Daily Times

Government of Pakistan has promised to create 10 million jobs as soon as possible. For that purpose a sub-committee of Economic Advisory Committee for Human Capital and the Labour Market is created. This committee is supposed to develop a ‘National Job Creation Strategy’ by end October. Today youth under the age of 25 constitute 63 percent of the Pakistani population. This makes focus on Job creation not only necessary for the time, but rather an incumbent permanent need for Pakistan in decades to follow. There are lessons learnt by international community in job creation strategies in the light of economic, social and production theories. However, there is no one-size-fit-all policy of job creation which Pakistan can borrow and implement. For any country to design an effective job creation strategy internalization of all aspects like population demographics, types of unemployment in the country, job deficient sector identification, job types and levels, skill support policy, economic conditions, social structure, development stage of a country and much more need to be focused. Why? That is because international experiences show that one successful policy in a country was a failure somewhere else. For policy making, the first and foremost point to understand is that no job-creation policy is going to be successful if it does not have a spine based on fiscal and social policies. Holistic macroeconomic and social planning is needed to create successful job creation strategy like Japan and Germany. A very strong coordination between planning ministry and banking system can be seen in their organization and work. In almost all of the countries with successful job creation, a fiscal policy stimulus was at the origin of the economic upturn. For successful job creation policy type of unemployment in the country is to be considered first as structural unemployment will be harder to eliminate as compared to cyclical unemployment.

This eye on both supply and demand side will help locate, the determinants of employment growth in Pakistan. Demand-side analysis should be more focused as ‘supply does not create its own demand’ and literature shows that efficiency wage theory and bargaining theories are far more effective in job creation instead of search-matching theory. Decentralized systems of wage determination, Moderate wage increases and a certain degree of wage disparity is necessary for job creation in any country. However, while determining these factors size and condition of the economy should be taken into consideration, as larger countries require more heterogeneity in wages but smaller ones can do with homogeneous wages. Role of social security in times of need along with pressure and incentive to be on job in balance can lead to better job creation and sustenance of the economy.  However, in Pakistan due to paternalism and dependency attitudes this policy measure should be researched well before implementation.

Along with public sector, exploitation of job creation potential for private sector is necessary for any holistic job creation plan. Private sector responds very differently to growth (and decline) across countries. Private sector job creation responsiveness to growth across stages of development and economic structures are greater for formal sector job creation efforts. A broad policy agenda for job creation should include: macroeconomic fundamentals, responsive labor markets, access to finance, competition, and a facilitative business regulatory environment.

In 2018, the British Backpacker Society ranked Pakistan as the world’s top adventure travel destination, describing the country as “one of the friendliest countries on earth, with mountain scenery that is beyond anyone’s wildest imagination.” Job creation regarding training and education in tourism will attract revenues as well as have positive linkages effect for other related sectors like hotel business, construction and transportation. Lack of planning in energy sector and manufacturing sector has seen loss of business and shifts of resources to neighbouring countries. Technical and vocational training expansion along with international market access and pro-industrial job creation initiative is needed.

R&D sector where data is gathered on all aspects of different sectors of economy is missing, this lack of data leads to uninformed decision making with lags in evaluation and timely management of issues. A whole sector of R&D generating data on monthly basis and publishing analysis reports is needed in all sectors of the country. This will create jobs for thousands of educated and trained people in the country. This sector will become eyes and ears of producers, customers, policy makers as well as the government, creating transparency in decision making processes. All developed countries have think tanks and research organizations both public and private to do this job, build public opinion and direct economy and society to the path of unity and prosperity.

Decentralized systems of wage determination, Moderate wage increases and a certain degree of wage disparity is necessary for job creation in any country. However, while determining these factors size and condition of the economy should be taken into consideration, as larger countries require more heterogeneity in wages but smaller ones can do with homogeneous wages

Pakistan needs a shift in education-work transition model. There is a gap between education-work transition model in Pakistan and Abroad, due to which our students are misfits in international academics and job markets. In Pakistan, our students tend to finish education to the highest possible level without a break. It is preferred to be qualified before joining work. A very small percentage of people are working and getting education simultaneously and only those who cannot afford to get further education, look for full time jobs mostly beginner level jobs. However, internationally, students are supposed to start working after their bachelors and then pick and choose their further education degrees and courses according to their career needs. When our fresh graduates go to international job market (even those who have graduate degrees from abroad), they face limitations in getting good jobs due to total lack of experience with on-job trainings etc, so they fail to get good jobs and unfortunately when they try to join the job market with lower level jobs, they are rejected for being overqualified. Within Pakistan, we need to add job experience as a must to get beyond bachelor’s degree. This will be the best way to create liaison between industry and academic sectors. Not only will our education become meaningful, gaps in the industrial sector and services sector will also lesson.

What constitutes a high rate of unemployment? Is it right to strive for the highest possible labour force participation rate? Why should the greatest possible number of people be in employment? Or is it sufficient to have highly productive activities for a smaller number of people who then help to support the economically inactive from their high wages? What kind of employment is it: full-time, part-time, permanent, fixed-term? What is the job deficiency per sector? Which sector should get what share of this job creation and at what priority level? What percentage of job creation should be divided between skilled and unskilled levels? These are some of the questions which need to be answered before a successful job creation strategy is designed.

The writer has a PhD in Economics from NCBAE, Lahore. She can be reached at salahuddin.taseer@gmail.com

Published in Daily Times, October 27^th 2018.