The Construction Sector Chapter 22: The Construction Sector 22.1. Characteristics of The Sector The construction sector has a share of 2.5 percent in the GDP of Pakistan. It relates primarily to the activities associated with the implementation of investment in public and private projects, especially to the building of housing units and development projects. One of the key features of the construction sector is its labor-intensive nature. It has a higher share in employment than in value added. According to the latest Labor Force Survey of the PBS in 2017-18, the share of the sector in national employment is 8 percent, with employment of 4.7 million. This is more than three times its share in value added. The other special characteristic of the sector is its strong backward linkage with a number of industries and services. This includes the building materials industry of cement and bricks, basic metal and non-metallic products, wood and wood products, rubber and plastic products, glass plates and chests, paints, etc. Turning to the housing sector, there are an estimated 34 million housing units in Pakistan today. The average annual rate of construction is close to 750,000 housing units, pre­dominantly on the basis of self-financing. 74 percent of the housing units in urban areas and 90 percent in rural areas are owner-occupied. There are large disparities in housing consumption among households. The PALMA ratio of the share in housing rents between the top 20 percent and the bottom 20 percent of households is as high as 11.5. It has shown a rising trend since 2001-02. Today, 55 percent of the households in the bottom two quintiles have families of 7 or more persons living in housing units with only one or two rooms. The magnitude of the housing shortage is 13 percent of the existing housing stock, equivalent to 4.4 million housing units. The construction sector is characterized by a strong business cycle. Construction activity rose at the fastest rate during 2004-05 to 2007-08 when the GDP growth rate was relatively high. There was a slump from 2008-09 to 2013-14. Between 2015-16 and 2017-18 there has been some recovery in business activities. Overall, a 1 percent GDP growth leads to a 1.6 percent increase in construction activity. 213