Designing an Employment Strategy The focus only on the‘open’ unemployment rate tends to significantly understate the overall level of unemployment in the economy. This should also include underemployment in terms of number of hours worked, mismatch between the level of skills of a worker and the nature of work and workers who give up search for a job in depressed labor market conditions. Inclusion of these types of unemployment raises the overall unemployment rate by almost 2 percentage points. Therefore, the overall unemployment rate was close to 8 percent in 2017-18 and almost 10 percent in 2019-20, even prior to the COVID-19 spread in Pakistan. A crucial determinant of the state of the labor market is the trend in real wages. This is important for determining if the incidence of poverty among the lower echelon of workers is rising or falling. The rate of change annually in wages for different categories for workers is given in Table 27.3. The positive finding is that real wages have grown between 2008-09 and 2017-18. Real wages have tended to grow faster for more skilled workers. The ratio of remuneration between the top and bottom occupational category of workers is 4.5:1. The corresponding growth in overall labor productivity at the national level is 2.3 percent. Therefore, the growth rate in real wages has been higher than the growth rate in labor productivity. This implies that the share of labor in the national income has increased. Estimates are that this share was 38 percent in 2017-18. Despite the rise it is still low relative to other countries at a similar stage of development where the labor share is above 46 percent. Table 27.3: Annual Rate of Change in Nominal and Real Wages for Different Types of Workers (%) Annual Growth Rate from 2008-09* to 2017-18 Nominal Wages Real Wages By Level of Skill and Status Senior Managers 12.4 5.7 Professionals 8.0 1.3 Technician& Associate Professionals 11.0 4.3 Clerks 10.4 3.7 Service and Sales Workers 9.9 3.2 Skilled Agricultural Workers 11.5 4.8 Craft and Related Trades Workers 10.0 3.3 Plant and Machine Operators 10.0 3.3 Elementary(Unskilled) Occupations 9.8 3.1 OVERALL 10.0 3.3 *first year when wage data was collected in the LFS Source: LFS, PBS 283