Labour force characteristics
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4.2.2 Employment and unemployment Conceptualisation of employment and unemployment
The labour force participation rate should be seen in conjunction with the employment-to-population ratio and the unemployment rate see below. These two indicators are usually considered the single, most informative indicators for
the performance of the labour market – in particular its ability to create employment – and of the economy as a whole. However, their interpretation may be far from straightforward and as an indicator for policy purposes, the unemployment
rate is of limited use in developing countries. A high employment-to-population ratio and a low unemployment rate are typically considered as positive, but paradoxically in developing countries they often disguise substantial underemployment,
poverty and low productivity. In countries without well-developed social protection schemes, many individuals simply cannot afford to be unemployed, but must resort to unproductive, low-paid jobs, often in the informal sector and for the
few hours that work is available. In these situations a low unemployment rate should be interpreted in the sense of poorly performing labour markets. However, the unemployment rate by itself does not shed light on the quality of jobs – that is
the extent to which jobs are productive and provide workers with sufficient and secure incomes cf. ILO 2008a, see also the Box on ‘Decent work’ in Section 4.1.
At present, no agreed exact definition of employment and unemployment exists in the statistical system of Afghanistan. In accordance with ILO recommendations, the analyses in this report classifies all working-age persons who are engaged in
economic activities as employed ICLS 1982. This definition is necessary in order to allow for an exact correspondence between employment statistics and production data, as required for the estimation of GDP in agreement with the System of
National Accounts SNA. The inclusion of people working for only few hours a week – even if it is only one hour – is also of particularly importance to assess the contribution of women and children, who disproportionally work fewer hours for whatever
reason not willing, difficult access to employment, competing commitments like household chores and education.
Of the remainder of the working-age population that is not working, people are classified as unemployed if they satisfy the condition of seeking work.
2
In addition, the ‘relaxed definition’ of unemployment is applied, meaning that potential workers who have become discouraged in their attempts to find work and have stopped looking for it, are included in the unemployed.
For the purpose of designing employment policies in Afghanistan it is of evident importance that appropriate indicators are developed that overcome the limitations of the unemployment rate. Efforts to create productive and gainful employment do
not only relate to unemployment as such, but in the context of Afghanistan in particular to underemployment. Therefore, in a future Labour Force Survey measures of genuine labour underutilization should be incorporated.
The NRVA 20078 did not include such measures for underutilization of labour, but adopting an alternative criterion of working for at least 8 hours a week for being employed may give some indication of time-related underemployment in
Afghanistan. Analysis in the last part of this sub-section indicates the implication of applying the 8-hour criterion.
Employment-to-population ratio and unemployment rate
3
Table 4.2 provides a breakdown of the employment-to-population ratio – the proportion of the working-age population that is employed – and the unemployment rate– the number of unemployed as a percentage of the labour force. It
shows overall fairly high participation in employment 62 percent and low unemployment seven percent. However, a strong differentiation exists if the employment-to-population ratio is broken down by sex, especially in the urban context.
Although variation by gender in overall unemployment is very small, again in the urban context a noticeable difference is observed, indicating on the one hand a relatively strong desire for urban women to work and on the other restrictions
to their access to the labour market.
Additional analysis not shown here indicates that pockets of unemployment occur among youth under age 25 with an unemployment rate of 10 percent for males and 15 for females, and among literate women 16 percent, against seven
percent for literate men and women with any form of education 18 percent, against eight percent of educated men. Apparently, the Afghan labour market provides difficult access to new entrants and educated women, which implies a
serious waste of human resources.
In absolute numbers, the employed population consists of 4.9 million males and 2.6 million females. The gender imbalance is even much stronger if the category of family workers is excluded and only persons engaged in paid employment are concerned
see also Section 4.3.1. The total number of unemployed consists of 363 thousand males and 205 thousand females.
_________________________________________________________ 2
The third formal condition for unemployment – next to not working and seeking work – is availability for work. The NRVA did not measure this attribute; in the analysis it is assumed that people who seek work are also available.
3
All figures are based on the standard 1-hour work criterion for being employed.
Table 4.2 Employment-to-population ratio and unemployment rate, by sex, and by residence
Residence Employment-to-population ratio, sex
Unemployment rate, sex Male
Female Both sexes
Male Female
Both sexes Urban
72 16
44 9
18 11
Rural 82
50 66
7 7
7 Kuchi
88 61
75 4
5 5
National 80
43 62
7 7
7
The agricultural nature of Afghanistan’s economy and the country’s climate conditions produce considerable fluctuations in unemployment rates. Figure 4.3 shows especially volatile changes in unemployment in rural areas across the farming
seasons, ranging between 65 and 169 percent of the annual rural unemployment rate. Urban unemployment varies less, although it also peaks in the period November-January. Besides seasonal changes in urban employment opportunities,
this is possibly also caused by a competition and replacement effect of rural labour seeking temporary jobs in urban areas in the low agricultural season. The annual variation in unemployment is more pronounced for men than for women,
except in urban areas.
Figure 4.3 Unemployment rate, by season and by residence
Underemployment
The unemployment rate is an inadequate indicator to measure the performance of the labour market and widespread labour underutilization in Afghanistan. One alternative way to get some grip on this phenomenon with available NRVA
data is to consider those who are working less than 8 hours per week as unemployed, even if this uses the incorrect assumption that these persons are available for more work and are seeking or willing to work more hours. This assumption
is particularly questionable in the case of many women and children-in-education, who are occupied for the largest part of the day by household tasks and schooling.
4
In the absence of better alternatives, the 8-hour criterion for being employed is applied and the results are compared with the standard unemployment rates in Figure 4.4. As per definition, the 8-hour unemployment rate is higher than the standard
1-hour version: 15 percent compared to 7 percent at national level. One relevant observation is that overall unemployment in urban areas shows only a small increase – from 11 to 13 percent – whereas in rural areas it more than doubles – from 7
to 15 percent. This indicates that in urban areas relatively few people work less than 8 hours 2 percent of the labour force and in rural areas relatively many people work few hours 8 percent of the labour force see also Section 4.3.3.
Labour force characteristics
29
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People working less than 8 hours, but who are not available for more work andor are not seeking more work should be classified as ‘inactive’ and not as ‘unemployed’. To the extent that this would apply to all persons working less than 8 hours, the labour force participation rate would decrease from 67 to 61 percent for men from
86 to 82 and for women from 67 to 61 percent, and the unemployment rate would slightly increase from 7 to 8 percent for men the rate remains almost the same and for women it increases from 7 to 9 percent.
Labour force characteristics
30
Even more remarkable is the gender-specific impact of the adjusted definition. Overall, male unemployment rises from 7 to 12 percent and rural male unemployment even slightly more to 13 percent. However, urban unemployment does
not change to a significant degree a rise from 9 to 10 percent only, again indicating that only few urban workers work less than 8 hours per week. On the other hand the unemployment pattern for women completely changes: the share of
unemployed triples to 21 percent and shows particularly high unemployment rates in rural and urban areas 20 and 28 percent, respectively. This indicates that a significant 14 percent of women work less than 8 hours.
Figure 4.4 Unemployment rates for 1-hour and 8-hours work criteria, by residence and sex
The 8-hour unemployment measure for women is, however, particularly unreliable. It is likely that many of the additionally unemployed women are occupied with care and household tasks and cannot or do not want to be engaged in more
work than they presently do. Therefore, these women should not be classified as unemployed, but as either inactive or employed. Since it is especially the contribution of these women that raises the overall unemployment rate from the
1-hour to the 8-hours definition, the credibility of the latter as a measure of unemployment or even underemployment is critically undermined.
Cross-classifying the weekly working hours of the employed by poverty status see also chapter 6 indicates that at any level of working hours a significant share of the employed cannot extract sufficient income to provide sufficiently for their
families. Overall, 35 percent of the employed are poor, but even of those working 60 or more hours per week, 29 percent cannot meet the basic needs Figure 4.5. On the other hand, it is observed that the percentage poor among the labour
force that is unemployed 38 percent hardly differs from that of the employed. This may indicate that being unemployed is not necessarily a sign of impoverishment, but may partly be representative of those that can afford being unemployed,
for instance because of other household incomes.
The message of Figure 4.5 is clearly that being employed or unemployed according to the one-hour criterion, nor any other criterion solely referring to the actual number of hours worked, provide an adequate indication of the extent to
which the labour market of Afghanistan is able to provide sufficient and productive labour opportunities. Measures of underemployment are essential to supplement the deficient concept of unemployment in the situation of Afghanistan.
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