The State Bank has passed on the good news that the economy is set to grow at six per cent next year. The government is happy with the swelling forex reserves and the stock market is keeping up the bull run. Yet, the highest office in the country has conceded lack of investment and no significant progress in alleviation of poverty and unemployment. There is no reliable data on the state of the job market. Reported incidents of suicide by unemployed youth could be one indicator.

In this special report, Dawn's business desk explores and investigates the burning issue of joblessness from different angles. It seeks the views of key economic players and makes an effort to identify manpower absorption capacities of various sectors in the growing economy. And finally it seeks to figure out whether it actually is unemployment or under-employment that is at the heart of the problem.

KARACHI: Every successive government in Pakistan has been making one common promise: it will go the extra mile to improve the lot of the poor. Poverty alleviation has also been the theme song of the international donor agencies: the IMF and the Word Bank. And yet the number of people falling below the poverty line has been on the rise. There is no known way of curing the malady of poverty, except by reducing the incidence of unemployment.

Unemployment is measured annually as the percentage of the labour force that cannot find a job. In Pakistan, the labour force includes all persons who are of ten years of age and above and are without work looking for work. The International Monetary Fund says it does not count among the unemployed those who do not seek employment, or who have become discouraged enough to stop looking for jobs.

According to the last Labour Force Survey, unemployment rate stood at eight per cent plus, not including substantial underemployment. According to the survey, Pakistan's labour force stands at 40.4 million people, which means that at one time nearly 3.2 million people are out on the streets looking for jobs. And there is even a darker side to the picture. If out of a population of 149 million, the labour force constitutes 40 million, then the dependent population is 104 million. Add to that the unemployed and you get the colossal figure of 107 million or 72 per cent of the entire population that depends on anything but gainful employment. Is it a wonder then that half the population of the country lives in the wretched conditions of dollars two a day with no social security net? Had there been no family and community support system in place in our society, thousands of these people would have died for want of the bare necessities.

According to a study conducted by the Applied Economics Research Centre, unemployment can be classified into three categories (a) frictional unemployment (workers who are simply moving between jobs); (b) structural unemployment (workers who are in regions or industries that are in persistent slump) and; (c) cyclical unemployment (workers laid off when the overall economy suffers a downturn). In Pakistan, unemployment is mainly of the structural and cyclical nature. But the study concedes that understanding the sources of unemployment has proved one of the major challenges of modern macroeconomics.

Most people doubt the credibility of official figures. The unemployment rate is specially considered to be widelyunderstated.

It was not possible for us to check the credibility of the figures projected in the Pakistan Labour Force Survey. This statistical division report is based on a sample survey of 18,928 households. There is no public or private set up in place in the country to ascertain the actual level of employment or the absorption capacity of the job market in the rural or the urban sector. No one registers entry or exit of individuals from the labour market or monitors their placement and mobility.

The investigations conducted by our team confirms that expansion in job market is not keeping pace with the increase in population. The growth in economy is in sectors and areas that have failed to register marked gains in the level of employment. According to the Economic Survey and Federal Bureau of Statistics, agriculture employs the largest (48 per cent) of the workforce, followed by community, social and personal services at 14 per cent and wholesale, retail trade and restaurants/hotels at 13 per cent. Manufacturing absorbs around 12 per cent of the people willing to work. Our investigations brought out some interesting facts to the fore. Currently, population and the manpower absorption capacity of the economy are moving in opposite directions. Population is increasing at the rate of 2.1 per cent (2.6 per cent according to the seventh Mehbubul Haq Human Development report) which is less than before, but still higher when compared to the rate of population increase in other countries of the region.

The manpower absorption capacity of the economy, on the other hand, is shrinking in the absence of a major breakthrough in the rural sector and because of a less than appropriate level of development spending, large-scale downsizing in state-owned corporations (Wapda, Pakistan Steel Mills, KESC, etc.) and other institutions such as banks and major corporations that are in the process of privatization.

In the private sector whatever investment has been made is directed more towards modernization of the existing projects. This process of modernization involves introduction of new technologies that are capital intensive, rendering even part of the already employed manpower redundant. The government has accepted the fact that for all the illuminating macroeconomic figures, there has been no substantial improvement in investment, reduction of unemployment and alleviation of poverty. And there is this obvious chain: no investment, no employment, poverty.

The hard pressed private sector, unnerved by an influx of cheap imports in the local market and wary of competition in the world market with rising cost of production, is shy to invest in the industrial sector which offers better employment prospects. There are several other factors such as insecurity and political uncertainty that discourage them from investing in long-term projects and encourage them to opt for trading or indulge in other rent-seeking activities. Even lowering of credit rates in an economy that is aflush with liquidity has so far failed to lure our entrepreneurs into undertaking industrialization in a big way, dampening hopes of the creation of more jobs.

In modern times there are several private placement agencies working alongside state agencies to bridge the information gap in the labour market. In Pakistan, however, the labour market is deeply marred by confusion. The government has all but washed its hand clean off its responsibility to help people in placement and has left them at the mercy of market forces. Some old time employment exchanges are either dysfunctional for want of resources or have disappeared altogether. The labour ministry is preoccupied with everything but addressing the issue of unemployment. On a very small scale some overseas placement bodies are functional and offering some services.

On the one hand, there are prospective employers looking for the right people and on the other there is an army of unemployed people in waiting to find appropriate job openings. Except for newspapers, there is no institution worth its name acting as match-makers between employers and prospective employees. In the private sector there are some small firms and headhunters but their scope and reach are quite limited when viewed in the backdrop of the scale and depth of the of the problem. The only effective mode to find an appropriate job is through contacts in the right places. The common perception is that more than skills in demand you need to know the right people to land a job.

Another aspect stressed by private sector representatives is the quality of manpower. They complain that our education sector is not geared to respond to the needs of a growing economy. There is no sense in producing skills that we do not need. All these young people who are graduating every year in subjects such as Persian, Urdu, history and the arts look like facing a bleak prospect in the job market. Many entrepreneurs suggest that technical or vocational skills would enable youngsters to earn a living even privately by offering their services even if they fail to land a job proper.

The government should look into the issue and evolve a suitable response to the situation that may serve to contain rising unemployment. But as to why the private sector itself has not taken an initiative and contacted universities and colleges through their trade bodies? These people have no satisfactory answer.

The absence of social security net forces people to work wherever even if it offers much less than what they deserve. Not many can afford to work no matter how unhappy they are with their terms of employment. Rising unemployment has eroded their bargaining power. In vibrant economies job data is one of the key determinant on which government's fiscal and monetary policies rest.

In Pakistan, policy-making exercises are undertaken with much vigour but without this necessary input. This reflects on the insensitivity of the government towards the issue. With all this focus on the issue of poverty in growing economies it, however, cannot afford to keep on ignoring the issue indefinitely. It has been reported that the task force constituted to make recommendations to contain the poverty and unemployment, has decided to press for an increase in development spending by the government to the tune of five per cent of the GDP from the current three per cent.

Quality of decisions depends on the quality of information on which these decisions are based. The government cannot possibly chart out a corresponding response in the absence of more dependable figures. The government cannot absolve itself of its responsibility. It must put in place some structure where people entering the job market can get themselves registered and monitor their placement and movement. Now it is time to move beyond the formation of committees, commissions and task forces. The economy must grow at the robust rate, but that alone is not enough.

Full employment, surely, can only be achieved in Utopia. Certain level of unemployment will persist no matter how well an economy is managed. It is, however, the responsibility of the government to look after the unfortunate people that the economy has not been able to absorb by offering unemployment allowance in return for some social service in their community.

In modern global economy capital is mobile. It has a tendency to flow towards sectors and regions that promise better returns. The only resource that is rooted in a nation - and the ultimate source of its wealth - is its people. There is no denying the fact that the best jobs programme is economic growth. However, inequitable growth is not sustainable in the long run. The only way Pakistan or for that matter any country can compete and win in this globalized world, is by investing in their most dependable resource - their people, by training them into a well-trained workforce and directing them into gainful employment. This - and not GDP growth rate - is the key pre- requisites on which prospects of long-term sustainable economic development rest.