This study on employment in Pakistan was conducted in 1997-98. Its objective has been to
analyse trends in the labour market in the country, and develop possible elements of an
employment strategy during Pakistan’s Ninth Five Year Plan period ( 1997-98 to 2001-02).
A. Recent Changes in the macro environment.
Since the completion of this work in 1998, some factors have entered into Pakistan’s planning
process that have affected it significantly. The first is a rapidly changing macro environment.
The second are the results of the 1998 Population Census. The report argues that these factors
heighten the need for an employment strategy being proposed in this document. Its should
however be finessed towards the transforming macro environment, and our better post-census
perception of it.
Pakistan’s macroeconomic performance, while showing indications of improvement at the time
ofthe 1998 budget, has since been subject to fiscalstress. The central point that is worth making
is that over the fiscal year 1997/98, growth had picked up in Pakistan to the five per cent level,
while the IMF stipulated targets in macro fundamentals were met to the satisfaction of the
evaluating mission to Pakistan at the time. However, domestic fiscal policy, perhaps in
anticipation of an impending sanctions based global environment due to the nuclearisation of the
country, (and possible investment behaviour based on this global environment), moved towards
regulation in a number of areas1
. A major result of this macro transformation had been the
cessation of the Enhanced Structural Adjustment Facility (ESAF) and Extended Fund Facility
(EFF) agreements signed with the IMF, and a renegotiated new loan.
Although the external environment is now more stable, and donor links have been reestablished,
changes in the macro environment need to be tracked as they can have critical implications for
growth and employment in Pakistan. Clearly this issue needs to be assessed in future work. It is
also critical to recognise the status of the specific macroeconomic policy environment for the
question of whether growth is employment-friendly or not. Since the link between macropolicies
and employment is generally mediated by growth, this provides an overarching context to
understanding different phases of (employment focussed) economic development in Pakistan. The
report devotes a separate Appendix to thisissue. The reason to keep this discussion separate from
the main body of the report is two fold. First that the assessment of the linkage between
macropolicies and employment in this report is itself limited to an historical overview. Second,
that it is the last phase of macropolicies in operation in Pakistan that are of greater importance
to an employment strategy, than what can be argued for earlier phases.