Productive employment generation: an effective way to revitalize informal settlements in Pakistan
Abstract
One of the major concerns of government trying to devise sustainable urban policies is rapidly growing informal settlements in and at outskirts of cities. The problem is highly prevalent in developing countries and needs urgent attention. Informal settlements are the most disadvantaged sections of the society that suffer extreme poverty conditions and are excluded from social, spatial and economic developments. The study is undertaken for Pakistan with the intention to find the best possible way through which quality of life of residents of informal settlements can be improved. Informal settlements from three provinces Punjab, Sindh and Khyber Pakhtunkhwa in Pakistan are scrutinized in detail to reveal the current conditions of these residents in terms of health, education, crime, social capital and happiness. The study shows the deviation between the life of affluent classes and the poor classes and touches the important subject of income inequality and its implications. It simultaneously explores a link between unemployment, underemployment, informal sector and informal settlements. The roles of the federal, provincial and local governments as policy makers and implementers are highlighted by studying urban policies adopted post partition of the subcontinent and the effectiveness of each policy is analyzed to understand their impact on the lives of these residents as well as on other civilians. Lastly, the importance of productive employment is examined in search of an effective long-term sustainable solution.
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Universidade do Minho Escola de Economia e Gestão Sarah Wazir Productive Employment Generation: An Effective Way to Revitalize Informal Settlements in Pakistan Septembro de 2020 Productive Employment Generation: An Effective Way to Revitalize informal Settlememts in Pakistam Sarah Wazir UMinho|2020
Sarah Wazir Productive Employment Generation: An Effective Way to Revitalize Informal Settlements in Pakistan Dissertação de Mestrado Mestrado em Administração Pública Trabalho efetuado sob a orientação do Professor Doutor António Fernando Tavares Septembro 2020 Universidade do Minho Escola de Economia e Gestão
ii DIREITOS DE AUTOR E CONDIÇÕES DE UTILIZAÇÃO DO TRABALHO POR TERCEIROS Este é um trabalho académico que pode ser utilizado por terceiros desde que respeitadas as regras e boas práticas internacionalmente aceites, no que concerne aos direitos de autor e direitos conexos. Assim, opresente trabalho pode ser utilizado nos termos previstos na licença abaixo indicada. Caso o utilizador necessite de permissão para poder fazer um uso do trabalhoem condições não previstas no licenciamento indicado, deverá contactar o autor, através do RepositóriUM da Universidade do Minho. Licença concedida aos utilizadoresdeste trabalho Atribuição-NãoComercial-SemDerivações CC BY-NC-ND https://creativecommons.org/licenses/by-nc-nd/4.0/
iii ACKNOWLEDGEMENT I am very grateful to Almighty Allah who has bestowed on me strength, guidance and knowledge for pursuing and accomplishing this study. I am thankful to all of the teaching staff of the School of Economics and Management at University of Minho. I would like to acknowledge and appreciates the invaluable technical and moral support that I have received, especially from my supervisor, Professor Doutor António Fernando Tavares, for sharing his valuable time and wisdom and providing continuous guidance throughout the course of my research work. A special thanks to my parents Wazir Ali and Noor Wazir and my siblings for their support and encouragement. Finally, I would extend my particular thanks to all the friends and graduate students who had made my journey at the University of Minho enjoyable and worthy.
iv DECLARAÇÃO DE INTEGRIDADE Declaro ter atuado com integridade na elaboração do presente trabalho académico e confirmo que não recorri à prática de plágio nem a qualquer forma de utilização indevida ou falsificação de informações ou resultados em nenhuma das etapas conducente à sua elaboração. Mais declaro que conheço e que respeitei o Código de Conduta Ética da Universidade do Minho. STATEMENT OF INTEGRITY I hereby declare having conducted this academic work with integrity. I confirm that I have not used plagiarism or any form of undue use of information or falsification of results along the process leading to its elaboration. I further declare that I have fully acknowledged the Code of Ethical Conduct of the University of Minho
v Productive Employment Generation: An effective way to revitalize informal settlements in Pakistan RESUMO Uma das principais preocupações do governo em relação a conceção de políticas urbanas sustentáveis é o rápido crescimento dos urbanizaçõesinformais nas cidades e nas periferias. O problema é particularmente prevalente em países em desenvolvimento e precisa de atenção urgente. As urbanizações informais são os setores mais desfavorecidos da sociedade sofrendo de condições de extrema pobreza e são excluídos do desenvolvimento social, espacial e econômico. O estudo é realizado no Paquistão, com a intenção de encontrar a melhor maneira possível de melhorar a qualidade de vida dos residentes de urbanizaçõesinformais. As urbanizaçõesinformais de três províncias, Punjab, Sindh e Khyber Pakhtunkhwa no Paquistão, são examinados em detalhes para revelar as condições atuais dosresidentes em termos de saúde, educação, crime, capital social e felicidade. O estudo mostra o desvio entre a vida das classes abastadas e das classes pobres e aborda o importante tema da desigualdade de rendimentoe suas implicações. Simultaneamente, explora uma ligação entre desemprego, subemprego, setor informal e as urbanizaçõesinformais. Os papéis dos governos federal, provincial e local como formuladores e implementadores de políticas são destacados pelo estudo das políticas urbanas adotadas após a partição do subcontinente. A eficácia de cada política é analisada para compreender o seu impacto nas vidas desses residentes, bem como nas outras esferas civis. Por fim, examina-se a importância do emprego produtivo na busca de uma solução eficaz e sustentável de longo prazo. Palavras-chave: urbanizaçõesinformais, desigualdade de renda, emprego disfarçado, emprego produtivo, favelas, governos locais, Paquistão, políticas urbanas,posseiros, urbanização
vi ABSTRACT One of the major concerns of government trying to devise sustainable urban policies is rapidly growing informal settlements in and at outskirts of cities. The problem is highly prevalent in developing countries and needs urgent attention. Informal settlements are the most disadvantaged sections of the society that suffer extreme poverty conditions and are excluded from social, spatial and economic developments. The study is undertaken for Pakistan with the intention to find the best possible way through which quality of life of residents of informal settlements can be improved. Informal settlements from three provinces Punjab, Sindh and Khyber Pakhtunkhwa in Pakistan are scrutinized in detail to reveal the current conditions of these residents in terms of health, education, crime, social capital and happiness. The study shows the deviation between the life of affluent classes and the poor classes and touches the important subject of income inequality and its implications. It simultaneously explores a link between unemployment, underemployment, informal sector and informal settlements. The roles of the federal, provincial and local governments as policy makers and implementers are highlighted by studying urban policies adopted post partition of the subcontinent and the effectiveness of each policy is analyzed to understand their impact on the lives of these residents as well as on other civilians. Lastly, the importance of productive employment is examined in search of an effective long-term sustainable solution. Keywords: disguised employment, income inequality, informal settlements, local governments, Pakistan, productive employment, slums, squatters, urban polices, urbanization
vii Table of Contents DIREITOS DE AUTOR E CONDIÇÕES DE UTILIZAÇÃO DO TRABALHO POR TERCEIROS ............................. ii ACKNOWLEDGEMENT............................................................................................................................. iii DECLARAÇÃO DE INTEGRIDADE ..............................................................................................................iv RESUMO .................................................................................................................................................. v ABSTRACT ...............................................................................................................................................vi CHAPTER I: INTRODUCTION .................................................................................................................... 9 Study Background ................................................................................................................................ 9 Informal Settlements as an Urban Problem ........................................................................................... 9 Research Objective ............................................................................................................................. 11 Research Questions ............................................................................................................................ 13 Research Structure ............................................................................................................................. 13 CHAPTER II: CONTEXTUALIZATION AND RELEVANCE OF THEME ........................................................... 15 A Historic Perspective on Housing Policies .......................................................................................... 17 Phases of Housing Policies ................................................................................................................. 19 Emergence of the Concept of Informality ............................................................................................. 21 CHAPTER III: LITERATURE REVIEW, THEORETICAL DEVELOPMENT ANDHYPOTHESES .......................... 30 Hypothesis 1 ...................................................................................................................................... 30 Hypothesis 2 ...................................................................................................................................... 43 Hypothesis 3 ...................................................................................................................................... 48 CHAPTER IV: RESEARCH DESIGN AND DATA LIMITATIONS .................................................................... 51 Research Design ................................................................................................................................ 51 Data Limitations ................................................................................................................................. 51 CHAPTER V: DATA COLLECTION AND ANALYSIS .................................................................................... 53 Introduction to Pakistan ...................................................................................................................... 53 Data Analysis on Current Condition of Pakistan ................................................................................... 53 Data Analysis on the Conditions of Slums in Pakistan .......................................................................... 60 Unemployment, Informal Sector and Underemployment ...................................................................... 78 Urban Policies of Pakistan .................................................................................................................. 79
viii CHAPTER VI: CONCLUSION AND RECOMMENDATION ........................................................................... 93 REFERENCES ........................................................................................................................................ 96 APPENDIX ............................................................................................................................................ 111 List of Figures Figure 1 ................................................................................................................................................. 12 Figure 2 ................................................................................................................................................. 35 Figure 3 ................................................................................................................................................. 35 Figure 4 ................................................................................................................................................. 46 Figure 5 ................................................................................................................................................. 62 Figure 6 ................................................................................................................................................. 67 Figure 7 ................................................................................................................................................. 81 Figure 8 ................................................................................................................................................. 82 List of Tables Table 1 .................................................................................................................................................. 29 Table 2 .................................................................................................................................................. 45 Table 3 .................................................................................................................................................. 60 Table 4 .................................................................................................................................................. 67
15 CHAPTER II: CONTEXTUALIZATION AND RELEVANCE OF THEME In 2001, around 924 million people representing 32 percent of total world population lived in slums. For developing regions a combined 43 percent of people were reported to live in slums while for least developed regions this figure was78.2% (United Nations Human Settlements Programme 2003). The terms slum, squatter settlement, shanty town, marginal settlement, informal areas and illegal settlement are used interchangeably with each other to define informal settlements. Distinction should however be made between these terms to prevent confusion. The word inner-city slum originated as many authors of nineteen century used it, to define the poorest vicinities of London. These areas were characterized as having heavy population, unhygienic living conditions, epidemic with diseases and degraded houses located within or near the city center. The former inhabitants of these houses were mainly middle and high-class residents who abandoned them to move to more convenient and fashionable residences. These houses were than subdivided and rented out to low income groups. With the growth in number of residents residing in these areas, the pressure on infrastructure increased to a point at which it was unable to sustain the entire population of residents, leading to further worsening of conditions. A recognizable aspect of this type of informal settlement is that their owners possess legal title of the land. The term slum now encompasses a broader meaning and is referred differently in various countries. Slums vary amongst each other significantly in ―physiognomic and social structure‖ with occupation of land in city centre, urban periphery to most unproductive lands and river beds (United Nations Human Settlements Programme 2003). In Latin America, marginal settlement refers to ―rapidly sprawling settlements in the urban peripheries‖ having high population density, insufficient public and private infrastructure and low and irregular income class employed in informal sector. Marginal settlements are comprised of traditional slums and squatters. The term squatter is specifically associated with occupation of land without legal title. Apart from illegal or semi legal occupation of public or private land, its characteristics resemble traditional slums being located on unproductive land near periphery of urban area and having absence of basic infrastructure. Defining slums through a universal concept has been quite challenging as slums are ―multiple dimensional in nature‖ that vary in definition according to subjective perspectives of evaluator, local, and
16 cultural backgrounds. For the purpose of consistent comparison and evaluation of slums, the United Nations has tried to operationalize the concept by establishing following definition: ―A slum household consists of one or a group of individuals living under the same roof in an urban area, lacking one or more of the following amenities: access to basic services, durable structural quality of housing, sufficient living area, security of tenure‖ (Obermayr 2017). Conditions that enable favorable emergence of slums are a combination of poverty and inadequacy of land where the poor seek reasonably priced accommodation while ―land becomes increasingly‖ scarce. Poverty in turn is a result of income disparity, lack of economic growth and ―population growth through inmigration‖. Each slum reflects its own local cultural, unique conditions and formation patterns with influences of history and politics. Slums lie at lowest socio-economic level in a city. According to a report of UN Habitat, urban poverty has been described as compromising of low level of income, human capital (education & health), social capital (social networks) and financial capital (productive assets). Factorial ecology demonstrates that the most significant factor responsible for spatial divide in a city is the social advantage/ disadvantage in terms of affordability of housing and land costs, employment opportunities and accessibility, availability of amenities, cultural landscapes and exclusionary zoning preventing some activities in specific areas. Medical science has advanced over time leading to higher life expectancy than before thereby having a direct impact on increase in population size. Along with this, rural-urban migration has contributed largely to urban population growth. The key features that make urban areas attractive to rural population for migration are employment opportunities, safety, health care and education, clean water supply, better infrastructure, and higher income. On contrary, lower agricultural income and other income opportunities, environmental degradation and declining productivity of crops are a few aspects pushing them towards urban areas. Lastly, urbanization is complemented by the lack of economic growth in many countries (United Nations Human Settlements Programme 2003). Other factors for formation of informal settlement include ―inefficient public administration, ineffective housing policies, war, natural disasters and earthquakes leading to massive movement of people to places of opportunity and safety‖ (Amao and Benjamin 2015).
17 2.1 A Historic Perspective on Housing Policies Over the course of time, various influences have affected local and national policies on housing, in turn impacting the availability of stock of houses to the urban poor. The magnitude of impact of policies, whether positive or negative, depends on local, national and global context. Democratization has led to increased participation of citizens at national and regional level while decentralization involves delegation of power and resources to ―regional, municipal and community levels‖ which were previously controlled through centralization. Greater autonomy and accountability have made local governments become more responsive to their regions needs while people and communities now feel more empowered than before. For informal settlements, decentralization results in policies targeted specifically toward needs of adequate shelter in the region. However, the downside involves greater fragmentation of nation and state, compromising economies of scales that were achieved through centralization and increasing corruption at local level due to poor accountability (Obermayr 2017). Globalization and specifically economic globalization has created strong international ties at the cost of ―national economic dependencies‖. It has opened opportunities throughout the globe for every country, yet has increased social exclusion, poverty and inequality to a wider extent. Neoliberal policies were advocated by the World Bank and the IMF in 1970 to be adopted by countries as a means of economic growth. These policies promoted removal of trade barriers (liberalization), privatization and minimal state intervention in markets (deregulation). The aim was to create a flourishing environment for investment and free global market. The World Bank and the IMF imposed the adoption of neoliberal policies as a condition on developing countries in exchange or extension of loan. The consequences of these policies were increased interurban competition and diminishing financial prosperity of cities. In many cases, even the basic services such as water and electricity were privatized. Repayment of loans meant reducing the state expenditures and any economic growth achieved as result was used for payment of debt. In addition, decentralization forced local governments to find their own solutions to expenditure financing as national government was no longer responsible to bail out local governments through redistribution of the overall revenue earned. Raising loans meant losing financial autonomy to donors who were more interested in generating return on their investment than investing in programs that met social needs of the regions. Cities started competing with each other to attract foreign investments in their region.
18 This meant greater expenditures on activities attracting investors than on social causes and public services; ultimately leading to inequality, social exclusion and poverty (Obermayr 2017). Cities are now becoming more and more fragmentized as a result of external forces (neoliberal polices, decentralization and democratization) and internal forces such as ―status, lifestyle and security‖. Cities can be pictured as a ―sea of wealth surrounded in ocean of poverty‖ (Obermayr 2017). The World Bank and the United Nations have played a significant role in devising housing polices throughout the course of history of housing policies. From 1970 to 1985 the World Bank was inspired tremendously by ideas proposed by Turner (1968; 1977). Turner (1968; 1977) believed that government has a role of assisting informal settlements, who would improve their condition by themselves. In this era, the World Bank tried to improve quality of lives of residents of informal settlements through site-andservices and slum-upgrading programs. In the 1980s, neoliberal policies gained momentum, but were later abandoned by the World Bank due to their negative consequences (Davis 2006). During the 1990s, the World Bank and the IMF adopted approaches to housing policies that incorporated enablement, tenure security, participation, micro credits and capacity building (World Bank. 2000).The World Bank has always prioritized market-based solutions over all others while for UN-Habitat environmental and social concerns are of much greater importance (Obermayr 2017). The United Nations has focused on ―adequate shelter for all and sustainable human settlement development‖. They have supported tenure security while giving loans on property and house improvement. Need for good governance has been made a priority through global campaign on governance who‘s ―objectives were to increase the capacity of local governments and other stakeholders to practice good urban governance by the operationalization of agreed norms through inclusive planning and decisionmaking‖ (UN Habitat 2002). A conference of Habitat I was called by UN in 1976 to address concerns over deteriorating human conditions in informal settlements (United Nations 1976). It was at conference of Habitat II in 1996 that the Habitat agenda was developed. The agenda had two goals; provide ―adequate shelter for all and sustainable cities‖. It was decided that local government involvement, building capacity and adoption of good governance principles at all levels would be used to achieve these aims. Important commitments made during the Habitat agenda were: right to adequate housing and adequate shelter for all, sustainable human settlements, enablement and participation, gender equality, financing shelter, international
19 cooperation and assessing progress. In the same era, the UN also defined seven dimensions of good governance: ―sustainability in all dimensions, Subsidiarity, equity, efficiency, transparency and accountability, civic engagement and security‖ (United Nations 1996). At the Millennium Submit in September 2000, the Millennium development goals were formulated with one goal specifically targeted towards Slum development: ―By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers‖. With achievement of improvement of more than 300 million slums in 2015, UN‘s Sustainable Development Goals were developed with a broader focus: ―By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums‖ (Obermayr 2017). At the Habitat III conference held on October 2016, the United Nations reassured its commitment under new urban agenda towards adequate housing for all citizens and ―sustainable cities‖. The agenda laid out principles and standards for urban area improvement, development, management, construction and planning and for implementation through ―national urban policies, urban legislation and regulations, urban planning and design, local economy and municipal finance, and local implementation‖. It also recognizes the relationship between; development and good urbanization, employment creation and good urbanization and better quality of life and job opportunities. Every urban policy should incorporate these links. The agenda also highlighted how the new urban agenda would lead to the achievement of sustainable development goals set be achieved by 2030 (United Nations 2016) 2.2 Phases of Housing Policies Lessons have been learnt with every policy approach adopted to cater the problems of informal settlements and new approaches with improvements have been devised subsequently. Until the 1970s, governments approached informal settlements with negligence and did not recognize or mark them on a city‘s map. It was in mid-20th century when governments started constructing high-rise blocks to provide suitable housing to people living previously in slums (United Nations Human Settlements Programme 2003). This policy proved to be quite expensive both for government and slum residents given that the number of houses constructed could not meet the demand and did not solve the problem of slums as
20 expected. In many cases, affordability of these houses was not possible for slum residents due to income constraints; hence these houses were mostly occupied by the middle class (Davis 2006). With the adoption of neoliberal policies in the 1980s by many countries, social housing lost its attractiveness and government paid direct subsidies for housing, which was a cash alternative of social housing with similar problem of being too expensive for governments. The consequence of the adoption of neoliberal policies was not as fruitful as initially thought (United Nations Human Settlements Programme 2003), hence the next approach of government towards informal settlements was eviction. Eviction was justified on grounds of slums being an eye sore for urban residents and breeding ground for criminal activities (Davis 2006). Many informal settlements were evicted due to their prime location (United Nations Human Settlements Programme 2003). Some were removed due to events such as the Olympics, where government did not wanted the international visitors to develop an impression of them being poor. The residents of evicted settlements either settled at the periphery of a city or in remaining slums; worsening conditions in these areas through overcrowding while with former increasing cost of commute (Obermayr 2017). Unlike eviction, resettlement programs did not use force of government rather involved cooperation and agreements by slum dwellers and compensation paid by government (United Nations 2014). By the 1970s, the World Bank started intervening in housing policies adopted by many governments and favored assisted self-help based on the ideology of Turner (1968; 1977). Site and Service and slum-up gradation were two ways through which assisted self-help was provided. Site and service involved provision to families; a plot on land connected with basic services and cheap material to construct houses themselves. Slum up-gradation was a program that aimed to improve the conditions of existing slums through regularization and infrastructure improvement. Additionally, housing loans were provided in some cases, either to build houses or improve existing structures. The outcome of this policy was not very satisfactory (Obermayr 2017). Missing skills, weak commitment of local authorities and slum dwellers, and lack of political will were not thought through which lead to poor governance structures, hindering effectiveness of the program (Davis 2006). It was realized that people involvement was an absolute necessity for the success of any program on slum improvement. Enabling policies incorporated this perspective where the role of government was to provide advice, financial assistance and training to build capacity. Mostly NGOs or local authorities assisted to achieve enablement with guidance of international development
21 organizations. The Habitat II conference further developed enabling approach and broadened it to ―participatory slum improvement approach‖ that combined best practices with market-based approaches. The dimensions of participatory slum improvement approach set by the UN includes ―physical upgrading, employment, tenure security, finance, partnership, participation, political will and formalization, sectorial reforms and capacity building‖ conducted through organizational, social, political action plan (Obermayr 2017). 2.3 Emergence of the Concept of Informality The International Labor Organization (ILO) works to develop and support labour standards, policies and programs that provide ―decent work for all‖ (International Labor Organisation 2019). In order for ILO to fulfill its purpose, it has directed its effort towards the creation of an operational measure of unemployment that could be used around the globe. To understand the impact of unemployment on countries and the effect of policies implemented, the Director General of ILO between 1948 and 1970, Davis Morse, emphasized heavily on devising measures to quantify the ―magnitude of unemployment problem‖. Labour statisticians during the process of formulation of the measure realized that the concept of unemployment could not ―readily apply‖ to Low Developing Countries (LDC) as the measurement only took into account the economic life quantified through wage-labour. With the rise in rural-urban migration, a larger population worked as unpaid family labour or was self employed, thereby being caught between the spectrum of full employment and unemployment. The utility of the terms ‗disguised unemployment‘ or ‗underemployment‘ emerged in 1950s and 1960s, to describe work with low productivity such as work performed in urban handicraft or agriculture. With many independent states being formed as a result of decolonization, countries started using this concept in their future forecasts and employment surveys (Benanav 2019). In 1889, Price and Booth (1896) studied the problems associated with unemployment and realized that people who were termed unemployed where in actual ―irregularly employed‖ as they were involved in some kind of work. Robinson (1936), the British economist, came up with the concept of disguised employment after studying Keynes general theory. Keynes (1936) in his theory has not taken into consideration the ambiguities of real life and defined involuntary unemployment as idleness enforced rather than as a search for work in frantic way. Robinson (1936) viewed this aspect differently and pointed that
22 people who become unemployed do not remain idle for long, engaging in any work they find and managing to live hand to mouth. She gave an example of matchbox sellers who were once employed in high productivity auto plants jobs. From the perspective of Keynes general theory these individuals despite having a job, fall under the category of unemployed but in reality their employment has taken a ―disguised form‖. Robinson (1936) stated that when the employment level is low, government intervention to stimulate demand will be effective if it has an effect of making disguised employment visible and ―then letting it resolve itself into new employment‖; enabling the workers on streets to relocate to high productive jobs. Rosenstein-Rodan (1944) was first economist to use term disguised unemployment to describe insufficiency of employment in LDCs in his ―big push industrialization‖ theory. Taking in consideration that there are many workers on the streets that have never held a job in high productive sectors, RosensteinRodan (1944) described the disguised employment as ―measure of workers with zero marginalproductivity‖, i.e., those workers who will not have any declining effect on productivity if they leave their present job. According to him, with the start of industrial era, these agrarian workers would eventually become part of the industrial work force. In 1951, Chiang Hsieh, the ILO official defined the term underemployment as the ―difference between the labour force‘s actual and potential working time‖. He also acknowledged that measuring underemployment is quite difficult as workers apparently seem fully employed but actually work in low productive jobs. Taking in consideration Hsieh‘s definition, ILO in 1957, defined underemployment ―as the difference between the actual employment and the theoretical full employment of the labour force‖. Standardizing the measurement of underemployment proved to be quite complex as the approaches undertaken involved subjective judgment of interviewee, interviewer or simply varied circumstances faced by individuals. Economists and government planners accepted only the standardize measure of visible underemployment that took account of part time workers seeking full time jobs while standardization of measures of invisible underemployment involving individuals working full time in low income activities was delayed (Benanav 2019). Between the periods from 1950 to 1960, many countries got involved in development planning. However, due to limited expertise, post-colonial devastations, dispersed rural economies, and maneuvering by super powers, much success was not achieved. At this point ILO failed to take into consideration barriers to economic growth (such as difficulty to import in US and Europe manufactures or declining
23 export prices of agriculture product) as many of the developing countries were in phases of rapid growth. The detachment between economic growth and employment expansion was explained by ILO through rapid rise in population and slow rise in demand for labour. Rising population meant higher rate of increase in number of workers compared to decrease in unemployment rate brought about by economic growth. Secondly, ―output of composition‖ was considered skewed where the rich played a more influential part in monetary economy than the poor as they tend to purchase products such as cars and whiskey that are capital intensive compared to labour intensive goods such as shoes and clothes. Governments hence favored policies that encouraged firms in LDC to import labour saving heavy production machinery. In response to these findings ILO recommended governments to set ―clear and publicly defined‖ employment policies with targets that can be quantified. In 1969 David Morse suggested governments to work on rural development, reducing capital intensive investments and social projects. Simultaneously, ILO focused its efforts on developing operational measures for underemployment. ILO wanted to convince countries to use direct employment targeting instead of GNP targeting but as no consistent measure of underemployment could be devised, the concept was abandoned. Instead, the concept of ―wage-earning jobs‖ was supported as a suitable measure comprising of written or verbal contracts and records being kept for wages received and paid. For LDC, this concept was inapplicable as most of their urban workers were either self-employed or contributed to unpaid family activities. Labour in rural areas comprised of men, women and children, all on whom contributed to income generating activities making it impossible to distinguish their specific role towards economic and noneconomic activities. As the work was spread across the entire day and amongst the family members, measuring the magnitude of labor force, their current level of productivity and ―its potential productivity at full employment‖ proved to be impractical. Asking questions about ―Are you available to work?‖, ―Are you seeking employment?‖ or ―Are you employed?‖ from a peasant who had no experience of any work other than what he does or from a precariously self-employed person during the survey did not do much and ended up only in ―pseudo-quantification‖. Now many ILO economists started looking at the concept having such rich historic background in a new way (Benanav 2019). Franklin (1969) noted that social policies of the government, for example unemployment insurance can help standardize categories of unemployment and employment in the West. These policies enable the jobless individual to become visibly unemployed instead of disappearing by choosing precarious self-employment. It was hoped that the same would be followed by developing nations as they industrialize. The phenomenon was
24 observed in modern sectors where state laws were strong and wage-labour was the general norm. However for sectors where the characteristics of modern sector did not existed, the concept of Franklin could not be applied. Not surprisingly, the latter sector was expanding. ILO statisticians now started considering proposals from other sources, the first amongst them was from Myrdal (Benanav 2019). In his book Asian Drama Myrdal (1968) stressed the idea of zero marginal productivity workers and argued that economist derived standard measures on labor underutilization should be used for LDC. Many measures on labor underutilization were proposed during 1970s; however, none got widely accepted. By this time ILO had already given up on putting its efforts on economic sector that was hard to describe through wage-labour relations and was experiencing crisis in formulating standard ―operational measure for underemployment‖. Finally, in 1971, the concept of ―employment in the informal sector‖ emerged (Benanav 2019). Informal sector was a neutral term used to describe activities related to so-called traditional sectors that were also inherently modern such as car repairs or beer brewing. Hart (1973) gave a presentation at Institute of Development Studies (IDS) on ―informal economic activities in the Ghana economy‖ in 1971;where he highlighted that these activities should be supported and not suppressed. According to Hart (1973), formal income opportunities consist of public and private sector wages and transfer payments such as unemployment benefits or pension. Legitimate informal means of earning as defined by Hart (1973) were ―small scale distribution‖ (petty trade, caterers), ―primary and secondary activities‖ (tailor, shoe maker, farming), ―tertiary enterprises‖ (transport, housing), others (shoe shiner, musician, barber) and ―private transfer payment‖ (begging, gifts) while illegitimate informal means takes the form of services (including drug dealing, bribery, prostitution) and transfers (pick pocketing, money doubling tricks, gambling). Hart (1973) theory focused on lower bracket of the working poor (Jacques Charmes 2017).It was here that economists of both IDS and ILO realized that term informality fit well with their organizational development framework. ILO has previously advocated that ―skewed demand composition‖ and technology driven government incentives were reasons for failure of economic growth not translating into employment growth. They have therefore recommended governments to adopt policies which favor labour intensive activities targeted at mass population. These aspects were covered by concept of informal sector (Benanav 2019).
31 A key feature defining informal settlements is poverty and the poor are unable to afford the basic necessities of life: education, health, food, water, shelter and clothing (Naidu et al. 2015; Simiyu, Cairncross, and Swilling 2019). For the formation of the first hypothesis which looks at economic prosperity/hardship through lens of income inequality, existing theories in literature are studied to understand the relationship between income inequality and happiness, health, education, crime and social capital for individual, community and nation. Next, the conditions of existing slums which are at the lower end of the income pyramid around the globe are assessed on political, social and economic terms to devise a connection between economic affluence and quality of life of individuals. Finally, the first hypothesis is presented. 3.1.1 Theory 3.1.1.1 Income Inequality and Happiness Subjective Wellbeing or Happiness is a self-evaluation by person of their own life through cognitive analysis (Diener, Oishi, and Lucas 2009).Happiness serves as an important measure in accessing individual and social quality of life. For a good life not only social status, job security, rewards and power are essential but so is the happiness and satisfaction experienced from them (Frey and Stutzer 2002). When viewing happiness in relation to income inequality, it can be perceived that individual generally don‘t like inequality (Dawes et al. 2007). The dislike can be because individuals feel that they could be at a better position in more equitable environment compared to otherwise (Piketty 1995; Benabou and Ok 2001).In the literature, several arguments have been presented on individual stance on inequality. The first view is based on individual‘s own self-interest while second view looks at the likes or dislikes of individual through their concern around betterment of society they live in (Ada Ferrer-i-Carbonell and Ramos 2014). The former view on whether income inequality is liked or disliked by individual is understood through their self-motive. Taking in consideration person‘s circumstances and characteristics, income inequality presenting a good opportunity to individual is more likely to be accepted by them than if it is associated with worse outcome. When people believe that the distribution of outcome in worst case scenario is linked with income inequality, they tend to be more risk and income inequality averse (A. Ferreri-Carbonell and Ramos 2009). The history of the individual is another factor affecting their preferences. Negative instances experienced by a person in past lead to development of pessimistic view on their
32 chances of climbing up the income bracket and increases inequality averseness (Piketty 1995; Giuliano and Spilimbergo 2009). Alongside this, their opinion on prospect about income mobility has an impact. If individual expects a fall from income ladder, they will tend to choose income equality (Benabou and Ok 2001). In some instances where income inequality might result in negative events such as increase in crime rate, individual will prefer income equality as it will reduce these events impacting them indirectly. Individuals will dislike income equality when they expect favorable outcome for themselves in worse scenario. The expectation might be of moving up the income ladder or any other positive prospect. The society as a whole in this case is more tolerant to income inequality but if these expectations remain unrealized the tolerance level might change towards dislike for it (Hirschman and Rothschild 1973; Grosfeld and Senik 2010). There are growing numbers of literatures on second view which support individual concerns for not only them self but also for the society. Bergstrom and Lachmann (1998) and Fehr and Schmidt (1999) pointed that choices of humans are based on their egalitarian believes and Dawes et al (2007)proposed that people are more happy in an equal opportunity environment. Individuals are not only focused on the outcome produced but also for them the means and processes involved in achieving the final results are important. The satisfaction by individual is drawn from processes being fairer (Frey, Benz, and Stutzer 2004). Therefore society will be more tolerant to income inequality when they believe income generating process is based on individual effort than on other aspects such as nepotism, luck, birth or corruption (Alesina, Di Tella, and MacCulloch 2004). In such society, multiple equilibriums are reached as a consequence of welfare policies and beliefs where effort is rewarded, taxation & income distribution are limited and reliance on luck is reduced, resulting in fulfillment of social beliefs (Alesina and Angeletos 2005). The literatures on subjective happiness have empirically tested how happiness of individual is affected by the position individual holds relative to their reference group in income distribution (Ada Ferrer-iCarbonell and Ramos 2014). The prediction of effect of income equality on happiness taking in consideration the impact of relative position of individual in income distribution is not than straight forward. There exist two opinions on why relative concern may be in line with individual‘s dislike for income inequality. The first opinion can be understood from the study of Fehr and Schmidt (1999). Fehr and Schmidt (1999) categorized those having more as upward comparisons while those having less as
33 downward comparisons. In their study, individuals who envied upward comparison and showed compassion for downward comparison had higher utility in equal societies. This effect was observed keeping the income of individual constant. Ada Ferrer-i-Carbonell (2005) confirmed the asymmetry of relative concern. According to him individuals get unhappy when they are poor compared to their relative group but there is no effect on their happiness in case of them being richer. Hopkins (2008) established that where this phenomenon is supported through empirical studies, there always is found a strong dislike of income inequality by individuals. Second opinion is based on preferences of individual from the point of view of within and between inequalities. Individual preferences might differ according to their perception of ―those perceived as equals (within inequality) and those perceived as not equals (between inequalities), the income distribution of each group will also have a different impact on happiness‖ (Ada Ferrer-i-Carbonell and Ramos 2014). This is however beyond the scope of this study. Relative concern eventually translates into positional consumption that leads to generation of negative externalities impacting happiness level of individual. ―A simple framework of conspicuous consumption rivalry to maintain one‘s apparent relative position‖ suggests that income inequality has positive effect on happiness. As the society becomes more equal, the competition for rank increases, increasing conspicuous consumption and decreasing utility (Hopkins 2008). Frank (2008) provides an opposite argument. He suggests that with the increase in high income bracket earners in US which have led to income inequality, USA has experience increased positional consumption and reduced utility. This is due to trickledown effect of increase in positional consumption by high earner on low income earners. Bowles and Park (2005) through empirical study of 10 OECD countries concludes that keeping all other aspects constant, there is positive relation between inequality, number of hours worked and unhappiness. 3.1.1.2 Income Inequality and Health Initially the researchers determined the relationship between income inequality and its effect on health by taking in account only absolute income. However with the progress in the literature, other factors were identified to also have impact on health and income inequality such as relative income of individual & its effects on health or social cohesion effecting income inequality (Wagstaff and van Doorslaer 2000). The rationale given for why relative income effects individual health is; lower comparative income induces stress in individual through induced feeling of deprivation resulting in unhealthy life (Leigh, Jencks, and
34 Smeeding 2009). Societal effect also has negative impact of individual health. Higher rates of crime and violence increases death rate as well as stress level of individuals. Heterogeneity in society hinders the mutual consensus on investment in public goods (Alesina, Baqir, and Easterly 1999) such as hospital or medical centers; hence resulting in higher income inequality and lower health of individual (Leigh, Jencks, and Smeeding 2009).These explanations have led to emergence of many hypotheses in literature to explain the link between income inequality and health which are discussed in detail here. Simultaneously, the impact of health on income inequality should not be ignored. According to Leigh, Jencks, and Smeeding (2009), individuals with health problem face more difficulty in seeking, retaining and being promoted in job compared to healthy individual. Healthy students have better educational outcome and are less likely to drop out which translates into brighter income prospects in future. Healthy individuals tend to ―marry and build stable relationship‖ which impacts positively their income earning prospects (D‘Hombres, Weber, and Elia 2012). There are several hypotheses linking the effects of income inequality and health. Next, I discuss each of these in further detail. 3.1.1.2.1 Absolute Income Hypothesis Rodgers (1979); Preston (1975) and Gravelle (1998) described the link between income inequality and health as being concave i.e. an increase in income impacts health of individual positively; however, for each incremental dollar there is diminishing incremental effect on health. When assessing the hypothesis at community or population level, it is suggested that average income of population and community along with inequality within them impact people‘s health. Considering equal distribution in society consisting of 2 people, a 100 dollar fall in person A income and rise in person B income will result in greater fall in A‘s health compared to rise in B‘s health due to nonlinear or concave effect of income inequality on individual health. Note that average income of population with two individuals has remained the same. Taking only absolute income in consideration, as the average income of society increase, income inequality decreases and, the health of society also improves (Wagstaff and van Doorslaer 2000).
35 Figure 2 Relation between Individual health and Income (Wagstaff and van Doorslaer 2000) Figure 3 Relation between Country Life expectancy and Income Inequality (Wagstaff and van Doorslaer 2000)
36 3.1.1.2.2 The Relative Income Hypothesis The Relative Income Hypothesis describes the effect of relative income rather than absolute income on health. According to Wilkinson (1998),the death rate of underprivileged people is higher in the United States than in Bangladesh. In United States, absolute income of poor people is higher in comparison however it is the effect of relative income and social status that affects the mortality rates tremendously. Hence at individual level, ―the deviation of individual income from the mean population‖ affects health of individual. Individual health will worsen when his or her income deviates more from population means. At community level, the health of community is directly related to the mean community income (same as absolute income hypothesis) but inversely related to mean population income. At population level, the health and income inequality shares same relationship as derived through society level absolute income hypothesis (Wagstaff and van Doorslaer 2000). 3.1.1.2.3 The Deprivation Hypothesis The term deprivation in social sciences is understood to be as when a person has income or living standard below poverty line. Poverty line can be expressed in absolute terms i.e. income earned below $1 per day or in relative terms such as income below half the community median income. Expressing z for poverty line and y as for individual income, the income gap i below poverty line or otherwise zero can be calculated as (z-y). Deprivation is hence measured in relative terms by using income gap as measure. At individual level, the health of individual will depend upon the income gap and the poverty line. The graph representing the relationship between health and individual income will be same as figure 1, however for income above poverty line, the relationship would appear flat. At community and population level, the health of community/population is dependent respectively on average income of poor, income equality amongst poor and proportion of poor at community & population level (Wagstaff and van Doorslaer 2000). 3.1.1.2.4 The Relative Position Hypothesis The relative position hypothesis emphasize on the position of individual income on income distribution. The health of individual is dependent upon the income and its position on national income distribution while health of community is function of its income and income inequality and the relative
37 community income ranking in population. The population level health determinants are same as described by absolute income hypothesis. The second variant of hypothesis underlines the importance of ranking of individual income in relation to their community. The health of individual will then be dependent upon the income and its ―relative rank in community‖. Community and Population health determinants will still be described as before. Yet another variant of hypothesis looks at community income ranking in relation to population as being important to individual. Individual health is than affected by income and community income ranking in comparison to population (Wagstaff and van Doorslaer 2000). 3.1.1.2.5 The Income Inequality Hypothesis Income Inequality Hypothesis states health at individual level is directly affected by income inequality. Hence the determinants of individual‘s health are his/her income and either inequality within community or at national level. The community and population health determinants are same as absolute income hypothesis (Wagstaff and van Doorslaer 2000). 3.1.1.3 Income Inequality and Education The relationship between income inequality and education can be view from two perspectives; first, what is the impact of education on income inequality? And second, what is the impact of income inequality on education attainment? In his theory of human capital, Becker (1964) illustrates that obtaining education enhances competences and skills of individual, thereby increasing their productivity. The competitive labor markets values productivity and hence individuals with higher education level and productivity are paid higher wages. This indicates that ―the more educated a society‖ is the greater welfare it holds (D‘Hombres, Weber, and Elia 2012). The positive correlation between education attainment and income inequality through ―skill deepening‖ has also been suggested by Mincer (1958) and Schultz (1961). Knight and Sabo (1983) described ―composition‖ and ―wage compression‖ effects of accumulation of human capital on income distribution. Composition effect at first increases income inequality as the size of individuals in group with higher education level increases but eventually decreases it. The wage comprehension effect, on other hand decreases income inequality as the supply of more educated individuals in market increases while supply of less educated individual decreases. For same number of positions, greater supply of
38 educated individuals leads to higher competition and ultimately leads to reduction in pay gap between more educated and less educated individuals. Spence (1973) illustrates that income distribution is unaffected by education level. Education has more of signaling effect as it helps employers detect individuals with higher skills. Wolf (2004) argues that personal trait rather than higher education level are determinant of skills while Galor and Tsiddon (1997) associate higher level of education attainment to genetics. Nether less, education still is considered to be positively linked to securing better jobs in market (Rodríguez-Pose and Tselios 2009). Analyzing the impact of income inequality on education attainment is less clear cut than it seems. As income inequality raises return on education investment, it should therefore increase expenditure on education. Topel (1997) in this reference concluded that due to increasing opportunity to capitalize returns, the accumulation of skills is quite rapid. Increasing supply of skills in due course reduces the rise in inequality (D‘Hombres, Weber, and Elia 2012). However, educational attainment requires financial resources and income inequality means, uneven availability of resources to spend. Income level of a family depends on their cultural background, inheritance and attributes of the community (Durlauf 1996; Checchi 2000). According to Cooper (1998) intergenerational stability of income is observed for rich and poor than for middle class families, indicating a large section of population remains trapped at same level of income and education, generation after generation (Rodríguez-Pose and Tselios 2009). 3.1.1.4 Income Inequality and Crime The theory here is arranged by first understanding the effect of poverty on crime to understand the impact of Income inequality on crime rate in larger context. The relationship between poverty and crime is strongly recognized in literature (Pratt and Cullen 2005; Sampson, Robert, Lauritsen 1994; Bailey 1984; Lee 2000); however the interpretation of connection is still unclear. According to Cusson (2005) association between the two can be spurious when individual or group features are taken in account. For example if crime punishment impacts attainment of job than crime has an impact on social status of individual. Most scholars have associated poverty with criminal behavior. One explanation of why poverty flourishes crime is based on discrimination and blockage of legal opportunities. Poor people ―lack access to the legal system‖ that translates into grievances expressed in form of crime (D. Black 1976; Donald Black 1983; Agnew 1999). Another explanation
39 focuses on neighborhood in which poor people reside having ―lower collective efficacy‖ compared to rich. The neighborhood effect creates an environment where people adopt an aggressive approach or arm themselves as tactic of self-defense (Bursik 1988; Sampson 1997; Anderson 1999; Felson and Pare 2010).Yet another explanation describes tendency of people to respond to disrespect through physical violence as factor linking poverty with crime (Miller 1958; Wolfgang and Ferracuti 1967) cited in (Pare and Felson 2014). According to economists the decision of individual to participate in criminal activities involves analyses of cost and benefit between ―return from criminal and legal activities‖. It is a rational decision. The net return earned from criminal conduct is equal to its return minus the opportunity and associated cost such as punishment of crime if caught. Income inequality increase the net return for poor situated at the end of income distribution as the difference between their income and mean country income is larger compared to situations with income equality (D‘Hombres, Weber, and Elia 2012). Sociologists have put forward the relative deprivation theory which states that poor compare their income with the income of the reference group and if their income is less in comparison, they experience a feeling of deprivation. The deprivation is expressed through frustration and aggressions (Dollard et al. 1939; Berkowitz 1993). Income inequality is a source of barrier to achievement of goals by poor people which leads to frustration and is visible in form of violence on ―other poor who do not produce frustration‖. One theory suggests that inequality and relative deprivation result in institutional anomie where ―rules for governing conduct lack legitimacy and lose their force‖ (Merton 1938). Another argument emphasizes on week welfare systems or social support as consequence of inequality (Antonaccio and Tittle 2008) cited in (Pare and Felson 2014). The poverty effects can be result of absolute and relative deprivation and therefore these factors cannot be used as argument against dispute between whether income inequality or poverty causes crime. Poor people will evaluate outcome in line with their expectations. These expectations are perceived in accordance with expectation of other and according to their prior outcomes. Hence absolute deprivation is feeling arising from not having basic necessities of life while relative depreciation is result of comparison with other poor people having better outcome in life. Sociologists who hypothesize income inequality as cause of crime suggests it on ground of relative deprivation theory (Pare and Felson 2014). In the theory assumption needs to be based on who is taken as reference group for comparison (Easterlin 2001).
40 International studies have used compatriots for comparison while researches on reference group theory have made use of smaller close group such as families, friend etc. (Runciman 1966; Easterlin 2001; Cochran et al. 2004). With compatriots as comparison group it is still unknown as to how many wealthy individuals in country, state or city induce feeling of deprivation. Furthermore, economic success is not only a factor responsible for social comparison. Others factors include talent, popularity, health, and one‘s own past performance (Pare and Felson 2014). Income Inequality studies do not incorporate neighborhood effect on crime. The literature considering neighborhood effects presents an argument quite different from studies on income inequality and crime (Kubrin and Weitzer 2003; Parker and Reckdenwald 2008; Sampson 1997). According to them neighborhood with low income inequality but high poverty are more prone to criminal activities. This explanation insists that people living with other poor people indulge in violent behavior compared to opposing view of poor people comparing and living within wealthier society and developing feeling of frustration (Pare and Felson 2014). 3.1.1.5 Income Inequality and Social Capital Social capital has been viewed in literature as relation amongst individual (Bourdieu 1980) and as country and region aggregate property (Fukujama 1995). It is further divided into three classifications: relational, structural and cognitive social capital. ―Relational social capital‖ incorporates reciprocity, trust and solidarity to defined relation amongst individual. ―Structural social capital‖ is concerned about connections and networks between individual and ―cognitive social capital involves attitude and shared values between individuals (Newton 1999; Chou 2006). Structural social capital is further dissected into two groups. Closed and exclusive group consist of family members and friend and is homogenous in nature while open and inclusive group comprise of members of diverse community (Narayan 2002) cited in (Pisani and Scarafile, n.d.). Heterogeneity is seen an important element in acting as barrier in formation of social capital. Community heterogeneity incorporates racial and ethnic heterogeneity and income inequality. Individuals tend to maintain contact with each other on basis of similarity such as having same culture, socio economic background etc. Hence in homogeneous community, individuals will be more in contact with each other compared to in a heterogeneous community. Latter communities are characterized as having
47 people where everyone contributes to society and benefits from it and where current needs of people are met without harming needs of generations to come (Georgescu and Herman 2019). Porter identified that structural transformation is important for enhancement in quality of jobs and labour productivity. It involves gradual shift of workers from low productivity jobs mostly traditional activities to high productivity jobs such as manufacturing and services. World economic forum used the theory presented by Porter (1990) and suggested that increase in wages, productivity and competitiveness is observed when countries transform from ―factor-driven stage‖ to ―efficiency-driven stage‖ and finally to innovation-driven stage‖. Erkut (2016) described the above process as economic evolution which is selforganized. Structural transformation is acknowledged as evolution rather than mechanical process. Many developing countries having low level of economic development were affected in terms of nature of employment created and speed of development when the share in output & employment in manufacturing sector was reduced. Lehmann-Waffenschmidt (2008) cited by Georgescu and Herman (2019) emphasized that growth and industrialization are a long term process and political interventions only provide short term solutions (Georgescu and Herman 2019). The quality of job and labour productivity is also impacted by sector of employment and therefore if countries want to break out of poverty they need to diversify their sector of employment. Agriculture is characterized as having low productivity and high vulnerable employment and hence greater share of total employment in manufacturing sector reduces vulnerable employment. Salaried worker are less influenced by relative poverty than vulnerable workers. However transformation in nature of work from permanent to temporary, full time to part time or employee to self employment increases vulnerable workers. Lavopa and Szirmai (2018) pointed that not only should the size of modern sector be enlarged but also investment in technology should be ensured to close technological gap. Innovation and knowledge capital are drivers of economic development and productivity (Georgescu and Herman 2019). Many of the residents of informal settlement work in informal economy implying the quality of jobs they occupy is very low. The literature suggests job creation as an effective long term solution to poverty reduction provided quality of employment offered is high. The second hypothesis is a solution to enhance and better lives of people living and facing extreme poverty in informal settlements. The hypothesis is as follow:
48 H2: The economic prosperity of residents of informal settlements will improve by employment creation not only through generation of jobs but through the provision of productive employment and decent work (Karnani 2011). 3.3 Hypothesis 3 Informal economy and informal settlements are linked with each other through its residents being employed by the economy. The choice of owner of a business to be part of formal or informal economy depends upon the convenience of doing business with ease in the economy on which the policies of government have tremendous affect. The policies of government also affect the ways of conducting business and growth of informal economy. This has a direct impact on informal settlement as effective policies and its implementation will bind the owner of business to fulfill regulatory requirements towards its worker while simultaneously creating an atmosphere for it to flourish for the owners. The subsequent text studies how policies affect informality both directly and indirectly. Informality have been linked by authors Chen, Sebstad, and O‘Connell (1999) to insufficient growth, growth without employment opportunities, bottom initiated growth through establishment of small enterprises and with structural adjustments. Economic growth is considered a core element to trigger expansion or shrinkage of informality and institution or policies influencing economic growth indirectly affect informality. Informality is thought to be a defensive mechanism by oppressed against rigid policies (tax laws, labour laws, social security laws etc.), bureaucracy and corruption. The studies conducted to assess the relation between informality and polices reveal inconsistent finding. Loayza (1996) used observation from 1980 to 1982 of 31 Caribbean and Latin American countries and found informality increases with ―statutory corporate income tax rate‖. Friedman et al (2000) observed a contrary result from assessing 64 countries of Latin America, OECD and transition countries. They concluded informality to decrease with increasing tax rate that are used to improve public service simultaneously. The burden of high cost of taxation is compensated through better public goods which minimizes tendency of tax payer to enter informality. This aspect was tested by author by incorporating legal environment control in regression analysis which led to tax variable losing its importance. In their earlier paper, Johnson, Kaufmann, and Zoido-LobatóN (1998) brought forward the concept of quality of tax administration and governance playing significant role along with tax rate in affecting informality. From the perspective of firm and using the data
49 on countries rating based on tax burden from ―Global Competitiveness Survey‖ 1997, they concluded for a specific tax rate, better quality of tax management results in lesser share of informality. The ―type of tax variable‖ and ―approach used to measure tax burden‖ determines extent of informality. Hibbs Jr. and Piculescu (2005) pointed that ―large shadow economies‖ are result of ―statutory tax rates relative to firmspecific thresholds of tax toleration rather than high tax rates‖. The study by Hill and Kabir (1996) on Canada‘s informal economy found greater relevance of marginal tax than average tax rate as contributory factor in formation of shadow economy (Rei and Bhattacharya 2008). Informality provides escape from regulatory burden. Welfare expenditures such as social protection cost to the employer and pressure from trade union to protect the rights of worker by serving as barrier to reduction of wages provides perfect condition for informality to flourish (Mazumdar 1976; Nipon 1991; Botero et al. 2003). The transaction costs and complex compliance procedures set by bureaucratic government system are tiresome and costly for both employer and employee (Chickering and Salahdine 1991). According to study by Loayza (1996) factors responsible for quality of institution are negatively correlated while factors responsible for labour market restriction are positively correlated with size of informality (Rei and Bhattacharya 2008). Transparency International, Fraser Institute, International Country Risk Guide and Freedom House are some of the agencies rating countries considering their regulatory environment. The attributes involved are quality of bureaucracy, business friendliness, formal laws and rules and their (formal) method of enforcement, economic freedom, control of corruption, non-biased judiciary etc. Countries having high rating have better quality institution and governance system. A positive regulatory environment is detriment to informality (Dreher, Kotsogiannis, and McCorriston 2009).Literature by Banerji and Ghanem (1997) suggests a different view; wage economy cannot be easily affected by small power that organized workers hold while a study by Botero et al (2003) indicates labour regulation having adverse consequences on rich countries instead of poor countries (Rei and Bhattacharya 2008). According to rational behavior approach logical analysis of cost and benefit by economic agent determines the choice of opting for informality over formality. Informality embeds two types of costs: explicit and implicit (Rei and Bhattacharya 2008). Explicit costs of informality are inaccessibility to legal system to enforce contact, to report criminal conduct or to benefits of ―governments and other development agencies‖ available to registered enterprise and high
50 cost of capital raised from informal credit market. Costs of formality are compliance cost of regulation (labour and other regulations), payment of tax and registration cost. Each of these costs serves as benefits of informal as they can be avoided through opting for informality. The benefits to stay in formality on other hand are access to government services which requires registration, access to credit market, legal protection and trade promotion services. Implicit costs are costs undertaken to avoid compliance and remain informal such as bribe to enforcement agencies (Rei and Bhattacharya 2008). Other factors apart from rational behavior approach too are taken in account during process of making the choice between formality and informality. These factors are human education quality, quality of government institution and services, enterprise size etc. With the growth of firm, the engagement in activities requiring formal contact becomes unavoidable (e.g. attainment of property right for enterprise). According to Krakowski (2005),the size of informal economy is dependent upon social-cultural indicators that vary with region. He also points that opting for informality is not always choice made consciously by economic agent. In developing world were literacy level is low or location is remote with little connectivity, economic agents might be unaware of legal requirement of setting up a formal enterprise. As informal economy has low productivity mostly the income tax bracket people or enterprises fall in is either exempt from tax or subjected to special tax rates. As transaction costs of enforcement to comply with regulation outweigh benefits to tax authorities the approach of negligence is adopted (Rei and Bhattacharya 2008). From the literature review, it can be deduced that informal economy which employs residents of informal settlements are influenced by policies of government. The third and last hypothesis places significant importance to role of government. The derived hypothesis is: H3: Federal, State and Local governments can play a limited but very important role through their policies on lives of residents of informal settlements by affecting the informal sector (Altman 2007).
51 CHAPTER IV: RESEARCH DESIGN AND DATA LIMITATIONS 4.1 Research Design The research design provides an overall framework for conducting the research. In line with the research design, the research objectives and questions have been defined in prior chapters. This chapter deals with research methodology to meet those research objectives and questions (Sileyew 2019). The two types of research method that can be used are qualitative and quantitative research methods. ―Quantitative research method involves collecting numerical data which is analyzed using statistical and mathematical based methods‖ while qualitative research tried to understand ―why and how people behave‖ in certain ways (Aliaga and Gunderson 2006). My research is a qualitative research conducted to understand the conditions of slums of Pakistan, factors involved in their existence and expansion and finding intervention through which the resident‘s livelihood can be improved. The data collection source can be primary data, secondary data or both. Primary data is collected by the researcher ―himself/herself for a specific purpose‖ while secondary data relies on sources of data collected by others for a specific purpose (Sileyew 2019). In this research, data source is non experimental secondary data and the unit analysis is slum of Pakistan. The secondary studies on slums of Pakistan are selected ensuring the author has collected and used primary data source for their research. As this research involves studying slums of Pakistan, the slums from major cities of four provinces namely Punjab, Sindh, Khyber Pakhtunkhawa and Balochistan were targeted initially. For Balochistan, however, availability of published studies on its slums could not be found; therefore the three remaining provinces became the focus of the study. Other sources of secondary data were collected from strategic papers and government reports related to slums, International and local newspapers, reports of NGO on slum dwellers, religion, kinship, discrimination, ethnicity and labour market and research papers on local government structure and urban policies of Pakistan. 4.2 Data Limitations Initially during the proposal phase, the research intended to collect primary data on slums of Pakistan, however due to their inaccessibility in terms of geographical scope, security concerns and time and resource constraints, the study was modified to use secondary data instead.
52 Residents of slums are categorized as poorest segments of the society. To depict the linkage between income inequality and their conditions of living, quantitative as well as qualitative data was planned to be used. The quantitative data required for this analysis was not available in reports published by the government of Pakistan and on the World Bank databank website. Only qualitative data was used. As mentioned earlier, the slums of all four provinces of Pakistan were to be covered in this study. As published literatures on slums of Balochistan were unavailable, the province of Balochistan had to be excluded from this study. The latest study published ―Pakistan Social and Living Standards Measurement Survey (PSLM)‖ at National / Provincial level by Pakistan Bureau of Statistic as of 30th May, 2020 was for year 2014-15 and ―Household Integrated Economic Survey (HIES)‖ was for year 2015-16. As data is taken from surveys conducted in the past, current figures might vary slightly.
53 CHAPTER V: DATA COLLECTION AND ANALYSIS 5.1 Introduction to Pakistan Pakistan is situated in South Asia and comprises of four Provinces namely Punjab, Sindh, Balochistan and Khyber Pakhtunkhwa. The capital of the country is Islamabad (Commonwealth Local Government Forum 2018). According to the World Bank Data, in 2018, Pakistan had a total population of 212.22 million of which 36.66% lived in urban areas; the country‘s surface area was 796.1 square kilometer and population density was 275.3 people per square kilometer of land area. Its poverty headcount ratio at national poverty line in 2018 was 24.3% of population and the poverty headcount ratio at $1.90 a day (2011 PPP) was 3.9% of population. Both ratios stated for poverty headcount, have decreased from 36.8% and 8.3% respectively in 2008, yet the figure remains significantly high. In 2014, the urban population of Pakistan was 35.613% of total population out of which 45.5% of urban population lived in slums (World Bank 2018). This figure is quite alarming as it represents residents of informal settlements living and surviving without basic facilities of life. 5.2 Data Analysis on Current Condition of Pakistan 5.2.1 Health The importance of healthy citizens in a country cannot be ignored as healthy individuals form an effective work force (Bloom, Canning, and Sevilla 2004). The information on health situation is taken from World Bank database and health indicators identified from literature are used to understand the overall health state of Pakistan. It can be concluded from the data on Pakistan that country‘s mortality rate in all classes and the number of infant deaths from year 2000 to 2016 has decreased while life expectancy at birth has increased from 63 years in 2000 to 67 years in 2016.The health of citizens of Pakistan on average have improved in year 2017 compared to year 2000. The improvement in health can be attributed to overall increase in spending on health by all institutions as depicted by current health expenditure per capita, PPP (current international $) over the period from 2000 to 2016. It should be noted that spending decreased from $127 per capita after 2007, between years 2008 to 2013 but increased to higher value of $131 per
54 capita in 2014.However, a cause of concern in area of health was the availability of health professionals in the country, as in 2015 reported physician density per 1000 population was 0.978 and nursing and midwifery personnel density per 1000 population was only 0.502 (World Bank 2018). 5.2.2 Water Supply, Sanitation and Infrastructure Safe drinking water is essential to maintain hygiene and good health. In Pakistan, many households are deprived of adequate supply of clean water. The data from latest available report of Pakistan Bureau of Statistic (National and Provincial) on main source of drinking water indicates an increase in use of motorized hand pump from 19% in 2004-5 to 32% in 2013-14. Simultaneously use of hand pump, dug well and other sources including river, spring, pond, canal, tanker, truck, etc. did not change drastically with usage being 29%, 3% and 10% respectively in 2013-14. The percentage of use of tap water fell from 34% to 26% between 2004-05 and 2013-14. When analyzing the data on urban areas only; tap water, motorized pump and dug well usage showed similar trends while use of other sources increased and hand pump usage decreased (Pakistan Bureau of Statistics 2014). When comparing the usage of drinking water from all sources according to the income group, the highest income group (5th quintile) consumed most drinking water while the lowest consumption was of the lowest income group (1st quintile) in year 2013-14. Overall 26% of population of Pakistan in 2013-14 had access to safe drinking water while the percentage was higher for urban areas with 52% of urban population having the access to portable water in 2013-14. Of entire individuals with access to water sources in Pakistan, overall only 22% people paid for it while for urban population having water access, only 44% pay for their usage. This represents a loss of collection of revenue to government from people that use water without payment for year 2013-14. The amount of collection has reduced from year 201213 being 22% and 46% respectively, representing weakening of governance system of public institutions. Another interesting aspect of concern was the installation of water delivery system. From the data available, it is not surprising that 61% of household in 2013-14 installed their own water system while local government institution installed only 28% and nongovernment institution contributed to 11% of installation of the system. A positive highlight (excluding few areas of Balochistan) was that 81% of the overall population having access of water in 2013-14 had water source inside their house, 14% had water supply
55 within 0.5 Kilometer and less than 5% had go obtain water from distance greater than 0.5 Kilometer (Pakistan Bureau of Statistics 2014). The importance of Proper Sanitation facilities can be realized from the fact that it is an indicator of the Millennium Development Goals. Sanitation refers to hygienic, proper, clean (solid and liquid) waste collection and their environmentally friendly disposal. In Pakistan (excluding few areas of Balochistan), analysis of the data on sanitation system for year 2013-14 revealed; 81% of the total households had toilet facility out of which 74% used flush system either connected to public sewerage, pit or open drainage while 9% used dry raised or pit latrine(non flush toilets). 17% of the households had no toilets and represented individuals lacking basic facilities and proper hygiene; however this figure was 1% for people living in urban areas. Income wise analysis showed 36% of the lower income group households referred to as 1st quintile lacked toilet facility but for urban areas the number was around 6%. The 5th quintile higher income group households in urban areas had 100% access to toilet facility (Pakistan Bureau of Statistics 2014). Waste disposal system of Pakistan (excluding few areas of Balochistan) was assessed through its drainage system which pointed towards an urgent need for improvement and was an alarming sign. For 2013-14, 36% of the country‘s household systems were open drainage while around equally same percentage had no drainage system at all. Urban areas of Pakistan had 34% of the households with open drainage system but the percentage for no system was low at 5%. Income based distinction showed 66% of the low income group having no system for drainage while the highest income quintile had 16% of the households in same category. The garbage collection of the country was no better than its drainage system. 76% of the households of the country had no garbage collection facilities while 7% accessed the system privately. For the urban areas, 43% of the households were provided garbage collection facilities by municipality, 14% accessed the facilities privately and 43% has no system access (Pakistan Bureau of Statistics 2014). Adequate housing is considered a basic human right and unsatisfactory housing that lacks legal tenure security, accessibility to services, proper infrastructure and facilities, affordability and adequacy of culture may increase risk of health problem and ―financial burden on the health system‖, reduce opportunities to attain education and minimize community interaction (Karamujic 2015). The data from Pakistan Statistic Bureau on National, Provincial and District on housing tenure shows an overall 7.8% of the households either paid subsidized rent or no rent. Most of these households represent occupants of
56 informal settlements living under poor conditions. In urban areas, the households paying subsidized or no rent are little higher than former at 8.4%. The material used for roof and for walls of houses reflects its durability and safety. In Pakistan, 39% of houses were built from T-iron or garder in 2014-15, representing the highest percentage when compared to any other material. Urban areas however had most houses constructed from RCC i.e. 57% while T-iron or garder material was second highest in percentage i.e. 29%. 79% of the households of Pakistan had their walls built of burnt brick but 16% still were made of mud brick. For urban areas, 95% houses had walls of burnt brick and 3% had walls of mud brick. The information on number of room in house was also collected by Pakistan Statistic Bureau. In 2014-15, 28% of houses had one room and 72% of the household had more than 2 rooms while urban areas had 23% and 73% houses in respective categories. 93% of houses used electricity for lightening and 7% used other sources including oil and wood while in the urban areas the percentage was much higher 98 % and 1% respectively. The most used source of fuel for cooking in Pakistan for year 2014-15 was wood stick (51%) but for the urban areas gas was used more than wood (Pakistan Bureau of Statistics 2015). 5.2.3 Education Every girl and boy in the world should have access to education as education and development are interlinked. Education eradicates poverty and boosts economic growth. It provides better opportunities of employment to individual along with better ability to maintain good health. It increases life expectancy of human and minimizes mortality rate. It‘s a source of income and promoter of peace as it enhances individual ability to make informed decision and avoid conflict (Kudroli Foundation 2019). For Pakistan, the literacy rate of population 10 years and older for Male, Female and both was 70%, 47% and 58% respectively in 2013-14. The rate of literacy was higher for urban areas being 81%, 66% and 74% in each category reflecting a more literate population. The literacy rate declined with age, overall as well as for urban areas and for both gender indicating individuals between age range 10-14 years being most literate while those above 60 years, the least literate. Income wise analysis revealed decline in literacy rate for overall population and for urban areas as we move from highest quintile measured using consumption per capital to lowest quintile. The data on children enrollment of slums of Pakistan referred to Katchi class is available separately. For both male and female child, as the age increases from 4 years to 10 years and above, the enrollment in urban areas and overall decreases. The annual expenditure on
63 Comparison of data from two diagrams show transition of slum population from stage 2 in 1996 to stage 3 in 2012 of four stages of classical demographic transition. In 1996, the population of slums of Islamabad had decreasing death rate while birth rate remained constant and high. The age group between 0 to 4 years had highest percentage of individuals and the percentage declined with age. The population of slums studied by Akhtar (2012) had low constant level of death rate and decreasing birth rates; the consequence of it was highest percentage of individual in their youth between age 20 to 24. The information presented clearly point towards policy direction to be taken towards youth in slums on education, housing, health and social needs. The study conducted by Chaudhry, Bajwa, and Nawaz (2014) on six slums of Lahore city to understand the health behaviors of residents of slums presented lack of education as major cause of their poor hygiene. 97% of respondents interviewed in this research had no prior education. The data collected through personal observation of interviewers described 43% of interviewees wearing extremely dirty cloths, 53% wearing unclean cloths, 70% being barefoot, 73% having messy hairs, 85% having unclipped nails and 76% having unclean teeth. A detail data gathered through primary survey revealed a lot about current health situations in these slums. This data was gathered through structured questionnaire. The information showed average fertility rate of slums to be 4.65 children per woman with 78% woman giving birth to 5 or less children during their life. The research by Akhtar (2012) depicted the demographic transition of Islamabad slum population while in this study average fertility rate of slums of Lahore under investigation were found to be higher than average national fertility rate (2012) of 3.07 children born to a woman, indicating a higher rise in population in Lahore slum area compared to Pakistan as whole. The research also inquired about reproductive health of female and found 38% of women to have had miscarriage once in their lifetime, 38% families had lost at least one child and 21% families had one child who died before age 1. Investigation on reasons for death pointed 24% of children dying of respiratory illness while 17% dying of diarrhea, dengue or Malaria. It was interesting to note that 56.7% of families visited medical facilities for general checkup but when it came to mode of delivery of children, 87.3% of female conceived with help of ―Dai (traditional birth attendant)‖ instead of seeking professional help. Diseases like skin infection and eye infection were found to be high, 78% and 47% respectively while no case of polio was detected due to effort put in by World Health Organization and UNESCO on its eradication. Furthermore, drug addiction was found in 55% of families interviewed. Some hygiene related habits of residents were
64 alarming and explained the causes of infection; 42% of respondents changed their cloths once a week, 51% of respondents washed their hands on alternative days and 16% of them took bath once a week. Unhygienic conditions provide breeding ground to diseases and are cause of deterioration of individual‘s health. Cynosure Consultants (Pvt.) Ltd (2013) in their research on four slums of Peshawar explained the living conditions of residents of slum which was followed by its health implications. From the interviewees, it came to light that within last 3 months, 74% had encountered some form of illness and most prevalent diseases described were flu, cold, fever, Intestinal and stomach disorder and diarrhea. Amongst adults‘ diabetes, heart and blood pressure was most common health issues reported and there were 2 cases found with polio. One aspect to be looked closely when talking on health is accessibility measured as distance of health facilities from home. The distance on average for all four slums for residents to reach to hospital was 5 Kilometer; however access was limited due to poor transport infrastructure (unpaved roads), availability and cost of transportation and security concerns normally at dawn and dusk. The residents of Peshawar slums mostly use public health facilities which have more qualified professionals (males and females), are equipped with advanced equipments compared to private physicians and are affordable to normal public but with income slum residents earn the cost is considered high especially for those with large families. The rates charged by public hospitals in Pakistan are subsidized. The problem encountered many times in hospitals is medical supplies running out of stock leading to rise in expenditures incurred by patients buying supplies now from private places. As public hospitals also have female trained staff, it makes it easier for women considering cultural sensitivities to discuss their issues with doctors of same gender. Considering the level of satisfaction, respondents were generally satisfied with public health facilities. 5.3.4 Water Supply, Sanitation and Infrastructure Global Shelter Strategy defined the term adequate housing as having adequate; space, ventilation and lightening, privacy, basic infrastructure, security, basic facilities and accessibility to work location (United Nations 2009). To evaluate the housing conditions of slums in Pakistan various secondary studies have been referred before reaching a conclusion. Study on Malir Slums in Karachi city by Jatoo, JinFu, and Saengkrod (2011) found the average size of household to consist of 7.7 individuals per house with average 2.54 individuals per room occupancy.
65 This data highlighted inadequacy of space in slums dwelling under examination. The research also provided data on time span a family has been living in a particular slum. The information is particularly useful to analyze the timeframe it takes to move from a low income locality to another place. According to the data 49.9% families were living in same location for greater than 30 years, 17% lived for greater than 20 years, 15% greater than 10 year, 5.3% for greater than 5 years and 12.6% lived in the same space for less than 5 years. On aggregate 82.1% settlers lived in their current house for greater than 10 years. Akhtar (2012) studied the socio economic status of four Islamabad slums and collected data to understand their household composition and calculate household deprivation index. The data revealed; on average for all four slums, a household comprised total of 8.82 persons with 3.4 persons per room. The slum of F6/2 had on average household size of 6.88 with 3.1 persons per room, the slum of F7/4 had on average household size of 9.54 with 3.1 persons per room, the slum of G7/1 had on average household size of 8.15 with 3.7 persons per room and the slum of G7/2 had on average household size of 8.94 with 3.4 persons per room. The data on household composition was used to calculate the spillover population living in excess of expected population to in turn determine percentage excess population living in targeted slums that is acting as indicator of housing adequacy. On average slums contain 45.05% of more population than their current capacity while individually F6/2 slum had 40.70% spillover, F7/4 slum had 37.53% spillover, G7/1 had 45.89% spillover and G7/2 had 46.05% spillover. Housing adequacy is used as one of the four indicators of household deprivation, other three being housing space, household level facilities and ―polluted water and solid waste disposal‖. A brief summary of data under each category is depicted in Table 4 and Figure 6. The research of Akhtar (2012) is eye opener as it uses the data to derive deprivation level of each slum as well as represents an overall figure. To conclude, overall these slums were 54% deprived of; household level facilities, 47% housing space and had 42% inefficient management of polluted water and waste disposal totaling the score to 46% of mean deprivation level.
66 Household Deprivation % Household Level Facilities Sub Indicators Households sharing toliet with other Households 82 Households with no kitchen or separate room 26 Households deprived of separate bathroom 46 Households without "flush to sewerage or flush connected to septic tank" toilets 6 Household sharing kitchen with other Households 54 Household sharing "bathroon with other Households" 78 Household sharing "more than one of above facilities with other Households" 74 Mean "Household Facilities Level Deprivation" 54 Housing Space Sub Indicators Households without room with cross ventilation 41 Households without internal open space 57 Households without drawing, guest or parlor room 83 Households without living or sitting room 91 Households using drawing, guest or parlor room for sleeping purpose 6 Households using living or sitting room for sleeping purpose 4 Mean Household Space Deprivation 47 "Polluted water and Solid Waste disposal Indicators" Polluted water Indicator Households discharging excretory and egestion waste in "water falls in nullas" 62 Households discharging excretory and egestion waste in water connected to open drain 3
67 Household link to proper sewerage 35 Mean inefficient waste management 65 Solid Water Management Indicators Disposal of waste in neighborhood n/a Disposal of waste in nullas 10 Mean "Polluted water and Solid Waste disposal inefficient Management" 42 Table4 Percent of Three Components of Household Deprivation for F6/2 ,F7/4 ,G7/1 G7/2 Slums Islamabad Akhtar (2012) Figure 6 Percent of Components of Household Deprivation for F6/2 ,F7/4 ,G7/1 G7/2 Slums Islamabad Akhtar (2012) A interesting research was conducted by S. Malik, Roosli, and Tariq (2020) in context of Lahore city Pakistan to understand the living conditions of residents of slums and squatters. The physical aspect of Karol Ghatti slum and Qalandarpura squatter were understood through infrastructure and basic facilities present in these settlements. Karol Ghatti slum is an illegal invasion of land with little or no security of tenure while Qalandarpura squatter is spontaneous legal invasion with partial security of tenure, both 0 10 20 30 40 50 60 70 80 Household Level Facilities Housing Adequacy Housing Space Polluted Water and Solid Waste Disposal Composite Index % F6/2 F7/4 G7/1 G7/2 Total
68 formed at outskirts of the city. The lack of facilities and infrastructure was found to be prominent characteristic of two settlements. There was only one tap facility available for drinking water at Karol Ghatti slum consisting of total of 50 household units. As no infrastructure was provided for sanitation purpose by government to this slum, a single temporary toilet made of basic material and clothes for privacy was constructed in slum with waste disposed through ―digging the mud‖. Such unhygienic conditions have become breeding ground for mosquitoes and other diseases prosing threat to individual‘s health. It was observed that many household activities such as cooking were carried out in open sky and respondent described the difficulty in carrying out their daily activities as harsh reality which they have become accustomed to over time. The slum did not have access to electricity at all and had shelters made of fragile structures which could fall easily endangering lives of tenants. Respondents described many families losing their loved ones as a result of collapse of these structures. Qalandarpura squatter had better infrastructure compared to Karol Ghatti but it was still characterized as insufficient. The streets of squatter were uneven without proper construction resulting in high chances of slippage during rainy day. As the roads were infrequently or not maintained at all by provincial government, any effort put initially had eroded with time. No lights on street increased insecurity amongst residents and promoted frequent occurrence of theft. There were electrical wires openly hanging above the roof of the household units and resident complained of overbilling as load shedding in their area was common and for extended hours. Flawed sewerage system with open manholes increased health risk and were dangerous as unattended kids can fall in them easily. As no waste disposal facility was available, garbage was dumped openly on unconstructed plots. It came with no surprise when respondents explained their efforts to reach local government authorities for help but were instead made to wait in long queues and returned without meeting. Lastly limited water supply encouraged residents to install their own water motor to pump water from nearby legal water system which meant illegal usage of water without payment of bills. Their household unit consists of a single room and toilet for family of more than 5 people with open courtyard where kitchen activities were also conducted. Most of times, a dirty fabric was hanging from roof wall instead of proper door at room entrance. The level of houses were below road level allowing water to make its way in during rainfall and unfinished back wall was adjacent to green field from where snakes found easy entry. City after city the same lack of infrastructure is observed for slums or squatter settlements and Peshawar city was no exception. Four slums of Peshawar were studied by Cynosure Consultants (Pvt.) Ltd
69 (2013) on behalf of UN Habitat. Their finding provided a complete view on housing and infrastructure of these settlements. For four slums, 66% of houses had size lesser than 3 to 5 Marlas but the real concern including house size was the quality of construction. Most of the houses were constructed from semi permanent material with clay or mud houses accounting for 59% of total houses, 11% made of thatch or wood and remaining made from either brick or concrete. 80% of time one housing unit was shared by a single family unit which included married sons and their families too while 18% of housing units had more than 2 families sharing a unit together. Breaking the unit further 20% of house units had one room, 59% had 2 or more rooms and 21% had more than 4 rooms. 22% of houses had 11 people sharing a room, 37% had 6 people per room, 25% had 4 persons per room and 15% had 3 or lesser persons per room. As per UN definition of adequate living standard 75% of houses had more than 3 persons per room indicating an extreme level of overcrowding. A positive aspect observed in these slums was the land had not been illegally occupied. Shaheehabad slum had 41% houses privately owned while 59% were rented. Tajabad slum was developed and subsequently sold to private individuals by Mian family. The slum had 20% houses owned while 79% were leased or rented. The land of Gujjar camp slum is owned by Arbab family who still retains the ownership but has created a system of leasing the land to immigrants. Changarbad land is situated near railway line, hence 60% of land ownership lies with Pakistan railway and 40% is privately owned. As Afghan refugees are not allowed to own an immovable property in Pakistan; therefore they normally rent houses on 1 year renewable lease. Internally displaced persons were second majority when it came to renting or leasing houses in areas described. The water, hygiene and sanitation system was also assessed in the research. More than 70% of households of slums had water supply in their home except Gujjar Camp. Of these households, 58% were supplied water through tap connected to public or private source and the rest through hand pump, motor pump or well. The supply of water was normally interrupted along with load shedding of electricity which meant tap supplied and motor pump household resident had to obtain water from outside sources. 30% of the households not having access to water inside their house had to fetch water from mosque or nearby neighborhood sources. Around 78% of outside sources were within 10 minutes walk still carrying a heavy water weight is tiresome work. Manly men were responsible for task of fetching water from outside due to cultural restriction on women to leave houses. Interviewees complained about insufficient availability of water but were satisfied with its quality which was doubtful as chances of water contamination are high in
70 slum are due to their unhygienic conditions. Around 98% of the household did have toilet inside their homes but 95% of them were non flushing toilet. Non flushing toilets are hazardous to human health as they involve collecting faeces and excretory material in a pit that needs to be emptied later using hygienic ways. In these slums it is the responsibility of women in household unit to clean the pit which is then dumped in open area. Each household unit has one latrine and normally at day time men use open defecation. Garbage is either thrown outside the house or at an empty plot few hundred meters away from the community. Garbage is not collected frequently by municipal cooperation resulting in its piling up and creating unsanitary environment for people. According to the respondents, there is no sewage drainage system provided by government, instead men on self help basis have dug drainage themselves for whose maintenance they are responsible. In rainy time the situation worsens a lot causing overspill of water from drainage into houses. It takes days for water flooding the unpaved streets to clear out and for community to return to normal pace. Almost 100% of houses in these slums had access to electricity but only 21% had access to gas used mainly for cooking and heating purpose with Shaheedabad and Gujjar Camp slums having no access at all. Most houses had electricity connection linked to main line however the availability of electricity in Peshawar city was 12 hours per day. Those houses with no connection to main line usually borrowed electricity from neighborhood or third party and yet some stole electricity as well. Slums further experienced a problem of low voltage allowing few basic appliances to operate at one time. In place of gas, the slum dwellers used firewood, LPG and natural gas as alternative. Firewood was mostly gathered from nearby agricultural land or nearby field by children or women of the house instead of purchasing it from market due to high cost. Cow dung, another fuel source for cooking was not used a lot for same high price reason. Slums with gas connection in house received gas normally 19 hours a day except in winter when the demand was higher as consequence of heating requirements. The transportation infrastructure determines the accessibility of slum dweller to main city center. Slums surveyed in Peshawar reported streets and main road being either unpaved or in need of urgent repair and maintenance. Shaheedabad slum is surrounded by privately owned agricultural land except 400 acres owned by Pakistan Armed Forces. The army has intervened in development of main road connecting city center. Tajabad main road through paved once now needs to be repaired. Poor transport infrastructure means difficulty in finding public transport close to houses, flooding of streets during rain and high cost of
71 transportation. Mostly the slum residents choose to walk by foot to their work, school etc. Rickshaws are also commonly used mode of transportation compared to public buses as they are available within 2 kilometer distance while for latter 3 to 4 kilometer distance needs to be walked before reaching the terminal. Open spaces are important for physical as well as mental health, unfortunately slums are deprived on these spaces. Peshawar slums were no different from other slums. The nearest recreational area was on average eight kilometer away therefore visits to them were limited by a family to 3 to 4 times a month and those using the space were not fully satisfied with it. The slums dweller seemed to have adapted to circumstances according to availability of their resources. Children utilized the unoccupied plots as play areas with hand-made swings installed by elders and young men socialized by playing snooker or board game. In extreme cases these men also got involved in drugs or gambling. Community elders and men had mosques, tea stalls and nearby markets for gathering and socializing. Only women and girls were completely deprived of this facility mainly due to cultural and safety issues. 5.3.5 Crime and Social Capital Slums emerge through illegal occupation of land, thereby posing a threat of eviction to its residents by governing authorities. There is a possibility of residents of slums changing their residence more than once in their lifetime; hence anything certain in their life is uncertainty. Karol Ghatti Slums in Lahore city investigated by S. Malik, Roosli, and Tariq (2020) is no different from any other slums. The occupants of the slum moved from one part of city to another before settling to this location. Their current life style was adopted from their ancestors who also lived in slums. As there is no up gradation in their living standards from one generation to generation, slums is the only reality they know and have learned to survive in. Slum dweller had limited vision of planning for future. They were unable to update their current situation by themselves due to financial limitation. No electricity or basic facilities have led them to conduct daily activities using natural resources. It also has inculcated a habit of waking up early and sleeping early at night. One prominent social consequence of living in this nomadic way is having early marriage of children so that cost of living is shared amongst families. Expenses of wedding are bared through selling their domestic animals. Children are normally left to wander unattended in slum depicting their ignorant behavior.
72 Squatters provide a low cost housing unit to urban poor. Most of the time, within real estate sector there are groups that direct people towards these cheap housing options instead of opting to use proper channel for renting and purchasing property. Sometimes squatter management corporation itself is involved through dishonestly using fake documentations to convince needy people of the legality of area. The ―possession of counterfeit stamp paper‖ on basis of which registry of house is made, encourage settlements in squatter. The resident of Qalanderpura squatters studied in S. Malik, Roosli, and Tariq(2020) research shifted to the location as a consequence of either clearance of their previous residence due to construction of bypass in Dharmapura located in main city business area or in search of better employment opportunities. As it was second generation living in the slum they have inherited their houses from their parents and did not possess proper documentation. People in general were satisfied with the way of living as they felt they were better than other urban poor who lacked security of tenure and therefore did not put much effort in improving their quality of life. The limited financial sources as well as unawareness of official platform for poor communities to ask for help and irresponsiveness of official authorities were reasons for no self initiatives for up gradation. Few studies on Pakistan in relation to slums were able to get hold on how a slum was developed. History of slum is important to understand its social capital. Cynosure Consultants (Pvt.) Ltd (2013) study on four urban slums of Peshawar provides details on its historical formation, enabling readers to understand the ethnic constitution and composition of these slums. The population of Peshawar city started to rise drastically in late 1970s due to immigration of Afghan refugee which consequently led to formation or increase in residents of slum. The Afghan refugees escaping Soviet war settled in Shaheedabad, Tajabad and Gujjar Camp slums in 1980s. In 2007, the first two settlements became home to internally displaced person (IDP) from operation of Pakistan Amry in Teera and Bara Valley. Gujjar Camp however consists of only Afghan refugees. The residents of Changarbad slum on other hand had settled in the area in 1960s and are of nomadic origins from Peshawar or ―other areas of Khyber Pukhtunkhwa Province‖ but were not internally displaced persons (IDP). A weak social capital of Changarbad was observed despite all being from same province when interviewees from slum expressed lack of cohesion amongst themselves with no step taken by residents to create community governance system for community benefits. Shahhedabad Colony on the other hand comprising of two large neighborhoods (Shaheedabad and Subhanabad) was formed by locals in 1970s possessing agricultural areas in
79 increased, job mismatch widened leading to increase in duration of opted unemployment. Another factor affecting unemployment in Pakistan was political instability resulting in corroding confidence of the investors to invest in businesses. When unemployment in formal economy is high, growth rate is low or the economy is going through recession, people end up working in a shadow economy. In addition, strict government regulations on the labour market (minimum wages, minimum education level and maximum working hours) puts heavy burden on the firms and limits their ability to hire more people. High inflation, unemployment, increased taxation and non existence of social welfare policies acts as catalyst towards expansion of informal economy (Mughal and Schneider 2018). Higher taxation on income reduces the disposable income available to individual and hence motivates them to join informal economy where no taxation is paid as opposed to formal economy. (Aslam 1998; Yasmin and Rauf 2003; Ahmed and Hussain 2008) in their research used taxation as independent variable on which the size of informal economy of Pakistan was dependent. (Gulzar, Junaid, and Haider 2010; Kiani, Ahmed, and Zaman 2015) used both taxation and unemployment as variables responsible for expansion of shadow economy in Pakistan while Mughal and Schneider (2018) in his research along with taxation and unemployment also used intensity of government regulation as cause of increase in the informal economy. His studies through empirical evidence confirmed these variables to be responsible for rise in the informal economy of Pakistan. 5.4 Urban Policies of Pakistan Pakistan has a three tier government and is a federal republic. At federal level, the parliament consists of two houses; the Senate (upper house) and the National assembly (lower house). The president is the head of the state which is elected indirectly by members of national assembly, senate and the provincial assemblies. The current head of state of Pakistan is Arif Alvi. The members of senate are either directly elected from two of the territories or indirectly from the provincial assemblies. In National assembly, the members are directly elected by the people with few seats reserved specifically for minorities and women. The current prime minister of Pakistan is Imran Khan and he is the leader of largest winning party in the National assembly. Pakistan comprises of four provinces; Punjab, Sindh, Balochistan and
80 Khyber Phakhtunkhawa and Gilgit-Baltistan( de facto province ) and Azad and Jammu Kashmir (Commonwealth Local Government Forum 2018). 5.4.1 History of Urban Local Government The history of local government in Pakistan dates back to pre partition times where the first municipal corporation was established in 1688 in Madaras by the East India Company. The first step towards establishment of Municipal Corporation was taken in 1842 through formation of a formal sanitary committee under the Conservancy Act to be applied to presidency of Bengal for garbage collection. The Conservancy Board was formed in Karachi in 1846 and for Lahore and Rawalpindi; the Municipal Act was established in 1867. In 1882, the municipal committees were allowed to have elected members in their committee under local self government resolution of Lord Ripon. This resolution also suggested the formation of local rural government. In 1907, it was recommended by Decentralization commission to appoint a non official chairman for member committee that was taken up by Simon Commission in 1925 which had the role of performance assessment of local self government. The Provincial autonomy to allow provinces to devise legislation for local government was granted under ―Government of India Act‖ 1935. After partition in 1947, Pakistan acquired limited local government systems with only Punjab province local government system being better developed than others. Due to heavy bureaucracy, the budget and policies were under bureaucratic control. With the martial law and military rule between period 1958 and 1969, a new ―elected system of local government‖ was established which increased the involvement of people at local level (Zaidi 1996). After the era of Ayub Khan, democracy was restored and the Constitution of 1973 was established. The Constitution under article 32 abolished bureaucratic control of Local governments and directed appointment of its members including chairperson through direct election (Kalia 2016). The practical implementation of this constitution was never observed. When General Zia came in power, a second military regime, he revived the ―provincial local government ordinance‖ in 1979 by supporting the ―principle of elected local government‖ (Zaidi 1996). He created four tiers in urban municipal government under the ordinance namely Municipal committee, Town committee, Metropolitan Corporation and Municipal Corporation. In rural area, three level systems were introduced: District Council, Taluka or Tehsil Council and Union Council. In his regime, local governments were empowered to play vital role in development and decision making. A middle management committee was formed called District and
81 Divisional coordination committee comprising of members of provincial and local government to liaison between two and for approval of development programs. Local governments were dependent on revenue generated from taxes, government grants and commercial projects. There were certain taxes that had to be decided in collaboration with provincial government such as property tax, penalties and fines, fishing rights, sale proceeds from mineral and mine auction and betterment tax (Kalia 2016). With the restoration of system of elected senators and members in national and provincial assemblies after 1985, the empowerment of local governments suffered immensely. Introduction of programs such as ―Five-Point Programme‖ in Junejo‘s government and ―the People‘s Progamme‖ in Butto‘s government acted as inhibitor in strengthening of the local governments. These indeed provided power to the provincial governments to use available funds according to their own judgment leading to provincial governments intervening in work at local level consistently. General Pervaiz Musharaf in 1999 replaced elected government and introduced ―Local Government Ordinance 2001‖ also known as ―Devolution of Power plan‖. The local governments under the ordinance were given full power with respect to their expenditures, administration and decision making at all tiers. The ruralurban divide was abolished and a system comprising of three tiers was introduced as illustrated in figure 7 (Kalia 2016). Figure 7 Three Tier Local Government System introduced by General Pervaiz Musharaf The departments of provincial governments were entrusted to local governments except for Department of Police, Power and Irrigation and Education. The district police officer and the head of the district administration now reported to district Nazim. The ―Provincial finance commission was established for fund transfer to local governments and the Nazim was given the authority to develop its budget and to District Council (All Nazims of Union Council Tehsil Council (Elected Nazims of Union Counci) Union Council (Directly Elected Members) Top Tier Middle Tier Lowest Tier Local Government Tehsil Municipal Administration Union Administration District Governments Supervise
82 raise its revenue through taxation. A provincial local government commission was formed to assess and monitor the performance of local government and to develop annual development plan. Community participation was ensured in small development programs through formation of ―Citizen Community board‖. However as the election system at local government level was non party based, this resulted in fiction between provincial and local governments and in lack of ownership. In 2010, 18th amendment passed provided power back to provincial governments to devise their own plans for local governments thereby encouraging provincial bureaucracy again (Kalia 2016). Local Government Act for four provinces namely ―The Punjab Local Government Act 2019‖ ―The Sindh Local Government Act 2017‖ (amended till April 3, 2017), ―The Balochistan Local Government Act 2010‖ (amended till March 2015) and ―The Khyber Pakhtunkhwa Local Government Act 2019‖ provides structure, power, election process, functions, responsibilities and fiscal power of their local governments (Provincial Assembly Secretariat Khyber Pakhtunwa 2019; Rohdewohld and Janjua 2019; PILDAT 2019). For Baloshistan, the Act enables the provincial government to suspend and dismiss local governments and its office holders. For Sindth, its government has the right under the law to carry out inspection on working of its council and in case of negligence; the government can suspend the council for six months. The government of Khyber Pakhtunkhwa has set up a commission to monitor activities of its local governments having authority of suspension of elected heads for 30 day if found ineffective. The inquiry can be conducted by order of government of Punjab through local government commission on its local government with suspension of Chair for 90 days. The Punjab government also provides its recommendation and direction to local governments through the commission (PILDAT 2019). The power delegated to local governments in each province under this Act was now limited in terms of fiscal management, service delivery, imposition of taxes, control over police departments and revenue generation and Provincial finance commission would transfer allocations to its local councils (UN Habitat III 2015; M. N. Malik 2019). The structure of local governments for four provinces according to the Act is represented in Figure 8.
83 Local Government Structure Tehsil Local Administration Neighborhood Council (Urban Areas) Village Council (Rural Areas) District Government Urban Rural Union Council District Council Municipal Committee Municipal Corporation Metropolitan Corporation Balochistan Local Government Act 2010 (Amended 2015) (PILDAT 2019) Punjab Local Government Act 2019 (Rohdewohld and Janjua 2019) Urban Municipal Committee Municipal Corporation Metropolitan Corporation Rural Town Committee Tehsil Council Sindh Local Government Act (amended 2017) (PILDAT 2019) Urban Municipal Committee District Municipal Corporation Metropolitan Corporation Rural Town Committee Union Council Metropolitan Corporation Union Committee Ward District Council Khyber Pakhtunkhwa Local Government Act 2019 (Provincial Assembly Secretariat Khyber Pakhtunwa 2019)
84 Figure 8 Local Government Structure for Provinces under Local Government Act 5.4.2 An Analysis of Urban Policies of Pakistan Pakistan is experiencing all the elements of urban crisis and the major urban problems that country faces today are lack of supply and management of electricity, water, sewer, waste disposal, drainage, traffic congestion, transport, mismanagement of land market, sprawled out and congested cities, inefficient system of land use and social inequity apparent through rich and poor divide (Qadeer 1996). In 2017, the total housing demand per year in Pakistan was 350,000 units each for urban and rural areas. It was estimated that 10% of the demand was by ―higher middle income class‖, 25% by ―lower middle income group‖ and 62% by lower income group. For urban areas, the annual supply of housing units per year was 150, 000 units creating housing unit shortage of 200,000 units per year. For rural areas, the housing shortage was 250,000 units per year with supply of 100,000 housing units a year. The unmet demand has to be fulfilled in one way or another which results in 25% of shortage being met through occupation and subdivision of land owned by government in form of Katchi Abadis, 60% through ―informal subdivision of agricultural lands‖ (ISALs) at urban periphery and 15% through densification of lower middle and low income residences, already in existence (Hasan and Arif 2018). Urban policies developed and implemented at local, provincial and federal government have profound impact on quality of institutions in terms of its structuring, administration and economics as well as on quality of life on people living in urban areas. The reason is simple. These policies deal with provision of community and transport services, management of land and usage and development of housing and infrastructure (Qadeer 1996). Urbanisation and urbanism are spreading rapidly in Pakistan with urbanism extending at much faster rate than urbanization. Urbanisation has resulted in two mega cities namely Karachi and Lahore and six cities comprising of population of more than a million. Urbanism is visible in Pakistan through penetration of urbanization in rural parts where the rich country side views comprising of wilderness and open areas have started to disappear and are replaced by factories, homes, garbage, open sewer, streets, etc. Formation and implementation of urban policies in Pakistan started in 1950s with development of ―Five Year Plan‖ by planning commission at federal level. The responsibility of execution lied with line managers. At federal level, the ―Division of Environment and Urban Affair (EUAD) was created in 1972 for development of urban policies and the local and the provincial governments were made responsible for
85 their implementation and execution. Over the course of time and with changes in leaderships, the power delegated to local governments in assisting with policy development of their area has been limited. The provincial bureaucracy has led to more centralization and lower involvement of local governments (Qadeer 1996). Now, the Planning Commission, an institution of ―Government of Pakistan‖ is responsible for public policy and financial development. The role of commission is to conduct policy research for development and growth of economy as well as state and public infrastructure and to propose practical solutions. The commission falls under the ―Ministry of Planning, Development and Reform‖ and has contributed significantly to Five year plan, replaced now with ―Medium Term Development Framework‖ (Government of Pakistan 2020). At provincial level, the responsible departments are ―Housing, Urban Development & Public Health Engineering Department‖ in Punjab (Government of the Punjab 2016), ―Planning and Development Department‖ and ―Human Settlement, Spatial Development & Social Housing Department (KatchiAbadies Department)‖ in Sindh (Government of Sindh 2015), ―Urban Planning and Development ― and ―Communication Works, Physical Planning and Housing‖ in Balochistan (Government of Balochistan 2020), Housing Department in Khyber Pakhtunkhwa (Government of Khyber Pakhtunkhwa 2018) and ―Physical Planning and Housing Department‖ in Azad Jammu and Kashmir (AJ&K Official Portal 2020). It is not only urban policies that affects the working and lives of people living in urban areas, but government policies as a whole has profound impact may it than be policies related to education, health, rural development, industrial development or fiscal or monetary policies (Qadeer 1996). Pakistan falls into low middle income country having GDP per capita of USD 1,482.40 in 2018(World Bank 2018) and the resources available to deploy towards development plans are limited. Currently the challenge faced by country is to use these limited resources in effective manner for fruitful outcomes. Pakistan was amongst one of the few pioneering countries both in First World and Third World to adopt ―physical planning and housing development function‖ as part of its urban policies. Initially its urban policies approaches could be seen through the five year plan and allocation of resources towards it, in its national budget (Qadeer 1996). Government of Pakistan in 1956 directed its urban policies towards mobilization of resources (funds, labour or physical resources) of the ―people who will own and use the housing and common buildings‖ through government programs. The role of public sector was to provide financial, institutional and infrastructure framework to enable equitable and efficient functioning of private sector. This role was
86 modified between 1988 to 1993 when government shifted its focus on provision of housing sites and services to lower middle and low income groups. The government programs now had to be implemented on basis of self finance. These programs on urban areas development were divided into five categories; the Katchi Abadis and Housing Improvement; supply of utilities such as sanitation, sewerage, water, public transport etc.; building of institutions for survey, establishment of local and provincial housing and planning laboratories and departments and planning and design of cities; housing for public officials, government building and national capital development; and projects specifically targeted towards Azad Kashmir and tribal areas (Qadeer 1996). After independence in 1947, millions of Muslims migrated to Pakistan from India while simultaneously Hindus and Sikhs in Pakistan migrated to India. Amongst these migrants, businessmen and farmers were settled on properties abandoned by Hindus and Sikhs and jobless and homeless were directed towards settlement in cities. In cities namely Lahore, Karachi and Hyderabad, the first squatter settlements started to appear. The first three, ―Five year plan (1955-1970)‖ introduced by government in this era focused on resettlement of residents of these squatters namely Sodiwal squatter Lahore, Orangi, Paposhangar and Korangi squatters Karachi. This resulted in expansion of suburban areas of the cities and formation of satellite towns in Balochistan, Punjab and Sindh. Mostly middle and upper income classes resided in these towns. Under the plan, various plots development and housing schemes were launched in big cities of Pakistan (Peshawar, Rawalpindi, Lahore, Karachi, Quetta and Faisalabad). Simultaneously, in Karachi city, the establishment of government buildings, public housing and land schemes for government official began. When Islamabad was made the new capital of Pakistan in 1960, the same plan was applied to it. The plan was more tilted towards creating housing schemes and Master Plans for cities and reorganization of provincial department of planning to ministries than on traffic management, urban administration and planning legislations. A positive accomplishment of the plan was setting up of ―department of urban planning and architecture‖ in universities to formally train professional in this area. The execution of the plan was successful; however as the need for housing was increasing at a faster rate than its supply, the housing shortage was apparent. By the end of third Five year plan, the difference between living condition of lower and poor income groups and upper and middle income groups was drastically high and so was the disparity in access of facilities between provincial and federal areas and
87 between rural areas, town and second tier cities. The urban policies now needed a thorough examination and revision (Qadeer 1996). In 1971, the East Pakistan separated from Main Land Pakistan and second military regime came to an end. In the same period Zulfiqar Ali Bhutto came to power. Bhutto‘s urban strategies focused on legalization of Khachi Abadis and provision of access of community utilities to these settlements. With the lending from World Bank, the up gradation and regularization of Kachi Abadis were accompanied with site and service programs. Free 3 Marla houses were distributed to poor households and 5 Marlas were given to village peasants. Many apartments, flats and core houses were built in city of Karachi, Faisalabad and Lahore to cater the problem of shortage of housing. Projects to develop suburban areas of cities were approved and ―autonomous development authorities‖ and ―public corporations‖ were created in major cities for urban administration, transport management, development and expansion of land plots and infrastructure construction. The nationalism and socialism was at its peak but so was corruption. Commercial and housing plots were given to public official, politicians and professional at discounted prices which were 5 to 10 times lower than their market price. On the flip side, many of the government‘s regularization programs for Kachi Abadis had been used by middleman and the public official for their own profit making purpose (Qadeer 1996). As gaining a legal title involves immense paper work, visit to offices and a house plan, middleman has emerged to help cope with these requirements after charging substantial fee (Hasan and Arif 2018). As the approach taken by government was to deliver mass housing through public programs, in 1973 ―a confiscatory act‖ was passed in Punjab that gave right to government to acquire land at a fixed price of PKR 200,000 per acre for development purposes. Similar but less aggressive act was introduced in Balochistan too. These acts were challenged in court and eventually nullified in 1986. Local governments were given authority to frame By-laws and decide taxation through ―Punjab Development of Cities Act 1976‖ and Provincial Local Government Ordinance 1979‖ (Qadeer 1996). The injection of foreign capital in form of foreign aids and loan was significantly high between periods from 1970 to 1977. The Lahore and Karachi‘s Master Plan for urban development was funded by UNDP while The World Bank funded the traffic study associated with these plans. It also provided loans for maintenance of wall city Lahore, historical renovation, expansion of water and sewerage facilities and improvement of roads and transit services. The UNDP funded Third World country projects on project to
88 project basis while the World Bank transformed its ways of funding by incorporating policy agenda that needed to be conformed for receipts of funds. The interruption of foreign agencies in policy priorities of the country without understanding the actual ground realities faced by the country provided ineffective solutions to their problems (Qadeer 1996). During the same era, many Pakistani labours moved to foreign land mostly to Britain and Middle East in pursuit of better work opportunities. The remittance from abroad led to a boom in private housing market in villages and cities and to creation of ―informal land development and housing industry‖. The housing sector was now divided into three segments; public land with provision of complete urban facilities allotted on quotas to influential upper class; private housing market for development of Mohallas for middle and lower middle classes; and Kachi Abadis. With rise in private housing market, many of urban houses were constructed without official permission and it was estimated for Lahore to have 12% of houses built without building permits. By 1980s, the numbers of houses have increased but the quality in terms of access to facilities had decreased (Qadeer 1996). After Bhutto, General Zia came to power in 1977 and his urban policies remained similar to Bhutto‘s strategies in ―Five year plan (1978-1983)‖. The plan concentrated on improvement of slums, provision of community utilities, public sector programs and investment mobilization in private housing sector. With recognition of private sector involvement in housing development, a shift in government ideology was observed after 1980s.In the Seventh plan government allotted PKR 20 billion towards meeting the housing needs of low and lower income group on self financing basis. The provision of utilities and up gradation of settlements was on cost recovery model requiring a part of financial contribution from residents of Katchi Abadis. In the same era, local governments and community organization were strengthened through delegation of authority of development of local people. A successful example of self help project was Orangi Pilot Project Karachi (1980) which worked on provision of low cost housing, sanitation, family planning, health and micro credit for small and medium enterprises. Through ―Matching grants programme‖ grants were distributed for local projects to town/district and union councils. Under these grants; pavements, streets, road and infrastructure of both urban and rural area improved, despite high level of corruption. ―Social Action Programme 1991‖ used public sector funds towards accessibility of health, welfare services and education in remote areas (Qadeer 1996).
95 7Public health and education systems should be strengthened and expanded to become more approachable to all income classes. 8Interventions that strengthen social capital formation in informal settlements should be pursued (Economic Commission of Europe 2008). 9Local government officials should be trained and educated on their role as service providers to the public and the public should simultaneously be educated on their right to information and services. 10The informal sector should not be condemned; instead, ways need to be devised to encourage maximum utilization of the informal sector so that it becomes a source of productive employment instead of being recognized as a sector providing disguised employment. 11The relationship between the public and the local government needs to be strengthened and local governments need to be empowered to take decisions autonomously without the requirement to go through an extensive bureaucratic hierarchy for authorization.
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111 APPENDIX Income Deficiency Income Inequality Happiness Health Education Crime Social Capital Hypothesis I Viewed through Impact on Questionnaires Gini Coefficient Stark Atkinson Income Quartile Measure Surveys/ Questionnaires Indicators Mortality: death rate Life expectancy: Weighted Average of age individual died in a year Specific Cause Indicator: Heart attack rate, depression death rate and disability indicator Robin Hood index Median Income 50/10 ratio 90/10 ratio Theil Family Income Highest Degree Enrollment rate at different school level Measure 90/50 ratio Interquartile Income Difference Mean Distance to Median Income Trust Volunteering Membership Informal Social Activates Measure Measure Measure % population b/w certain income value Income polarization index Measure Justice System Robbery Rate Property Crime Rate Homicide Rate Police System
112 Income Deficiency Income Inequality Hypothesis I Viewed through Impact on Happiness Individual Self Motive Concern for Society Like Dislike Income Mobility Individual History Indirect Impact such increase crime rate Relative Income Positional Consumption Positive Impact Negative Impact Comparison Wealth Political Preference Process Involved in achieving outcome Corruption Birth Nepotism Fair Luck Effort Awareness Education Level Risk-averse profile Trust on Political System Choose Inequality
113 Hypothesis I Income Deficiency Viewed through Income Inequality Health Absolute Income Hypothesis Relative Income Hypothesis Deprivation Hypothesis Relative Position Hypothesis Income Inequality Hypothesis Educational Outcome Stable Relationship Individual Community Population Concave (each $ has diminishing health) Average Income Individual Community Population Deviation from Mean Community Income Deviation from Mean Population Income Individual Community Population Income gap Poverty Line Income Inequality among Poor Proportion of Poor Individual Community Population Position on national income distribution Community income ranking in population Individual ranking in community Individual Community Population At Community and Population Level Social Capital Crime Impact on
114 Income Deficiency Viewed through Income Inequality Education Productivity Competence Skills Composition effect Wage compression effect Personal Traits Genetics Growth Family Income Cultural background Inheritance Community Attributes Expenditure on education Imperfect Capital Market Income Equality Economic Status Less Crime Impact on Hypothesis I
115 Poverty Crime Income Deficiency Income Inequality Lack of access to legal opportunity Low Collective Efficacy Neighborhood effect Disrespect Difficulty in Job attainment due to criminal record Impact on Viewed through Sociologist‘s Point of View Economist Point of View Cost e.g. Crime punishment Benefit Net Return Increase difference b/w their income and mean country income Increases Relative Deprivation Anger Deprivation Frustration Institutional anomie Lose Force Lack Legitimacy Weak Welfare System Absolute Deprivation Lack basic necessities Economic Success Health Popularity Talent Own Performance etc Viewed separately, with high poverty and Low Income inequality Low High Hypothesis I
116 Income Deficiency Viewed through Income Inequality Social Capital Impact on Relational Social Capital Structural Social Capital Cognitive social capital Solidarity Trust Reciprocity Connections Networks Attitude Shared Values Closed and exclusive group Open and Inclusive group Barrier Community Heterogeneity Racial and ethnic Heterogeneity Low Homogeneous (Cultural and Socio economic background) High Low Pessimism Dishonesty Cultural Participation Social Participation Civic Participation Hypothesis I
117 Income Poor Poverty Alleviation Foreign Aids Market Liberalization Bottom of Pyramid Capital Injection in economy One Size Fit All Top down Approach Big Project & Objectives Corruption and Dependency Neglects the role of Government Shift demand to low priority goods Low Earning Employment Generation Type of employment Duration Wage Level Terms of Contracts Living Standard Social Cohesion Productivity Productive Employment Generation (PEG) Good Working conditions Stable employment Remuneration Working poverty rate Proportion of vulnerable workers Labour productivity Economic growth Education and Training Structural Transformation Diversity of Employment Sector Elements of PEG Indicators of PEG Disadvantages of various Approaches Hypothesis II
118 Informality Growth Bottom initiated growth Growth without employment opportunities Insufficient growth Small enterprises Structural adjustments Institution or Policies Type of Taxation Labour Laws Social Security Administrative and Governance Bureaucracy Corruption Tax Rate Way taxation is measured Trade Union Expenditure on Public goods Tax Laws Transaction cost Complex Procedures Social Protection Cost Formal Laws and Method of enforcement Analysis by agent Cost Benefit Cost Benefit Informal Formal Explicit Implicit Legal System Enforce Contact Report Crime Other government benefits Formal Credit Market Inaccessible Accessible Compliance Cost Registration Cost Tax Payment Avoidance Cost such as paying bribe Quality of Education Enterprise Size Enterprise growth stage Avoidance Hypothesis III