Paper short abstract:

This paper focuses on the sustained growth of Pakistan's service sector and the pursuit of "decent jobs". The study aims at analyzing this phenomenon and the potential for sustained economic growth accompanied by decent jobs with such an unconventional structural pattern for a developing country.

Paper long abstract:

Pakistan entered the wave of globalization by liberalizing its economy earlier than its neighbours, India and China. Ironically, both the neighbours have fared quite well economically with high rates of sustained growth but Pakistan lags behind. However, the success story of both the neighbours differ - China's growth has mainly been driven by its manufacturing sector whereas India has experienced a service sector led growth. Interestingly, Pakistan has a similar structural pattern to that of India where the contribution of the service sector to its GDP dominates. This raises concerns in context of employment generation as the manufacturing sector which is perceived to be creating "decent employment" is almost stagnant in Pakistan. Thus, the main question that emerges from development perspective is that whether this structural change is helping the general populace i.e. through an increase in employment opportunities. This paper aims to deepen our understanding by focusing on the following aspects. Firstly, the paper would analyze the determinants of service sector growth in Pakistan. Secondly, it would examine the increase in employment and productivity in the sector thereby, determining the trade-off (if any) between the two. Thirdly, it would attempt to assess the overall nature and trend of job creation in the economy by monitoring the four indicators suggested by ILO (labour productivity, employment-population ratio, working poverty and employment status) in light of the service sector growth. Conclusively, the study would provide insights on the sustainability of the aforementioned path to economic growth and job creation.