleclass 4.3

Upper middle Elite middle class 6

Upper Privileged 0.4Source: Dur-e-Nayab (2011)


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Method 2: Computation by Weighted Composite Index

Class Urban (%) Rural (%)

Lower lower 23.6 55.2

Middle lower 21.8 23.9Upper lower 20.8 12.3

Lower middle 12.5 5.7

Middle middle 8.1 1.6

Upper middle 12.3 1.3

Upper 0.9 0.1

The middle class is an urban phenomenon lives and works in cities

Urban: 22.6m

Rural: 9.8m


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Occupational Proportion in Middle Class (%)


OccupationLowerMiddle

MiddleMiddle

UpperMiddle

Armed forces 1.1 0.6 1.3

Senior Officials 2.9 8.2 20.7

Professionals 18.3 15.7 26.4

Technicians 19.3 14.2 21.3Clerks 14.5 11.8 12.9

Service /retail 30 28.9 17.1

Agriculture 5.9 8.6 0.1

Crafts 2.6 5 0

Plant operators 2.1 3.1 0Elementary

occupations 3.3 3.9 0

Total 100 100 100

Dominant

presence in civil

service


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OccupationLowerMiddle

MiddleMiddle

UpperMiddle

Armed forces 1.1 0.6 1.3

Senior Officials 2.9 8.2 20.7

Professionals 18.3 15.7 26.4

Technicians 19.3 14.2 21.3Clerks 14.5 11.8 12.9

Service /retail 30 28.9 17.1


Crafts 2.6 5 0

Plant operators 2.1 3.1 0Elementary

occupations 3.3 3.9 0

Total 100 100 100

Dominant

presence in

engineering &

medicine


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Industry Lower Middle

Middle

Middle

Upper

Middle


Mining 0.8 0.5 0.9

Manufacturing 7.6 9.7 11.6

Power & fuel 2.6 2.6 2.7Construction 2.5 2.7 2.1

Wholesale/retail 25.6 27 15.5

Transport/commu

nication 4.3 4.8 4.9

Banking &Insurance 3.6 6.9 9.4

Community

services 46.8 36.8 51.5

Total 100 100 100

Domestic

commerce


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Proportion of Occupational Status (%)

Barriers to entrepreneurship holding back the middle class

Occupational

Status Lower Middle

Middle

Middle

Upper

MiddleEmployer with < 10

employees 1.1 1.6 1

Employer with > 10

employees 1.4 3.9 4

Self employed non-agriculture 27.5 27 16.9

Paid employee 64.5 60.1 78

Unpaid family

worker 0 0 0

Own cultivator 4.7 6.3 0.1Share cropper 0.3 0 0

Contract cultivator 0.3 0.6 0

Own Livestock 0.3 0.5 0

Total 100 100 100

Moving from

wage to self

employment


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They want:

Education

Jobs

Nayab (2011):

When compared to its neighbours Pakistan has a

bigger middle class The middle class in Pakistan has actually grown

with time

17

What does this middle class want?


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Average years of schooling (age 15-19) has not

changed since 1990 (currently at 7.6 years)

Labour force with tertiary education under

22%

18

Two facts about education in Pakistan


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What about jobs?

0

2

4

6

8

10

12

Percent

GDP growth (annual %)

Unemployment, total (% of total labor force)

Education without opportunity

DecliningGrowth, Rising

Unemployment


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Migration Increase Since 1972

20

16

20

0 5 10 15 20 25

Highly Qualified

Highly Skilled

Skilled

% Growth

Remittances and Dutch Disease Phenomenon


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Currently no space for middle class (physical & intellectual)

Reforms for engaging middle class

21

Choices


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The rise inconsumption

Thedevelopmentof urbanmarkets

Backwardlinking of

urban with

rural markets

Changes inconsumption

pattern

Opportunitiesand challenges

22

Accommodating Middle Class

McKinsey 2007


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23

Annual Projected Consumption Growth - 2030

46

78

9

1213 14

0

2

4

6

8

10

12

14

16

%Growth

Emphasis has already shifted from food to durable goods Choice driven consumption


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Births and migration will drive growth

Labour market shortages:

Design

Engineering

Middle management

Financial markets that provide savings instruments

Opportunity for niche cities

Backward linkages with farm activity

Diversification towards higher value addition

24

Urban Growth and Management


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Infrastructure governance reform of PSEs

Social sector governance

18

th

Amendment

Legal and judicial reforms for inclusive markets

Efficiency of public expenditure results

based management

25

Inclusive Governance for Middle Class


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Thank You

Documents

pakistan socio economy data