Economic inequality rising in Pakistan’ ISLAMABAD: According to a United Nations Development Programme (UNDP) report, the problem of 22 families controlling 66pc of Pakistan’s industrial assets, as identified by Dr Mahbubul Haq in 1968, remains relevant today due to rising inequality in a country where the richest 20pc consume seven times more than the poorest 20pc.
The report titled ‘Development Advocate Pakistan’ claims that inequality has grown even though consumption based poverty has dropped from 57.9pc to 29.5pc between 1998-99 and 2013-14, and multidimensional poverty – which includes health, education and living standards – has fallen from 55.2pc to 38.8pc between 2004-5 and 2014-15.
It says that in 1987-88, the Gini coefficient, which measures income inequality, was 0.35 and that this number has risen to 0.41 in 2013-14.
UNDP report says some Pakistani districts are as well off as any developed country while others are on par with the poorest in sub-Saharan Africa
According to the report, one of the world’s great achievements in the past few decades is the significant fall in global poverty. Between 1990 and 2012, the number of people living with $1.90 a day has fallen by more than a billion. However, despite this, income inequality has increased within and across the countries.
Today, 16pc of the global population earns 55pc of the income while 72pc of the poor account for just over 1pc of wealth.
Because of this inequality, the report says, economic growth is affected, crimes increase, talent is wasted, and social mobility is hindered. Therefore, the most critical challenge of the 21st Century is achieving the Sustainable Development Goals, which includes ending poverty in all its forms and leaving no one behind.
The report claims that Pakistan’s Multidimensional Poverty Index, released last month, found that 54.6pc of rural Pakistanis were poor compared to 9.3pc of the population in cities. Multidimensional poverty stands at 31.5pc in Punjab and 73.7pc in Fata.
“While multidimensional poverty in Islamabad, Lahore, Karachi and Rawalpindi is below 10pc, it exceeds 90pc in Killa Abdullah, Harnai, Barkhan, Sherani Kohistan. Therefore, some Pakistani districts are as well-off as any developed country while others are on par with the poorest in sub-Saharan Africa,” report says.
Women are mostly engaged in unpaid family work and their very real economic contribution is not counted, the report says.
Women own less than three percent of the land which impacts their economic empowerment. Their participation in the labour force is 25pc compared to 83pc of men. This is the lowest in South Asia after Afghanistan.
“Dr. Haq called for reforming Pakistan’s economic, social and political institutions to help prevent the concentration of such immense wealth with a few. Although the landscape has changed considerably since then, his recommendations remain painfully valid. Pakistan’s institutions continue to benefit the rich and burden the poor,” report says.
It talks about tax exemption on some select sectors and indirect taxes which disproportionately affect the poor. The richest districts in Pakistan receive, on average, five times more public funds than the poorest, which further aggravates inequality.
The high cost of running for elections systematically excludes poor Pakistanis from political institutions. Discriminations on the basis of gender, economic status, religion and social identity restrict upward mobility.
The report alleges that to date, Pakistan’s response to inequality has been superficial and focuses on symptoms rather than root causes. As a result, inequality has persisted and grown.
It recommends that to tackle inequality, key institutions need to be reformed and fiscal, monetary and other policies should be made equitable. It says regional inequality can be addressed by investing in lagging regions and districts, particularly in rural regions.
Governments should use the Multidimensional Poverty Index for allocations, especially under the Provincial Finance Commission awards, which are long overdue, the report says.
Gender responsive budgeting can help mainstream women’s priorities in the budgeting process.
The report says that politicians, bureaucrats, civil society, the media, many development partners and the wider publics ignore inequality in the Pakistani society and economy and that it is time to recognise that this inequality is not inevitable.