‘Service sector absorbs one-third of employed labour force’
ISLAMABAD: The services sector in the country is a leading contributor to the country’s economic growth and it also absorbs around one-third of the employed force, said a State Bank of Pakistan report 2014-15.
The report said that this sector had been growing more rapidly than the overall Gross Domestic Product (GDP), pushing its share in GDP from 50.7% in FY00 to 58.8% in FY15.
The report added that more than 40% of the workforce in Pakistan was still engaged in low-productive agriculture (and also vulnerable to potential climate change), which contributes only one-fourth of the GDP.
On the other hand, the industry (where labour productivity is highest) absorbs 23% of the labour, and has performed poorly in recent years, thereby pulling down its share in GDP.
The burden therefore falls on the services sector to steer productivity growth, create sufficient jobs for growing workforce, and improve per capita income, the report added.
In FY15, the services sector grew by 5.0%; though slightly lower than the target of 5.2%, this still surpassed the FY14 growth of 4.4%.
In overall terms, this sector explains more than two-third of the GDP growth in FY15, the report said, adding that within services, all sub-sectors contributed positively to growth; however, the impetus came from the finance and insurance services.
Since these two sectors had already witnessed a sluggish growth in FY14, a sharp recovery was expected in FY15.
The increase in salaries, explain a sharp rise in contribution from general government; whereas, the improvement in finance and insurance stems from strong performance by commercial banks (mainly driven by massive investments in risk-free government securities). The remaining sub-sectors recorded a lower growth in FY15 than the last year, the report added.