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A few hard facts for unemployed Pakistan

Updated Jun 04, 2014 03:10pm
  Illustration by Khalida Haq
Illustration by Khalida Haq

Unemployment is our number one problem. Irrespective of how you approach the unique set of challenges that face Pakistan, it seems that lack of employment is at the heart of them all. Be it terrorism, health issues or political turmoil, the buck stops at the prevalent job crisis.

It might be unfair to say that the various governments and provincial governments of Pakistan have done nothing to address the issue. What is true though, is that the approach they have used so often is marred by various flaws and needs a major overhaul.

An arcane and unproductive understanding of ‘unemployment’ is the reason it persists even as large sums of money are poured into it at regular intervals.

What we need is a rehashing of our approach towards job creation and economic improvement because the current policies are moving in the wrong direction.

What I intend to do in this post is list the approaches we are fixated on right now and point out why they are redundant for our goals. I will attempt to present alternatives that have worked the world over and yet have been ignored by our nation.

First off, the notion that the government has to create jobs is wrong.

It is not the government’s job to create employment. What the government is supposed to do is act as an enabler and create an environment where private firms and businesses are able to grow, thus creating jobs.

The trouble with the current government’s attempts at doing this is that they’re trying to create jobs without realising that throwing money at problems does not fix them, it just gives the illusion of doing so.

Take, for instance, the funds thrown at the various loan schemes over the years. In each case, the government starts out by trying to create jobs and ends up creating a huge bureaucracy that eventually ends with the government doling out money for political favors.

To take the example of the Benazir Income Support Program (BISP), the program’s income support component is useful and does make an impact (albeit in limited areas), the loan scheme’s lacklustre performance in creating jobs did not stop the government from continuing it.

In such a case, the taxpayer is paying for a job creation program that has not only failed to create a sufficient number of jobs but has helped politicians gain favours within their strongholds.

Same is the case with most other schemes for job creation. The problem is with the basic idea of handing money out instead of using the same money to subsidise new and existing businesses.

So, why do governments do this even though it doesn’t work?

Because in terms of political point scoring, it’s a great move. Simple.

Secondly, there’s the idea that traditional education will help more people get jobs.

This is an outdated perception that direly needs to change. Most people understand higher education to be a prerequisite for landing a job.

This faulty mindset has created a horde of degree awarding factories with students trying to ‘MCQ’ their way into the market, creating a market where the majority of the HR is interchangeable and virtually identical in most of their capacities.

The one-size-fits-all trend has cloned entire armies of faceless graduates, often not knowing what they want and always unable to differentiate themselves from each other.

In such a situation, and especially when new openings are hard to come by, employers seek to hire the cheapest possible candidate, assuming the majority of graduates to be cut from the same cloth.

To compound this problem, there’s the issue of underemployment i.e. overqualified people working on basic jobs. The next time we have a rant on higher education; specific elements of instruction need to be stressed, simply building more universities and colleges will not equal the creation of more jobs in the long run.

Lastly, the obsession with starting new businesses is all wrong.

While the idea is adventurous and admirable, it is grossly overestimating the entrepreneurial skill set of the local population.

Entrepreneurship is one of the factors of production, and anyone who has studied economics will know that all Factors of Production are scarce.

The delusion that the economy will jumpstart with the state bankrolling hundreds of thousands of these new business ventures is an amount of crazy which even a 12 year-old will be able to spot.

Think about it, the essential logic here is that if you cannot find a job, maybe you should start your own business. And if you choose to go down that path, the government is ready to pay for the trip.

Here is the problem: According to economists and specifically a Forbes report, eight out of 10 new businesses fail within the first 18 months.

To put things in perspective, if the government plans on handing out 100,000 loans of even 100,000 rupees each, 80,000 of these loans or 8,000,000,000 rupees are doomed to be sunk costs within 18 months.

Assuming the rest of the 20,000 loans actually develop into businesses hiring an average of five employees at least, the government effectively just spent 10,000,000,000 rupees to create 100,000 jobs, which amounts to 100,000 per job.

Will that create even so much as a dent in a country where the Planning Commission estimated (in 2009) that 3.7 million jobs were needed per year against the availability of about 700,000 to 1 million jobs?

Unemployment is a serious issue that our governments have been merely been toying around with. We must rethink our approach to higher education and realise that it won’t be benefitting everyone. A lot of people are better suited for technical education which helps them get real jobs instead of turning them into easily replaceable cookie-cutter graduates.

In Germany, France, Canada and other developed nations, technical education receives significant attention and investment, which garners sustainable jobs and even leads to new business opportunities for students of technical institutes.

Secondly, apprenticeship programs and tax credit programs have done well in EU and the US. The idea is to subsidise employment through the private sector by giving private firms tax credits every time they recruit new graduates or take on apprentices. In each case, the cost of creating new jobs is significantly lower in the private sector on account of incurred public debt being much lesser than in a direct government job creation.

Lastly but crucially, if we are serious about addressing unemployment, we first need to start accounting for ‘underemployment’ as a real statistic in our calculations.

The long and short of it is that our economy creates significantly lesser jobs than required, and the government creating jobs directly raises the public debt even higher than its currently ridiculous level (about 62 per cent of the GDP based on 2012 estimates).

We could either go on serving destined-for-doom monetary handouts and creating colonies of faceless university graduates, or we could revamp our approach by focusing on technical education, creating apprenticeship tax-credits and addressing underemployment.

Or, we could just play the blame game while unemployment drives people of Pakistan to crime and corruption.