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Growth & job generation

February 10, 2017


PAKISTAN needs to generate millions of new jobs a year if it wants to absorb the young people who are currently looking to join the workforce. And it will need to continue creating an even larger number of new jobs every year, for at least a couple of decades, since we are still going through a demographic transition and are adding more young people to the population than there are people exiting the workforce. Female participation rates in the labour force continue to be quite low. If more women were to come into the workforce as they should, we will need even more jobs.

Most of the jobs created over the last decade and a half have been in the private-service sector. The manufacturing sector has not done well over this period. Fiscal realities and the policies of privatisation and liberalisation have limited new job creation in the public sector to a considerable extent. It is quite likely the trend will continue in the future and most of the new jobs will have to come from the services sector.

Service-sector jobs usually tend to be less formal. In many service-sector jobs, especially at entry levels, the skill levels required are low, but many of these jobs do not change with time and so do not offer a career path to entrants. The low-entry barriers to these jobs facilitate the induction of young people into these jobs even when they have not had much education and/or skill training. At the same time, lack of career progression can be very frustrating as one cannot stay in the same dead-end job for the rest of one’s life. High-skill service-sector jobs (doctors, dentists, lawyers, nurses) usually require years of education and training.

If we want to ensure employment for our youth, we have to invest heavily in our people.

The expansion of the service sector is likely to continue for the foreseeable future. But to achieve success in the service sector, one has to make substantial investments in human capital. This is and will be, in all likelihood, Pakistan’s Achilles heel.

An estimated 25 million children between the ages of five and 16 years are out of school in the country. Even if this number is overestimated by a couple of million, it is staggering. It is almost two-thirds of the entire population of a country like Canada. Where will these children, when they become adults and enter the workforce, be adjusted? What sort of jobs and career paths will they have? Will they be able to have productive and fulfilling lives? Will they be able to provide a good life for their spouses and children? With little or no education and/or skills, it is unlikely that any of this will be possible.

Even for the millions who are in schools in Pakistan, the future does not look too bright. The quality of education imparted by an overwhelming majority of our government and private schools is very poor. Most employers find it difficult to hire even Master’s-level graduates: content knowledge of graduates is poor and sketchy and since they ‘learnt’ material to pass their exams, their ability to apply what they know is very limited. The economy of the future is unlikely to be properly fuelled by such human resource.

There are many young people who approach me for jobs. A lot of them have done their matriculation but have no skills. What sort of jobs can one find them?

We hire a significant number of young people as junior researchers as well. Apart from one or two Master’s/Bachelor’s programmes in the country, it is hard for us to find properly trained people. It is heartbreaking to have to say no to a young person who, in good faith, spent four to six years in a university pursuing a Bachelor’s/Master’s degree but still does not have the basic skills needed for relevant jobs. But that is the reality of human capital in Pakistan

We are hoping for a growth boost from the China-Pakistan Economic Corridor (CPEC). There might well be a growth and employment boost from the investments we are making and contemplating, but the boost will neither kick-start the economy and give us sustained growth nor will it create significant employment opportunities in any sector.

Some policymakers have been hoping that cooperation with Chinese firms might boost our manufacturing sector. Some joint ventures might, indeed, happen and benefit local manufacturing, but what Pakistani firms need a lot more of is help with issues like quality management, standardisation, brand creation, brand management, advertising and just-in-time production. All of these are mostly skills and human-resource issues. Even the gains in the manufacturing sector are now dependent on our investments in the area of human resource.

If we want to ensure rewarding careers for our youth and a sustained growth path for the country, there is no way around the fact that we have to invest heavily in our people. We have to give good quality education and/or training to our children, we have to ensure they have access to good-quality healthcare, we have to make sure they live in a good environment, and we have to ensure everyone has access to decent drinking water and to facilities for sewage disposal.

And there are double rewards for investing in these sectors. Investments in human resources through health, education, skill training, basic infrastructure and environment will not only create a large number of jobs directly, it will prepare for growth tomorrow and will also ensure that future growth becomes sustainable. Our population growth rate is too high and is not slowing down fast enough. If we do not investment in our people, our future, CPEC or not, manufacturing boost or not, will be a bleak one.

The writer is a senior research fellow at the Institute of Development and Economic Alternatives and an associate professor of economics at Lums, Lahore.

Published in Dawn, February 10th, 2017