“It is critical that Pakistan’s most abundant asset — labour — be utilised in productive income-generating activities” for the country to become an upper-middle-income country by 2047, says the World Bank’s latest report on ‘Jobs Diagnostic Pakistan.’

To address the key challenges of quantity, quality and accessibility of jobs, the report advises policymakers to use targeted interventions that can strengthen the fundamentals of job creation, boost productivity and promote inclusiveness of the labour market. Every year 2 million people enter the labour market.

Keeping inflation in view, the national workers’ convention held on the first of March in Lahore demanded introduction of ‘living wages’ instead of minimum wages. The joint declaration by the country’s trade union representatives on the restoration of labour rights called for the fixation of monthly ‘living wages’ of unskilled workers at Rs30,000.

On a year-on-year basis in February the Consumer Price Index rate rose by 12.4 per cent, food inflation by 15.2pc in urban areas and 19.7pc in rural areas, where wages are very low compared to the big cities. Close to 45pc of the country’s labour force engaged in agriculture shares around 24pc of the GDP. Their plight has further worsened.

Labour is grossly underutilised in an era where human skills play a primary role in high-tech-driven, sophisticated socio-economic development

Speaking at the convention, labour leader Farooq Tariq suggested the government should ensure payment of the full wages a worker deserves instead of announcing subsidies for the poor if it wants economic stability. The workers also demanded the abolition of contract-based employment in all sectors.

In fact, Pakistan’s greatest asset — labour — is grossly unutilised and underutilised owing to, among other factors, low priority accorded to human resource development in an era where human skills are destined to play the primary role in high-tech-driven, sophisticated socio-economic development. In the first seven months of the current fiscal year, workers’ remittances at $13.3 billion were close to the export of merchandise of $13.5bn.

World Bank experts estimate that excluding China remittances inflows to low- and middle-income countries became the largest source of external financing in 2019, and were seen on track to overtake the inflows of foreign direct investment. On the other hand, global exports were stipulated to drop to 2.6pc in 2019 against 3pc in 2018.

The PTI government planned to build 5m houses with a focus on low-cost housing and create 10m jobs over five years. Independent research shows that a million jobs were lost in the past year and another million are headed towards losing employment by the end of this fiscal year.

The outstanding small housing loans of up to Rs1m have dropped during the quarter ending December 2019 to Rs6.67bn from Rs6.86 in the previous quarter. The overall housing loans fell by Rs2.7bn in the first half of the current fiscal year compared to the same period last year. Prime Minister Imran Khan says “housing finance is not given due to a lack of foreclosure laws. The government is working on it.” For long, foreclosure laws have been a big controversial issue in policymaking owing to enhanced risks they pose particularly for the borrowers of low-income groups.

Labour-intensive economic activities have not been accorded the right priority they deserve in policymaking as well as the provision of bank credit. Late last month, the National Assembly Standing Committee on Finance and Revenue expressed serious concern over the level of credit provided to small and medium-sized enterprises (SMEs).

The share of the SMEs in total private sector credit in Pakistan is the lowest in the region at around 7pc as compared to 28pc in India and 20pc in Bangladesh. The SMEs in Pakistan provide 80pc of the non-agricultural jobs and contribute to 40pc of the GDP. Bank loans and tax incentives can help small enterprises upscale their operations and enter the documented sector.

The formulation and implementation of the federal Public Sector Development Programme (PSDP) and provincial Annual Development Plans (ADPs), which generate employment, are beset with numerous problems. The first item to be axed in the event of a fiscal crisis is the development spending. The National Assembly finance committee advised the government to drastically cut the number of PSDP projects to 200-300 from the existing 1,200 to avoid delays, cost over-runs and ensure effective development output.

On the other hand, Sindh Chief Minister Syed Murad Ali Shah has decided to constitute district committees to enable elected representatives to coordinate with executive agencies to ensure timely, quality project completion.

The growth multiplier for PSDP as well as the private sector in Pakistan is very small compared to neighbouring countries, including Bangladesh and India, says Vice-Chancellor of Pakistan Institute of Development Economics Dr Nadeem ul Haq.

Speaking at a conference titled ‘Doing Development Better: Analysing PSDP,’ he said planning had been on the back foot under austerity regimes. There was no overarching strategy, no sectoral plans, only fragmented small independent projects with critical issues in the planning cycle, downplayed, both by the donors as well the government. Former federal minister Sartaj Aziz said inclination of the PSDP towards political manifestos is natural and cannot be avoided but can be minimised by having a master plan.

Owing to the fiscal crunch, Dr Haq said the government needs to harness assets of the society. Out-of-the-box solutions such as having an initial public offering and community-government partnership models can reduce the burden on the national exchequer. However, the PTI programme for devolution has been put on the back burner to centralise tax revenues as well as public welfare programmes.

Published in Dawn, The Business and Finance Weekly, March 9th, 2020

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