State Bank of Pakistan Reports: Bridging the Gender Gap in Labor Force Participation Holds Significant Economic Potential


Introduction: The State Bank of Pakistan (SBP) has recently published reports highlighting the substantial benefits of narrowing the gender gap in Female Labor Force Participation (FLFP). According to the SBP, reducing this gap has the potential to generate 19.3 million jobs and bolster Pakistan’s GDP by nearly 23 percent. The report emphasizes the need for key reforms in various sectors to support and facilitate the entry of more women into the workforce, including safe transportation, improved documentation of the economy, and increased educational attainment.

Closing Connectivity Gaps: The reports also shed light on the prevailing digital connectivity gaps, revealing that Pakistani women are 49 percent less likely than men to use mobile internet, with only a mere one percent of female internet users utilizing it for work purposes. Addressing and bridging these connectivity gaps is crucial to enhancing FLFP and empowering women economically.

Challenges Faced by Home-Based Workers: While home-based workers make significant contributions to the economy, they often face vulnerability to exploitation, longer working hours, and lower wages due to the absence of formal contractual agreements. The reports underline the need to safeguard the rights and improve the working conditions of home-based workers, particularly women, who form a substantial portion of this workforce.

Gender Wage Gap and Underrepresentation in Managerial Positions: The Global Wage Report 2018-19 (ILO) reveals that, on average, women in Pakistan earn 34 percent less than men. Although women’s average wages have shown some growth over time, they still remain lower than men. Furthermore, women are significantly underrepresented in managerial positions, with only 5.7 percent of employed women holding such roles, as per the LFS 2020-2021 data.

Barriers to Female Labor Force Participation: One of the significant barriers to women’s participation in the labor force is low educational attainment. The reports highlight the positive correlation between higher education levels and increased labor force participation. Bridging the education gap between males and females is crucial to ensure equal opportunities for women in the workforce.

Comparative Analysis: Gender Gap in Labor Force Participation Pakistan’s FLFP lags behind that of men, with the overall female labor force participation standing at a mere 21.4 percent, as per the labor force survey 2020-2021. This places Pakistan’s FLFP as one of the lowest among peer economies. In contrast, countries like Bangladesh and Indonesia have made significant progress in increasing FLFP. For instance, Bangladesh boasts an estimated FLFP rate of 37 percent, primarily driven by the expansion of the ready-made garment sector and a narrower education gap between men and women.

Conclusion: The exclusion of women from the labor market not only denies them economic opportunities but also hampers overall productivity and growth potential for the country. Recognizing the importance of closing the gender gap in labor force participation, the SBP reports emphasize the need for comprehensive reforms, including addressing connectivity gaps, improving working conditions for home-based workers, and narrowing the educational disparity. By fostering an inclusive and diverse workforce, Pakistan can unlock its full economic potential and pave the way for sustainable growth.

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