Employment is another key measure of economic activity. BPNG surveys formal sector employment in the private and state-owned enterprise (SOE) sector. Ironically, the public service time series is incomplete. Formal sector employment, both private and public, is mainly flat until the end of the 1990s. Private sector/SOE employment increased rapidly in the 2000s, but has fallen since the boom ended. Overall, there has been a decline in the employment/population ratio, from 6 per cent just after independence to 4.5 per cent today. The share of formal employment in the public sector has grown slightly, from 26.5 per cent at independence to 28 per cent in 2019.

Data notes on employment

Employment numbers by major sector are shown in the next figure. The resources workforce has grown in importance over time but is still only 7 per cent of total employment (including the public service). After growing to highs of 35 per cent of the total in the mid-1990s and again during the resource boom, it has now come back down to around 25 per cent of the total, around the same as it was at independence. Manufacturing has slid from highs of almost 17 per cent of the total in 2005, down to 11 per cent, 3 percentage points higher than at independence. All sectors show strong employment growth in the 2000s, until the end of the resource boom. It would have been expected that agriculture and manufacturing would have suffered as a result of the real appreciation of the resource boom period. On the other hand, this was a period of great confidence in the PNG economy, and presumably the expansion was on that basis. 2020 saw a steep decline in ‘Other’ employment, due to the impact of the COVID-19 pandemic. ‘Other’ employment includes all formal employment not otherwise shown, and key sectors include retail, construction and transport.

Minimum wages were an important policy issue in the years after independence, when it was widely believed that the urban minimum wage was too high given the country’s exchange rate. There was then a policy of partial indexation that resulted, as the figure below shows, in a gradual decline in the real value of the urban minimum wage from independence to 1991. Then, during PNG’s first structural adjustment program, the urban and rural wage were unified in 1992. There is no evidence that nominal wages were reduced, but the minimum wage was not increased for a decade. Nevertheless, there was no growth in formal sector employment until the boom years, suggesting that other constraints were holding back formal sector employment. Even today, in real terms, the minimum urban wage is less than the minimum rural wage at independence, and less than half of the minimum urban wage at that time.

Data notes on employment

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