The issue of poverty in Pakistan has its significance for sustainable
development. Long run development is not possible without protecting the rights of the
vulnerable groups and the participation of the entire population in the development
process. A notable development in the last decade in Pakistan’s economic scene has
been the sharp pick up in the incidence of poverty. It can be attributed to several factor.
The real GDP growth fell from 6 percent in the 1980s to 5 percent in the first half of
the 1990s and declined further to just over 4 percent in the second half of the decade.
The rate of inflation remained in single digits throughout the 1980s but had a rapid
increase of 12 percent during the first half of the 1990s. It is significant to note that
food prices generally rose more sharply than overall consumer price index. The
unemployment rate increased by 2 percent in the 1990s as compared to in the 1980s
reflecting the deceleration of labour absorption in the economy in response to the
significant decrease in the economic growth during the nineties.
The policies adopted under the Structural Adjustment Programme, initiated in
the late 1980s, have tended to increase the incidence of poverty. The tax burden on
the poor over the ten years period has increased by 7 percent and those of the richest
class decreased by 16 percent. During this period subsidies on agriculture inputs
have withdrawn, development expenditure on social services reduced, and monetary
expansion though high could not provide sufficient credit to private sector and as
such impacted on output and employment [Amjad and Kemal (1997)].
To combat the menace of poverty, it is imperative to identify the roots of the
problem first and then propose strategy to fight against poverty. For that labour
market cannot be overlooked as it has strong linkages with poverty through workers
activity. In the previous studies poverty has rarely been linked with labour market
indicators. This fills the gap and develops linkages between poverty and labour
market through examining incidence of poverty across workers occupation and
employment status. The characteristic of the poor by occupational groups are also
examined focusing on education, age and employment status. The present analysis is
of crucial importance because many poverty alleviation programmes of the
government are focused on certain population sub-groups.