It is apparent from various labour force surveys that during the past 20 years
Pakistan’s employed labour force has become more “educated”. For instance, according
to the Labour Force Survey 1982-83, 28 percent of the employed labour force had
attained formal education.12
In comparison, the literate employed labour force in 1999-
2000 is estimated at 46 percent, while the formally educated is 43 percent. However, the
pattern of growth in educated labour force is not uniform in all four provinces of the
country. A closer look at disaggregated provincial level data reflects the disparity in
employed labour force in the four provinces: Punjab, Sind, NWFP, and Baluchistan.
Regional decomposition of the labour force data shows that Sindh has consistently
demonstrated the highest level of literacy among the four provinces over the past 20
years; Balochistan, in contrast, has demonstrated the lowest level of educational
attainment for its employed labour force. However, the gap between the literacy level of
Sindh as compared to the provinces of both Punjab and NWFP has gradually narrowed.
This is because although Sindh started out with the highest base, in terms of growth of its
educated work force, since Sindh’s educated have grown at a decreasing rate, Punjab and
NWFP have caught up because of much higher rates of growth in their respective literate
employed labour force. In 1999-2000, 43 percent of Punjab’s and 39 percent of NWFP’s
labour force is categorised as formally educated, as compared to 49 percent for Sindh.
Despite the convincing evidence of regional disparities no satisfactory measure of
human capital stock at the provincial level presently exists for Pakistan.23This paper is
motivated to fill the above gap in policy analysis by estimating the human capital index
(HCI) at the provincial level from 1982-83 to 2003-04. This index is based on two main
components: completion of education levels and age (as a proxy for experience). The
index is computed for the three sectors of the economy: Agriculture, Manufacturing, and
Services, by using published and micro data from the respective Labour Force Surveys.
Given the recent initiative vis-à-vis the devolution of power to the local level this
exercise becomes all the more relevant. Moreover, given its rapidly advancing
population, Pakistan needs to count on an improvement in the quality of its labour force
to compensate for the increasing pressures on its limited resources. A suitable measure of
human capital per worker can be used to assess correctly the evolution of the effective
labour force.
The paper is structured as follows: Section 2 provides an overview of the different
approaches associated with HCI computation elaborated in the economic literature. Section
3 provides details of the methodology adopted for the subject analysis, while estimation
results are presented in section 4. Finally, Section 5 offers concluding remarks.