Pakistan’s economy grew just 0.3 per cent in FY23 ending in June. And in FY24, starting from July, the targeted growth rate is 3.5pc. The most disturbing aspect of the economic downfall (from 6.1pc growth in FY22 to 0.3pc in FY23) is that it has created massive joblessness.

Even if the economy grows at the targeted rate of 3.5pc in FY24, the issue of joblessness will remain in place. Bringing down the unemployment rate to an economically sustainable rate will take a few years, at least.

Some jobless people find work in the huge undocumented economy, others are choosing online freelancing, and others are trying to get overseas jobs. But due to the global economic slowdown, the labour market is becoming tighter and tighter day by day. Survival of the fittest (or the most competent) has become the order of the day.

Against this backdrop, the education sector, as a producer of one key factor of production, has acquired more importance than ever.

Provincial resource allocations for education look sizable when seen as a percentage of the total budget outlays but are often subject to cuts, corruption and underutilisation

If the education sector is not reformed in the short run, Pakistan cannot ensure a supply of quality labour for future domestic progress. And it will also lose the opportunity of exporting its educated and skilled workforce abroad. Remittances will start falling.

A total of 832,339 Pakistani left the country in 2022 to work overseas. But 357,995 or 43pc of the total were unskilled workers, according to the Bureau of Emigration and Overseas Employment.

This percentage will continue to rise, bringing down the average per-capita remittances of the Pakistani diaspora if enough resources are not diverted towards the education sector and education reforms are not immediately undertaken.

One of the less-talked-about reasons for the current fall in remittances is a fall in average per-person remittances. The underlying reasons are several, but one of them is that the ratio of unskilled labour is too high in the composition of the workforce Pakistan exports to the Gulf Cooperation Council region, its main remittances centre.

The federal government has allocated about Rs97.1 billion for the education sector in the FY24 budget, which is equal to just 0.67pc of the total budget outlay of Rs14.5 trillion.

After the 18th Amendment to the Constitution that became effective in FY11, education was devolved as a provincial subject, and the federal government’s allocation for this sector should be seen in this light.

But if less than 1pc of the total federal budget is allocated for the education sector, it betrays the seriousness with which the federal government takes higher education — the only area of the education sector that is still directly under its domain.

Despite such a meagre allocation for education (mainly for higher education), the federal government continues unnecessarily intervening through its Higher Education Commission in the daily academic and administrative affairs of universities and institutions of higher learning run primarily by provinces. Provinces continue to protest but to no avail.

In the FY24 budget, Sindh has allocated Rs312bn for education. This represents about 13.9pc of the province’s total budget outlay of Rs2.25tr. Baluchistan’s allocation is Rs87bn or 11.6pc of its total budget of Rs750bn.

The caretaker governments of Punjab and Khyber Pakhtunkhwa have presented only four-month budgets for FY24 ahead of general elections in the country, so let’s have a look at their FY23 allocations. In FY23, Punjab allocated Rs485.8bn for education, equal to about 15.2pc of its budget of Rs3.2tr, and KP earmarked Rs261bn or 19.6pc of its budget of Rs13.3tr.

Provincial resource allocations for education look sizable when seen as the percentage of the total budget outlays. It’s a different story, though, that often these allocations are subjected to “cuts” during the fiscal year; originally allocated funds often shrink in size, and even downward revised funds are not always fully utilised.

Furthermore, structural and cyclical issues continue to haunt the quality of spending (where funds are used and how efficiently they are used) and transparency in spending. Corruption, leakages, misappropriation and embezzlement of funds also eventually affect the purpose of funding, and desired results remain elusive.

All these issues also remain involved in federal allocations for the education sector. But since the bulk of federal funding for education is meant for higher education, one obvious measure of its adequacy could be the quality of the university graduates.

Federal funding does not absolve provinces of their responsibilities towards promoting higher education. And they do this. Budgetary allocations for the education of all the four provinces mentioned above include a small percentage of expenses on higher education as well.

Why then, do we not see graduates from most local universities doing as well in their lives as their regional peers? There are several reasons entrenched in ‘our society’, ‘our state structure’, and ‘our system’, but lack of quality education is certainly one of them.

The federal and provincial governments have a shared responsibility for addressing this issue. The global and regional labour market is competitive, and if the standard of our education is not raised right from elementary and secondary schools to colleges to universities, our educated yet jobless youth will not be able to find the right jobs abroad. Or they will end up doing jobs that require much less academic qualification.

Last month a recruiting agency for Saudi Arabia hired dozens of Pakistani engineers as supervisors. And this is not a stray example — or limited to just engineers.

Unlike China and India, the linkage between industry and universities is too weak in Pakistan. And compared to China and India, the level of governmental support (to both industries and educational institutions) for upskilling workers is nearly absent.

Without tackling these two key issues immediately, Pakistan cannot lay the foundation for a quality supply of labour.

Published in Dawn, The Business and Finance Weekly, July 3rd, 2023

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