Pakistan's informal sector records 20 per cent growth

ISLAMABAD — The informal sector in Pakistan grew at an unprecedented pace over the years and 72.9 per cent of the non-agriculture workforce is employed by this sector.

By A Correspondent

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Published: Mon 3 Sep 2007, 9:12 AM

Last updated: Sat 4 Apr 2015, 11:32 PM

Informed sources said that there has been 20 per cent plus growth in the informal sector and the issue has become a matter of great concern, with government considering a proposal to bring the informal sector in the mainstream through its "decent work country programme".

According to a conservative estimates, out of $160 billion size of country's economy, $32 billion plus is in the informal sector, providing a huge opportunity to its businessmen to evade taxes every year. According to the latest details, shared with this correspondent, 32 per cent workforce is in the wholesale and retail business, 21 per cent in the manufacture sector, 17.5 per cent in community and social and personnel sector, 13.8 per cent in construction and 11.1 per cent in the transport sector. This included both in urban and rural areas.

The informal sector consists of small units producing goods or services with the primary objective of generating employment and incomes to the families engaged in these activities. Informal activities have often been characterised by low levels of capital, skills, access to organised markets and technologies; low and unstable incomes and poor and unpredictable working conditions. Such activities are often outside the scope and purview of the official statistical enumeration and government regulations as well as beyond formal system of social protection.

The units operating in the informal sector are highly labour intensive b ut employment is mostly casual; based on kinship, personal relations rather than contractual arrangements ensuring protection. The informal sector activities depend, to a large extent, on the local and regional demand.

The informal sector is difficult to estimate because of non-recording ac tivities falling in this sector. "The huge and increasing size of the informal sector is an area of serious concern", said a concerned official.

Despite the growing size, the informal sector continues to be largely "invisible" and "neglected". Sufficient information is lacking concerning employment pattern, the nature and extend of its activities and characteristics of its participants which leads to an absence of information on region-trade-and activity-specific employment potential.

The focus should be on productive and decent employment creation rather than low productivity and marginalised jobs that largely create a pool of working poor.

The informal sector, the official said, plays a significant role in employment and income generation in Pakistan.

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