The Economics of Child Labour

Spearhead Analysis – 10.01.2017

By Farrukh Karamat
Senior Research Coordinator, Spearhead Research

“Child labor and poverty are inevitably bound together and if you continue to use the labor of children as the treatment for the social disease of poverty, you will have both poverty and child labor to the end of time.” (Grace Abbott). 

The issue of child labour and abuse has suddenly come to the forefront with the recent case of Tayyaba, a child servant, employed at the residence of a Sessions Court Judge. This is not a lone incident. In the past there have been numerous unfortunate incidents that have served to highlight the plight of such children and the harm inflicted on them. Some have, unfortunately, even lost their lives. These are the cases that were written about, there must be many more of which we never even hear. Children are the future of any nation. It is a sad reflection on a nation when it is unable to offer protection, education, and growth opportunities for its younger generation, and when it allows their exploitation and inflicts physical and emotional damage on them.

In a seminar conducted last year, ‘Elimination of Child Labour in Pakistan’, organised by the Society for the Protection of the Rights of the Child (Sparc) at the Sindh Boys Scouts Association’s Headquarters, the issue of child labour and its implications were highlighted. While it is the right of all children to be able to ‘live’ their childhood, many poor and ‘over-populated’ families in Pakistan are ‘forced’ to put their children into child labour. As per the data from The Global Slavery Index 2013, presented in the seminar, Pakistan ranks third in the world with the highest prevalence of child and forced labour despite a significant decline in the number of child labourers recorded worldwide. As per the International Labour Organisation (ILO) the numbers of child labourers has declined from 200 Million in 2000 to 168 Million in 2014.

Just as there has been no population survey in Pakistan for almost two decades, there has been no child labour survey since 1996, which makes it extremely difficult to determine the exact number of children working in Pakistan. It seems that implementation of labour laws to protect the innocent children are hardly understood by anyone, let alone enforced. As per the National Child Labour Survey, of 1996, there were around 3.3 Million children working in Pakistan. The ILO in a 2012 survey estimated that 12.5 Million children were involved in child labour in Pakistan, besides 264,000 Pakistani children working as domestic labour. It is heart-wrenching to see these children having to put in long hours of work, at a time when they should be playing and leading a care-free life. That they are subjected to inhuman cruelty is absolutely intolerable.

It is estimated that there are some 25 Million children out of school in Pakistan, out of which 15 Million are economically active. In terms of age, it is estimated that around 32% of the population is in the age group of 0-14 years; while, 22% of the population is in the age group of 15-24 years. This implies that around 54% of the population is under 24 years of age. Based on a total population of 200 Million (estimated), there are around 108 Million people under the age of 24 in Pakistan. It would be safe to assume that at least half of these would be under the age of 15 years, or 54 Million children. A huge number by any standards and to put it into perspective, larger than the entire population of Canada. With limited access to education, Pakistan has a literacy rate of 58%, which is the well below the Millennium Development Goals (MDG) target of 88%, and its education spending as a percentage of GDP hovers around the low 3% mark. Dismal statistics by any standard and numbers that should elicit genuine concern.

As per the Government of Pakistan, it is estimated that around 60 Million Pakistanis are living below the poverty line, based on 2013-14 survey data. The number of poor households is estimated at 6.8 Million to 7.6 Million and the poverty headcount ratio comes out to 29.5% of the population, with the poverty line defined as Rs.3,030 per adult equivalent per month. It is therefore no wonder that with a large under-age population, a high fertility rate, inadequate educational opportunities and poverty the country faces a large incidence of child labour.

From an economic standpoint, the most obvious short run implication of child labour, is an increase in household income levels. Poverty or threat of survival due to an external shock, such as the loss of a job of a parent or crop failure, can often force parents to push their children towards employment, hazardous or non-hazardous. Under such circumstances, efforts to curb child labour need to provide alternative economic solutions to ensure the survival of the family. Such measures can include income support and subsidy programmes, and perhaps that is a reason that the Benazir Income Support programme has been hailed as a major effort.

From a long run perspective the employment of children, deprives them of the opportunity for education, which in turn reduces their productivity and future earning potential. This puts them in a child labour trap of operating within a vicious circle of poverty for generations. A rise in child labour in the long run is detrimental for a country. With rising child labour, there is a reduction in the accumulation of human capital; a rise in the population growth rate (more is better); a decline in healthcare; reduced investment; rising income inequality; and higher social inequality. All this leads to a lowered productivity and economic growth in the wider economy. Factors that in the long run would prove to be a major drag on the economic growth of the country.

It is a fact that there are limited employment opportunities as a result of the deteriorated economic conditions characterized by falling exports, higher imports, remittances under increasing pressure, and a rapidly rising population base. Concurrently, a dismally low level of education, and a qualitatively deficient educational system is churning out ill-qualified individuals with low productivity. Compounding the issue is the chronically low levels of budgetary allocations for the education sector. Just as the Mughals were more interested in grandiose architectural creations, the present government is obsessed with roads, trains bridges and underpasses. Neither of these ‘rulers’ laid an emphasis on educational pursuits. The result a population that knows no better and continues to be mired in poverty, illiteracy and child labour.

To break the vicious circle of poverty child labour, the government needs to educate people about the benefits of a small family and perhaps go as far as to enforce a two child policy. In additional genuine educational reforms are required to produce educated individuals who can be a productive asset for the economy. Setting up of schools to impart basic education combined with vocational training is important in this regard. This would create tremendous opportunities for self-employment and poverty reduction. Income support and subsidies are short term solutions and should be used as a tool for supporting the other structural changes such as education and training. In the absence of genuine reforms to tackle child labour, the problem will persist and there will be many more victims of child abuse such as Tayyaba.