Pakistan suffers from low productivity growth because of shortage of human skills, a critical factor in present times, needed to manufacture quality goods at competitive prices. One of the many outcomes is that cheap Chinese goods have outpriced the local products.

To quote Saquib Mohyuddin, chief, National Productivity Organisation,( a state outfit set up recently) the domestic productivity growth is slower in Pakistan than that recorded for Malaysia, Philippines and India.

And an associate professor at the NUST Institute of Management Sciences, Dr Memoona Rauf Khan, laments that the country ranks sixteenth in productivity among the members of the Asian Productivity Organization(APO),lower than Bangladesh, Nepal and only higher than Mongolia. Incidentally, Pakistan is a founder member of the APO, set up decades ago.

About sixty per cent of China’s exports are accounted for by multinationals which have relocated their production facilities because of cheaper labour and infrastructure costs. The Chinese government also provides training to redundant employees in new skills to meet emerging market demands. Labour is not stuck up with old vocations in declining demand. The total factor productivity (TFP) growth is sustained by independent macro-economic policies free from counter-productive external influences and a stable national currency.

The issues related to total factor productivity(TFP) in Pakistan were dealt here on October 2 in a presentation made by the NPO chief. The APO Asia-Pacific Productivity Data and Analysis 2002 shows that TFP growth in Pakistan in the closing year of the decade was 1.04 per cent against 3.90 per cent for Malaysia and 4.27 per cent for Philippines.

Saquib Mohyuddin reckons that the country suffers annual economic loss of Rs 450 billion due to “ poor quality of productivity as well as element of waste”. The nation has yet to learn to manage its human, capital and natural resources most productively. There is a critical shortage of human skills needed to improve efficiency, cut costs and improve quality.

Professionals in the NPO describe” productivity” as” doing things right, at the least possible cost in the least possible time with highest possible quality and to the maximum level of satisfaction of the customers and employees.” The industry is being made competitive by exchange and interest rate policies, tax cuts and rebates, rapid reduction in tariff on import of raw materials etc. Market reforms have also weakened rentier class and crony capitalism. In textiles, capital spending on modernization has improved productivity and resulted in boosting exports without subsidy in the form of devaluation. Yet, not much is being done to improve human skills to raise productivity.

In the 1990s, says Dr.A. R. Kemal, director, Pakistan Institute of Development Economics, productivity growth contributed roughly one-fourth to the growth of GDP and the increase in TFA was mostly the result of removal of distortions in the system. As the markets have been freed from most of the distortions, this source will have a rather small share in future productivity growth. The country would have to rely on technical change, improvement in human resource development and the nation’s infrastructure.

In his article on “ analysis of productivity indicators” published in the NPO’s journal, Dr Kemal says adequacy and quality of training facilities have strong implications for productivity. The current market needs for human skills is not being met. He reckons that one million workers join the labour force every year, while training capacity in the formal sector is only around 60,000. The quality of formal training leaves much to be desired, as the capacity to assimilate, adapt and innovate is rather limited. The illiteracy and a relatively small educated work force impact the productivity levels.

“ The real bottleneck to industrial development is low productivity of labour” says Dr Memooona Rauf Khan.

She laments that” managers and industrialists typically take a short- term view of labour.They generally want to invest the least amount possible in making labour productive”.

It is low wage workers with low productivity who dominate the domestic labour market.

In his presentation, the NPO chief identified five key “success drivers” for higher productivity: human skills, appropriate technologies, management systems, standards and attitudes. The NPO has embarked upon a programme to create productivity awareness and to help improve institutional productivity through knowledge-sharing , measurement and human resource development. For this, it is trying to develop tripartite partnerships between academia, industry and government for research and development and skills development.

The NPO has also come out with a scheme like “training on the wheels “ which is being executed in factories in four cities. It is a small organization with a big agenda.

One of it’s most useful project is the “productivity village .” The objective is: “economic empowerment through skill development.” It a strategy to alleviate poverty by increasing human productivity at the grassroots level. The first model village was launched near Islamabad in June this year.

Under the concept, a typical productivity village is to be managed by a committee of 7-8 persons and includes numberdar, the moulvi, the master farmer, member of the zakat committee, dai, school principal, a woman representative and a senior respected citizen of the village. The village committee is expected to hold regular meetings to discuss the problems and progress of the interventions, interact with the people and discuss concerns and issues to facilitate development programmes.

The subjects handled by the committee are: primary, secondary,technical and vocational education, professional skill development in agriculture, farm and non-farm activities and community health and hygiene.

The APO study indicates the total factor productivity in Pakistan has fluctuated from a negative 3.8 per cent in 1998 to 3.73 per cent in 1993. It would not be possible to have a enhanced growth rate on a sustainable basis without raising productivity through human skills. That is how capital and natural resources can be used most productively.