This demographic transition process is being witnessed since 1981, and each year the ratio has improved because of falling fertility rate. According to Dr Zeba Sathar, Country Director, Population Council this shift in the population profile has happened mainly because the fertility rate has declined from six to four children per woman.
Now the question is why is it a good transition? And what benefit this demographic dividend should bring if managed sensibly by our planners? Pakistan has entered the second phase of demographic transition. In this phase less young (under 15) and older (above 60) mouths have to be fed by the population which is in the working age bracket.
This working age segment is contributing to higher production and at the same time higher consumption -- thus fuelling the economy. This shift in population profile is offering dividend in the shape of increased young labour supply, improved savings, higher per capita income (which has doubled in last seven years), growing middle class, rising remittances and exports.
The East Asian model also shows that when this opportunity was offered to them by demographic transition, they invested in heavily in their human resources. And the result is sustained high economic growth rate.
Andrew Mason who wrote a paper on demographic dividend, says: ‘the change in age structure defines possibilities but by themselves do not determine the outcomes.” So the big challenge for the planners is to convert this pass given by demographic transition into a goal. In real life it would mean providing employment to over 91 million working age population.
It is one thing to have a huge human capital; it’s another to employ it gainfully. And yet another bigger challenge is to improve the quality of this human resource asset for raising productivity and absorption in the employment market.
One of the major problems is that our literacy rate is low; almost 50 per cent of the workforce is illiterate. The government claims that it raised the enrolment rate to 86 per cent, but only 53 per cent of the enrolled students complete their primary education.
Unfortunately, education planners are not paying much attention to arrest the dropout rates. While a lot is being done to have new schools, very little is being done to improve conditions of existing schools. Furthermore ,much less attention is being given on training the primary teachers.
These teachers need guidance to make schools a place where children would love to go, instead of dreading to cross that path. Punjab government, I am told, has been able to control the dropout rate in government girls’ schools by giving monetary incentives to parents and free books to children.
Even those who cross and move over to do matriculation are, by and large, semi-literates. That is perhaps the reason for higher unemployment rate among matriculates. The workforce survey has shown that rate of unemployment is higher among the people who have higher educational qualifications. The major factor for this skewed relation between higher education and unemployment is that our education system has no linkage with the job market.
Employers in most industries and services sector are consistently complaining that they are not getting qualified workforce. Automobile industry vendors, surgical instrument manufacturers, sports goods industries, to name a few, are short of trained workforce now that child labour induction is coming to an end.
Booming electronic media industry is constantly cannibalising on each other, textile industry feels that the existing institutions’ capacity is not enough to meet their demand, even the construction industry is finding it hard to get labour and trained masons etc.
Many projects are delayed because of shortage of labour availability. So it seems the problem is not dearth of jobs or number of people who need jobs. The problem is finding the right person for right job.
Dr Salman Shah, Advisor to the Prime Minister on Finance & Economic Affairs says that the government is fully conscious of the fact that to harvest the demographic dividend they have to invest in the human resource development. And also find ways and means to provide this huge workforce enough jobs. In the last few years, higher economic growth has created many jobs in the transport, infrastructure, entertainment, IT and telecommunication sectors.
According to an ILO Paper, the UHT processed milk sector is presently employing a total of nearly 1.55 million workforce directly and indirectly. During the tenure of Poverty Reduction Strategy Period II, the planners hope if the amount of UHT processed and packaged milk is increased to 10 per cent, the total number of additional jobs which will be created are expected to be around 4.6 to 5.0 million.
They also hope that during the tenure of PRSP II approximately 100,000 rickshaws, 60,000 taxis, 30,000 mini-buses, 25,000 buses, 60,000 pick-ups and 15,000 trucks may be financed. This will create over 1.16 million direct and a similar number of indirect jobs. In banking sector employment has increased from 84000 when they were in the public sector to 125000 in the post-privatisation period.
Another development in the last few years has been a rapid increase in micro financing – the number of borrowers has risen from just 210,000 in 2002 to 1.3 million in March 2007. Similarly, the number of savers with newly established micro finance banks has shot up from 880,000 to 1.5 million in this period.
This looks like a good beginning as it raises the self-employment in the country. The reports that only two out of six micro finance banks have shown profits is however a matter of concern. Though almost all of them have reported high recovery rate, the problem seems to be that their fat administrative expenses are eating up on their income.
One view is that the new banks need to cross critical mass business mark, to absorb the administrative expenses.
Before concluding, let’s also have a look at the downside of having a large young workforce. Demographers say that this transition generally lasts for about 50 years and then the ratio of old age dependents starts taking over the young workforce in the third phase.
The nation has been living on the dividend for almost 10 years. So the time to act and utilise this dividend is now. One dangerous outcome of this change in population profile is unemployment. At present, unemployment and under-employment of our youth, particularly of women is high. It is one big reason for the growing anger among youth. One hopes that this demographic dividend would not be squandered by our present and future governments. What is disappointing is that political parties are not talking about the real issues which are of importance to the common people.