No, Pakistan does not have the lowest unemployment rate in South Asia 28

PBS just published updated data and estimated Pakistan’s unemployment rate at 6.3%. This is in contrast to recent headlines, where Pakistan was lauded for achieving the lowest unemployment rate - at 4.3% - in the South Asian region. So, why the difference?

By Zunairah Qureshi

The Pakistan Bureau of Statistics (PBS) on Thursday finally published the results for the 2020 - 2021 Labour Force Survey (LFS) which estimates the unemployment rate at 6.3%. However, only a week earlier, a Twitter post by the South Asia Index stated that Pakistan with a 4.3% unemployment rate “outranks other South Asian countries with lowest un-employment rates in the region.”

As the country was embroiled by political chaos, in the background the government attempted to continue to shine light on the successes of their term in power and PM Imran Khan did not miss the chance to highlight this post by retweeting it and adding that, ‘we handled the Covid pandemic - better than all the countries in South Asia.’

So then why the difference in rates reported by this unverifiable Twitter page and the LFS data? Sure the post could be gimmicky but that’s not the only thing to consider here.

The post lists down unemployment rates of seven countries (Pakistan, Bangladesh, India, Sri Lanka, Nepal, Bhutan, and Maldives)

from the South Asian region among which Pakistan ranks the lowest at 4.3%. The South Asia Index, which appears to be nothing more than a Twitter handle with no verifiable associated organisation, claims that the reported data is taken from the World Bank database for the 2020 – 2022 period.

However, following the cited link within the post itself reveals that the World Bank database only has data up to the year 2020 only.

What’s more is that the database clearly indicates that the country with the lowest unemployment rate in South Asia is, in fact, Bhutan at 3.6%. This means that in 2020, according to World Bank data, Pakistan had the second-lowest unemployment rate at 4.3%, next to Bhutan. However, South Asia Index’s misleading post states Bhutan’s unemployment rate as 5% while rates for every other country are exactly the same as the World Bank estimates.

Clearly, there has been an attempt at doctoring data to make Pakistan’s unemployment rate appear to be the lowest among the region and the Prime Minister plus the country’s foremost media and even business publications bought the bait.

This presents an opportunity for us to learn to be more cautious when consuming statistics.

Apart from the misleading data cited in the Twitter post, there is a lot more to be understood about how unemployment rates are calculated for each country and whether they are comparable. What is the difference between World Bank’s ‘modelled data’ and national estimates published by PBS.

Citing World Bank may sound reliable but it is also important to trace where it sources its data from and how it processes this data before publishing it on its global charts.

First of all, can we evencompare unemployment rates?

The unemployment rate is the number of people without jobs or those seeking a job within a certain reference period over the number of people that are part of the labour force.

Although, given above is the standard definition for unemployment rate, each country may have different ways of calculating it and different methodologies for collecting data. The age-groups, definition of what is considered as labour, the reference period over which employability is checked, and inclusion of all regional areas, are some of the variables that affect the unemployment rate. These can be different for every country.

For instance, unlike other countries the US official unemployment rate does not include armed forces. This and other factors combined mean that comparing the US unemployment rate with Pakistan’s rate would not give the most accurate picture.

Within the context of South Asia, most countries like India and Sri Lanka, calculate the unemployment rate for persons aged 15 and above while Pakistan includes persons aged 10 and above. This would naturally overstate Pakistan’s unemployment rate in comparison to the other two in this example.

However, within its labour force survey, Sri Lanka chooses a reference period of 15 days, while for India and Pakistan this is only one week. A reference period for the labour force survey defines the time before the survey is taken during which if a person is not employed and not seeking a job, he or she will be eliminated from the labour force and hence not represented as part of the unemployment rate.

Since Sri Lanka has a longer reference period, its unemployment rate will be understated in comparison to India and Pakistan.

Moreover, not all countries update data like the unemployment rate at the same pace. So, it is especially difficult to make any conclusive statements for current employment rates. Pakistan only very recently released data for its 2020 - 2021 LFS, which reports the official unemployment rate at 6.3%.

Bangladesh’s Bureau of Statistics last conducted a labour force survey in 2017 and India conducts periodic labour force surveys to report quarterly statistics on the labour force and unemployment rates. However, India’s latest quarterly update for the period of January to March 2021 that shows unemployment at 8.1% is not comparable to Pakistan’s or Bangladesh’s annual unemployment rates from the previous years.

For such reasons, it is difficult to compare statistics like unemployment rates across countries. The International Labour Organisation (ILO) is a UN agency that compiles labour statistics of all countries. According to the ILO, ‘Regarding the international comparability of unemployment rates, there are a host of reasons why the statistics may not be comparable between countries… They (national statistical offices) may differ in their choices concerning the conceptual basis for estimating unemployment.’

Something called ILO modelled estimates

Let’s visit the World Bank database - which was misleadingly linked in South Asia Index’s post as reference -and see how they are able to graph the unemployment rates for South Asian countries. There are a couple of things that should be noted. For one, it is always wise to see where the data reported is being originally

sourced from. The World Bank database, as stated on the site, has extracted data from the ILO database. The ILO in turn, gets its data from official statistics reported by each country through its national data reporting systems.

In Pakistan’s case, this data is published by PBS. However, since PBS’ most recent update for the year 2020 has not yet been incorporated by the ILO database, it is still sourcing data from the 2018 - 2019 LFS. Similarly, Bangladesh bureau of statistics last annual LFS was conducted in 2017. Then how come the World Bank shows data for every country up till 2020?

This is because the World Bank is not reporting national estimates but something called the ‘ILO modelled estimates’. This is evident in the difference between the World Bank data and the PBS data for the years, that national estimates of unemployment rate have been published by PBS. So, even though the PBS’ LFS data for 2018 - 2019 estimated the unemployment rate at 4.8%, the World Bank and ILO modelled estimate reported it at 3.5% for 2019, which is a considerable difference.

This is also why recent data shows that the unemployment rate for 2020 was 6.3% by PBS standards and not 4.3% as reported by the World Bank or the South Asia Index post in question.

However, don’t get the wrong idea here. Neither of the estimates have to be ‘wrong’. Because at the end of the day these are just estimates and each has different ways of being calculated.

What the ILO modelled estimate does is that it makes data like unemployment rate harmonised and comparable across countries. It does so by adjusting different national statistics for differences in methodology and calculation according to standardised conditions.

This means that the data present in the World Bank database are primed for international comparison. In which case we can claim that according to ILO modelled estimates, Pakistan’s projected unemployment rate for the year 2020 was the second-lowest in the South Asian region but definitely not the lowest. It’s only a ‘projected’ estimate because you know, the official unemployment rate for Pakistan for the year 2020 was not available until last week.

The ILO modelled estimates also actually do report projected unemployment rates for 2022 as well as 2023. However, the Twitter post in question did not refer to this since the statistics it reported does not match with this data despite its claim that its figures were from the 2020 – 2022 time period.

According to projected ILO modelled estimates in the year 2022, Pakistan should have the lowest unemployment rate, at 4.2%, in South Asia. But in the same year India’s unemployment rate would have fallen (projectably) to 5.4%, so the drastic difference that is visible in 2020 between the two countries – when India’s unemployment was estimated at 8% - should no longer be.

Bear in mind the data beyond 2019 for most of the countries is based on modelled projections. Out of the seven countries only Bhutan has so far published results of its 2020 Labour Force Survey and now Pakistan has too but we have yet to see how the projected estimate will change after the recent LFS update.

Consider this: the PBS reported unemployment rate at 4.8% for the period of 2018 - 2019. This figure has greatly increased, undoubtedly owing to Covid-19 impact and overall economic conditions in the country so that the PBS estimate for 2020 - 2021 is 6.3%. However, according to ILO modelled estimates, Pakistan’s unemployment rate went from 3.5% in 2019 to 4.3% in 2020. While this is a hike up, it nowhere near reflects the difference in rates over the same period as estimated by the national Labour Force Survey.

So, it’s clear that even though national estimates are not best for comparison, even modelled projections can only be confirmed for accuracy once national estimates are made available.

This is specially necessary for the 2020 – 2022 period because of the unprecedented effects of the Covid-19 pandemic on the labour force. The ILO is of course aware of this and it gives the following disclaimer on its website, ‘Given the exceptional situation, including the scarcity of relevant data, the estimates from 2020 onwards are subject to a substantial amount of uncertainty.’

This is also why recent data shows that the unemployment rate for 2020 was 6.3% by PBS standards and not 4.3% as reported by the World Bank or the South Asia Index post in question. However, don’t get the wrong idea here. Neither of the estimates have to be ‘wrong’. Because at the end of the day these are just estimates and each has different ways of being calculated

Remember to check the source before retweeting

Naming a Twitter something as official sounding as the ‘South Asia Index’ is smart because it makes it instantly seem external. People are less likely to question an ‘index’ that is covering the South Asia region and not just Pakistan. However, some probing into the Twitter account reveals that it has no official website, any other social media account, or even contact. An authentically operated index would have to have a recognised affiliated organisation which is transparent in its methodology.

In fact, it is hard to discern what exactly the index is indexing as its Twitter feed is currently over-populated by regular updates of the PM’s quotes to the opposition and vice versa. On the surface, the South Asia Index appears to report more hourly Pakistani news updates with a sparing presence of some developments in Sri Lanka and India.

A quick look at the Twitter account’s 26,000 followers list also shows a majority presence of Pakistani followers. It wouldn’t be too forward to say that perhaps if the Prime Minister had not retweeted this particular tweet, it would not have made the news.

To reiterate the takeaway, the fact that the new LFS report estimates the unemployment rate at 6.3% does not mean that the ILO modelled estimate of 4.3% is incorrect. Perhaps, ILO’s adjustment of the national estimate to internationally comparable standards is spot on. Perhaps it is slightly understated and will be revised in light of new data published by PBS.

However, as far as comparisons are concerned, it can be said with some caution that Pakistan had the second-lowest unemployment rate in South Asia for the year 2020. And this is actually a good indication for Pakistan’s performance.

After all, data shows that it has had a history of being among those countries that have lowest unemployment rates. It is also reflected through reported statistics that Pakistan fared better during the pandemic in comparison to other countries and it is not surprising that it managed to maintain its low unemployment rate.

The recent LFS also reports that Pakistan’s economy created 5.5 million jobs in the last 3 years.

If the overblown and misleading Twitter post would have chosen to report Pakistan’s performance as it is without making a desperate attempt at falsifying data, it would have actually done a better and more credible job at demonstrating Pakistan’s economic wins. n