Demographic Changes and PNG s Labour Market Developments: Challenges and Prospects

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Transcription:

Demographic Changes and PNG s Labour Market Developments: Challenges and Prospects Manoj K. Pandey ANU Crawford School Development Policy Centre & UPNG SBPP Division of Economics 1

Introduction Demographic changes Labour market developments Challenges Prospects and remarks 2

PNG s Demographic Changes 3

Higher FR but Declining Trend PNG's fertility rates 1950-2100 0 1 2 3 4 5 6 7 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Year Source: United Nations Department of Economic and Social Affairs 4

Lowest ever MR, will bounce back later PNG's crude death rates 1950-2100 0 5 10 15 20 25 30 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Year Source: United Nations Department of Economic and Social Affairs 5

Young Population with low LE PNG's Life expectancy and Median age 1950-2100 0 10 20 30 40 50 60 70 80 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Year Life expectancy Median age Source: United Nations Department of Economic and Social Affairs 6

Growing Working and the old population, Declining Young PNG's population age structure 1950-2100 0 10 20 30 40 50 60 70 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Year Young (0-14 years) Working age (15-64 years) Older (65+ years) Source: United Nations Department of Economic and Social Affiars 7

PSR high but falling PNG's dependency ratios 1950-2100 10 20 30 40 50 60 70 80 90 100 0 PSR ratio 0 5 10 15 20 25 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Year Total dependency ratio Old-age dependency ratio Child dependency ratio Potential support ratio Source: United Nations Department of Economic and Social Affairs 8

Summary Overall, PNG has a still high but declining fertility rates, moderate mortality rate with a tendency to bounce back later, median age lower than the world, and life expectancy increasing. As a consequence of these demographic factors, while share of young population declining, both old age and the working age population will continue to increase. Reduction in potential support ratio might start showing pressure on the economy in coming decades. 9

PNG s Labour Market Outcomes 10

LFPR remains close to 70%, E2PR to 45% PNG's labour force participation rates 1991-2021 0 Rates (%) 10 20 30 40 50 60 70 1991 1996 2001 2006 2011 2016 2021 Year Employment to Population ratio Labour force participation rate (% of 15-59) Census labour force participation rate (% of 10+) Source: PNG NSO and International Labour Organisation 11

Subsistence employment remains high but wage employment not catching up PNG's employment and unemployment rates (%) 1980-2011 (actual) and 2011-2021 (forecast) Actual Forecast 0 Rates (%) 10 20 30 40 50 60 70 1980 1990 2000 2010 2020 Year Subsistence employment rates Wage employment rates Unemployment rates Source: PNGNSO and author's calculations 12

Declining GDP and Negative FE growth in recent years PNG's formal private sector employment and real GDP rates 1979-2016 Rate (%) -10-8 -6-4 -2 0 2 4 6 8 10 12 14 16 18 20 1979 1984 1989 1994 1999 2004 2009 2014 Year Total Formal private employment Real GDP Source: Bank of Papua New Guinea QEB 13

Falling employment shares for Agri, slow growth in the service & industry PNG's employment shares by sector (%) 1990-2021 Share (%) 10 20 30 40 50 60 70 80 Women dominate Men dominate 0 Men dominate 1991 1996 2001 2006 2011 2016 2021 Year Agriculture Services Industry Source: International Labour Organisation 14

Summary LFPR remains high at around 70 % Since 2014, GDP growth declined but growth in the formal sector employment has declined even more and is negative since then. Agriculture remains a major source of employment in PNG with dominance of women over men workers. Service and industry sector job providing performance remains poor 15

Challenges 16

Literacy rate catching up but mean years of schooling is below 4 years PNG's Educational performance 1985-2015 0 1 2 3 4 5 6 7 8 9 10 Literacy Rate (%) 0 10 20 30 40 50 60 70 1985 1990 1995 2000 2005 2010 2015 Year Expected years of schooling Mean years of schooling Literacy Rate Source: UNDP Human Development Report and PNG NSO 17

Very low Secondary and Tertiary educational attainment PNG's highest educational attainment by sex 2009-10 0 5 10 15 20 25 30 35 40 45 50 55 Elementary Primary Secondary Tertiary All Males Females Source: Household Income and Expenditure Survey, 2009-10 18

Is working population healthy? 10000 15000 20000 25000 30000 35000 40000 PNG's population with HIV and TB 1990-2015 0 5000 1990 1995 2000 2005 2010 2015 Year People living with HIV People with TB People living with both TB and HIV Source: WHO, UNAIDS and author's own calculations 19

Lost healthy life days per person PerCapita number of healthy life days lost due to TB and HIV/AIDS 2013, by gender 20 40 60 80 0 100 0-14 15-64 65+ Age group (years) Due to TB for males Due to HIV/AIDS for males Due to TB for females Due to HIV/AIDS for females Source: author's calculation based on data from various sources 20

Minimum Wage: Nominal-real paradox PNG's nominal and real minimum wage (Kina per week) 1972-2016 0 15 30 45 60 75 90 105 120 135 150 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 Year Nominal: Rural Real: Rural Nominal: Urban Real: Urban Notes: Real wages data are at the constant prices 1977=100. Source: McGavin (2001), BPNG and author's calculations 21

Is minimum wage for all, despite low in real terms? Average gross hourly wage rate by sector July 2014 (Nominal Kina) 10 12 0 2 4 6 8 Minimum wage line All sectors Government Private Private-informal Private-Unregulated Median wage: all Median wage: female Median wage: males Source: Jones and McGavin (2015) and author's calculations 22

Very low labour productivity PNG and the select Pacific countries' labour productivity 1991-2021 0 5 10 15 20 25 30 1991 1996 2001 2006 2011 2016 2021 Year Fiji Papua New Guinea Samoa Solomon Islands Tonga Vanuatu Note: Labour productivity is measured in terms of GDP per worker in constant 2011 international dollars in PPP terms Source: International Labour Organisation 23

Business Environment Obstacles for Firms Constraints for firms in PNG Access to finance 10.77 Access to land 12.31 Business licensing and permits 4.62 Corruption 16.92 Courts 6.15 Crime, theft and disorder 15.38 Electricity Inadequately educated workforce 3.08 3.08 Political instability 13.85 Practices of competitors in the informa Tax administration 6.15 6.15 Tax rates 1.54 Source: World Bank Enterprise Survey 2015 0 5 10 15 20 Percent of firms (N=65) 24

Summary Lower educational attainment at secondary and tertiary levels-learn from East-Timore Poor health causing loss of healthy years to working population poses serious challenge to the labour market today and in near future Very low labour productivity, low-skilled workers, shortage of skilled workers Despite real minimum wage picking up in recent times, it is still same as 2010, and lower than 1974-1987 real minimum wage. Implementation of minimum wage in the informal sector that adjusts costs of living remains a big issue. 25

Summary Poor labour statistics: HIES and Census. No periodic labour force survey, Business Liaison Survey for formal sector by BPNG and is very thin SME Policy 2016 is not very effective due to lack of access to finance and restrictive w.r.t foreign investment Weak formal economy: not able to generate enough formal jobs to reduce reliance on subsistence economy 26

Prospects and Remarks 27

Prospects Invest in health and education Promote skills and technology driven trainings Promote health and safety (at work & in general) Cost of living adjusted minimum wage: to incentivise otherwise low paid workers Improve law and order issues to boost investments Reduce costs of public utilities and infrastructure: roads, electricity etc. Create favourable business environment 28

Remarks PNG is young country with very high human capital potential But at very high risk if not properly invested in health, education and skill development Structural changes are desirable in the employment policy. 29

Thank you! 30