Impact of Floods on Unemployment and Poverty Therefore, with the strong recovery in 2020-21, employment rose by over 2 million. Almost 75 percent of the increase in employment was in the industrial and service sectors. The 6 percent growth in the economy in 2021-22 sustained the rapid increase in employment again above 2 million, approaching 2.5 million. Bulk of the workers who had lost their jobs after COVID-19, regained their jobs. In addition, there was sizeable absorption of new entrants into the labor force. However, the floods will take their toll on employment. Employment in 2022-23 680,000 less compared to an increase in the labor force of almost 1.7 million. The loss of jobs will be mostly in the agricultural sector. The key question is what is happening to the unemployment rate? As highlighted above it was 6.9 percent in 2018-19. As shown in Figure 13.1, it spiraled up to double-digit 10.9 percent in 2019-20, after the COVID-19 attack. This is one of the highest rates of unemployment in the 75 years history of Pakistan. The economic recovery in 2020-21 and 2021-22 led to a significant improvement in labor market conditions. The unemployment rate is estimated to have fallen from the peak in 2019-20 to 8.8 percent in 2020-21 and 7.7 percent in 2021-22. However, it was still somewhat higher than the rate in 2018-19. There is the likelihood of another upsurge in the unemployed in 2022-23. The number of unemployed workers is projected to rise above 8,000,000 due to the negative economic impact of the floods. This represents an increase of over 2,350,000 over the number employed in the previous year. Consequently, the unemployment rate is likely to rise above 10 percent once again. This big increase in unemployment is taking place when the economy of Pakistan is facing an acute financial crisis. Consequently, domestic resources for relief and rehabilitation unfortunately remain limited. There are two other dimensions of the labor market which need to be highlighted. The first relates to the trend in real wages and the second to the absorption of youth. The extent of change in real wages according to the LFS of 2017-18 and 2020-21 by occupational category of worker is shown in Figure 13.2. All categories of workers suffered a decline in real wages after COVID-19. Future surveys will indicate what will have happened to real wages after the floods. One indicator of‘decent work’ is also quantified. This relates to the percentage of workers, who are employees, earning more than the minimum wage in 2020-21 of Rs 20,000 per month. The share of workers with low wages, even below the minimum wage, was as high as 59 percent in 2020-21. Therefore, the incidence of the working poor is high in Pakistan. 129