Thursday, April 23, 2020

Incomes of Pakistan's Poorest Rising Faster Than Richest Pakistanis'

Pakistan Living Standards Measurement Survey (PSLM/HIES) of 2018-19 has revealed that the incomes of the poorest Pakistanis are rising much faster than the those of their richest counterparts. The survey measures changes in incomes, expenditures and living standards of the population by quintiles on a periodic basis. The survey provides detailed outcome indicators on education, health, population welfare, housing, water sanitation and hygiene, information communication and technology (ICT), food insecurity experience scale (FIES) and income and expenditure.

Average Monthly Income Growth By Quintiles. Courtesy: Bilal Gilani of Gallup Pakistan

PSLM/HIES 2018-19 compares incomes with those reported in PSLM/HIES 2015-16.  It shows that the average household monthly income in Pakistan has jumped 16.5% to Rs. 41,545.  It also shows that the average monthly income of the lowest quintile (Q1) in Pakistan rose 17.5% and that of the second lowest quintile (Q2) grew 22%, significantly faster than 11.7% for the middle quintile (Q3) and 12% and 5.1% for the top two quintiles (Q4 and Q5) respectively.

The average monthly income of Q1, the poorest quintile, stands at Rs. 23,192 in 2018-19. The second-lowest quintile’s income is Rs. 29,049. The middle-income group (Q3) is Rs. 31,373. The higher middle-income group’s average monthly income has increased to Rs. 37,643. The average monthly income of the top income group (Q4) is estimated at Rs. 63,544.
Monthly Household Incomes By Provinces. Source: PLSM/HIES 2018-19

Average monthly household income in Balochistan is Rs. 36,387, the lowest among the provinces. However, it has grown 21.2% since 2015-16,  much faster than Punjab's 18.3%, KP's 11.4% and Sindh's 15.1%.

Change in Share of Income From 1990 To 2015 in Poorest (Left) & Richest (Right) Quintiles. Source: UNESCAP

Pakistan's latest PSLM/HIES survey confirms long term trend of the lower quintiles gaining an increasing share of the national income.  Earlier in 2015, the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015 showed that the share of national income of Pakistan's poorest 20% of households increased from 8.1% to 9.6% in 1990-2015.  It was the highest share of income for the bottom income quintile reported in the region.


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6 comments:

Mayraj F. said...

Interesting- income of those in KP higher than in Sindh and Balochistan

Riaz Haq said...

Mayraj: "Interesting- income of those in KP higher than in Sindh and Balochistan"

KP's households are larger than Punjab's and Sindh's but smaller than Balochistan's

Years 2015-16 2018-19

Pakistan 6.31 6.24
Urban 6.03 5.97
Rural 6.47 6.40
Punjab 6.04 5.78
Sindh 6.22 6.23
KP (Excluding Merged Areas) 7.34 7.41
KP (Including Merged Areas) 7.52
Balochistan 7.84 8.12

Mayraj F. said...

I remember reading a paper by Arif Hasan about migration that mentioned KP sends more migrants to Gulf countries. The money they send back could also be helping income capacity for those at home.

https://pubs.iied.org/pdfs/10570IIED.pdf
Migration and small towns in Pakistan

Riaz Haq said...

Mayraj: "I remember reading a paper by Arif Hasan about migration that mentioned KP sends more migrants to Gulf countries. The money they send back could also be helping income capacity for those at home."

PSLM/HIES 2018-19 says foreign remittances account for 5% and domestic remittances 4% of household income in Pakistan.

It's possible that the share of remittances in KP is larger than in other provinces.

Anecdotally, there appears to be disproportionate representation of Pathans than other ethnic groups in construction and transport sectors. It's probably true in both Karachi and Dubai.

http://www.pbs.gov.pk/sites/default/files//pslm/publications/pslm_hies_2018_19_provincial/key_findings_report_of_plsm_hies_2018_19.pdf

nayyer ali said...

Are these income gains just due to high inflation or are they after inflation numbers?

Riaz Haq said...

NA: "Are these income gains just due to high inflation or are they after inflation numbers?"

These are inflation adjusted.

The figure of 16.5% average income increase for Pakistan from 2015-2016 to 2018-2019 corresponds with about 5% real GDP growth compounded over 3 years.