AS the current trends indicate, there is no possibility of the economy achieving a sustained high growth rate of seven to eight per cent per annum in the immediate future to take care of growing unemployment.

If things continue for long the way they are now, it appears that joblessness, particularly among the youth, may, over time, overshadow other economic issues.

Agriculture, housing and small and medium sized enterprises that have immense potential to push up growth and generate jobs, are either under-served or starved of formal credit. With the exception of big farmers, these sectors also do not have powerful lobbies to make their presence felt in the corridors of power and influence policymaking.

The three segments together provide employment to bulk of the country’s labour force with the share of farming highest at 44 per cent. The SMEs employ 35 per cent of the non-agriculture workers. Often house-building and construction are promoted to pull economies out of slump.

But this is not happening in Pakistan. Bank lending to SMEs has declined over the last four years from Rs437 billion in 2007 to Rs248 billion in June 2012. Over a year ending March 31 this year, housing finance by banks, state-run HBFC (whose share in credit is 48 per cent) and development financial institutions dropped by Rs6.88 billion to Rs58.55 billion. Farm credit accounts for merely seven per cent of the total bank lending while agriculture contributes 21-22 per cent to the GDP.

The recent banking system reforms have enabled the financial sector to shed its responsibility towards financing of labour-intensive sectors that could provide employment and reduce poverty. Mandatory credit ceilings have been withdrawn. Both the banks and non-financial institutions are showing marked preference for investment in government papers. The State Bank has failed to take necessary steps to induce banks to finance socio-economic development.

The problem is that not only economic slump but even high tech-driven growth does not create jobs or enough jobs in the current policy environment. If people are kept idle and not put to productive work, they, as potential producers, are denied the opportunity to create national wealth, earn their livelihood, and as, consumers, forced to cut on even their essential spending that goes to buy good and services. Economic slump and unemployment perpetuate each other as is so evident from the European Union’s ‘savage’ austerity measures.

Inversely, as the global financial crisis and creeping double-dip recession indicates, high growth is not achievable without full employment.

Unemployment worldwide is emerging as a key issue as the European Union slips into double-dip recession with its worldwide impact. On August 31, the US Federal Reserve Chairman Ben Barnanke said ‘ the economic situation (in the US) was far from satisfactory’ and the ‘labour market stagnation was a grave concern.’ As the international recessionary trends are gaining momentum, the International Labour Organisation has forecast a pickup in the youth joblessness worldwide.

Noting the rise in grain prices with drought hitting many parts of the world, the World Bank and the FAO are advising nations to reinforce their efforts to ensure food security. On the one hand, people are losing jobs and incomes, and, on the other, food is becoming expensive. Rising poverty looms large on the global horizon with no solution in sight. And the speculative investment is pushing up prices of food grains evoking protests from social activists.

As no meaningful reform of the global financial markets has so far been undertaken, the current economic slump is continuing since the last five-years. Top Western economists do not see the recession going away for another five to seven years.

Gradually, the prolonged slump is forging an economic depression. With growth slowing down in countries like China and India, big companies in a number of countries across the globe are shedding labour. The worst is still not over.