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Poverty issues

A new IMF economic package is in the pipeline and it has renewed focus on increasing poverty and unemployment due to contraction of the economy. This article refers to some literature (Chaudhry et al. 2015; Amjad 2004) to illustrate the discussion.
An important point to make regarding the poverty in Pakistan is that the choice of method to determine the poverty level is crucial for assessment of magnitude. A traditional method has been to move beyond the income and use ‘minimum caloric intake’ and ‘basic needs basket’ to assess poverty. The latter uses a combination of food and non-food indicators to gauge the percentage of citizens living below the poverty line.
Chaudhry et al. (2015) use income, education, and health as the three indicators of poverty. For income poverty, they use per capita income at the household level. For education poverty, they use the number of years of schooling by the members of the household. For health poverty, they use a mix of indicators including the water source and sanitary conditions in the household.
To take forward this more complex way of ascertaining poverty; a person is poor in terms of education, if he/she has not been able to complete the primary education; similarly a person is health-poor if he/she does not have access to clean drinking water source. For ‘unidimensional comparisons of poverty over time’, this approach aggregates poverty trends by applying each of these indicators of income, education, and health across more detailed gender, provincial, and urban/rural divisions. For multidimensional poverty, a person is considered to be above the poverty line, if he/she is not poor vis-à-vis all three indicators of income, education, and health; if not and if the person is poor in any one of the three dimensions, then he/she is assessed as poor.
Moreover, there are also ‘transitory vulnerable’ who are above the poverty line and the ‘transitory poor’ who are below the poverty line. Marginal changes in the socioeconomic conditions of these two categories can push them below or above the poverty line.
For a more well-rounded assessment of poverty and inequality, there is need to gauge the consumption trends and wellbeing measures across different levels of income and supplemented by measurements being defined around literacy, all levels of school enrollment rates, pre-and postnatal care provision, child immunization, access to clean drinking water, sanitation, and electricity.
The reason why it is important to view poverty as a multidimensional concept is because it leads to better assessment of poverty and overcomes the omission and commission errors. Gauging poverty only through the income level may fail to take into account other ways that a person might be poor; similarly a person might be better off on other dimensions of poverty and yet his/her income may not reflect it. So, multidimensional poverty is a better conceptualization to determine poverty levels.
In terms of the way forward to overcome the poverty, the literature makes various suggestions. Workers need to be offered protection against falling real wages and worsening conditions of employment. Industrial Relations Ordinance 2002 is considered a blow to workers’ rights as it has curbed collective bargaining and offered lots of scope to change the status of permanent workers into contract workers in the large-scale industrial units. Therefore, there is a need work towards the establishment of a ‘well functioning and equitable labour market’ and for this purpose labour market institutions also need to be strengthened. It is the government’s responsibility to create the conducive conditions for an equitable labour market.
There is also the need to move away from over-emphasis on the big-ticket infrastructural projects and invest in water systems like lining of watercourses, construction of small dams etc. Water is the key source to increase productivity. A focus on the housing and SMEs is needed for employment-intensive economy with backward and forward linkages.
There is also the dire need to not only focus on girls education but also to increase greater female labour market absorption. Similarly, there is need to focus on local level-oriented development planning and management as the “employment multiplier of local level expenditure is high”.
The economic packages negotiated with the IMF and the World Bank need to be better worked out to take into account their impact on low employment and poverty due to slowing down of the economy. There is need to focus on water, women, and workers’ rights along with institutionalizing the devolution process.
The level of education has a significant impact on a person’s income and it can play an important role to reduce poverty. Therefore, there is need to work on education promotion in the least developed areas. Similarly, for poverty reduction, there is need to move beyond the ‘household’ level focus and instead target low-income areas as a whole.



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