Daily Times

Being one of the world’s most populous countries, Pakistan is uniquely blessed with plenty of untapped human resources. Most of the country’s over 200 million citizens are young and ready to work. However, there are not enough jobs in the country to cater to the growing needs of its younger population. According to estimates of the International Labour Organisation (ILO), unemployment between the ages of 15 and 24 in Pakistan is 10.8 percent. This is higher than other countries in the region such as India, Bangladesh and Nepal.

Also, the latest Human Development Report by the United Nations Development Fund (UNDP) suggests Pakistan’s working age population includes around 3.5 million unemployed individuals.  An additional 1.4 million or more people of working age will join the labour force every year for the next five years, the report says. The growth in employment creation is necessary to match the unprecedented number of young people entering the working age. The country needs an urgent strategy to tackle the issue, which has the potential to create other social and economic problems if left unaddressed.

The current political leadership of Pakistan is aware of the gravity of the situation. Before coming to power, Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) had promised to create 10 million more jobs during next five years.

In an article Published in The Express Tribune on May 27th last year, the current Finance Minister Asad Umar outlined his party’s plan to create millions of jobs.  He had promised to boost private sector through economic incentives to kick-start a growth cycle, which would result in enormous employment opportunities. The Minister had especially mentioned manufacturing, construction, tourism and social services as key areas with potential for job creation.

However, until 23rd January- when a second mini-budget was announced by the government- no serious steps were taken to implement those plans. According to almost all independent estimates, unemployment has increased during first six months of the current administration. Devaluation of local currency, coupled with political uncertainty and flight of capital from the country resulted in an atmosphere non-conducive for the economic growth.

There are not enough jobs in the country to cater to the growing needs of its younger population. According to estimates of the International Labour Organisation (ILO), unemployment between the ages of 15 and 24 in Pakistan is 10.8 percent. This is higher than other countries in the region such as India, Bangladesh and Nepal

This situation might change after the government announced a number of incentives for businesses in its mini-budget. These steps are aimed at getting the wheels of the economy moving. In his budget speech the Finance Minister talked about the link between growth and employment. Measures announced by him have the potential to create more jobs. Whether or not these steps help in achieving that objective still remains a big question. According to economic experts, there are several tried and tested ways to increase employment in any country. Some of these might work for Pakistan.

The government has to target a higher growth rate to achieve 10 million job goals. Explaining the relationship between the GDP growth and employment in one of its recent reports, the State Bank of Pakistan (SBP) has noted that every percentage point increase in the growth rate translates into the creation of 0.2M jobs. By this measure, the government should aim for a 10pc GDP growth rate to create 2M jobs every year throughout its term in office to achieve its goal. However, the IMF forecasts that the growth rate will be 4pc for the current fiscal year.

According to a University of Massachusetts at Amherst study, most cost-effective government spending include building roads, bridges, and other public infrastructure works. One billion dollars spent on public works created 19,975 jobs. Public works create jobs because it puts people right to work. The last government of Pakistan Muslim League (N) was criticized for focusing more on mega project rather than spending on social sectors, but one has to admit that mega projects did spur economic activity and jobs had been created as a result.

Pakistan is also expecting to accelerate its economic growth and activity through the China Pakistan Economic Corridor (CPEC) under which a network of roads, power projects and special economic zones are being constructed across the country. The multi-billion-dollar initiative is being hailed as a game-changer for the national economy. However, its impact on job creation hasn’t been quite pronounced so far.

According to Dr Shahid Rashid, executive director at the Centre of Excellence for CPEC, about 75,000 jobs were created under the CPEC in the last five years. This means the CPEC has created only about 15,000 new jobs every year on average so far. However, according to Chinese officials in Islamabad, as many as 700,000 new job opportunities for local people are estimated to be created by 2030 through CPEC.

The government of Prime Minister Khan needs to target higher literacy rate and focus on vocational education and training to obtain long-term employment goals. Experts believe when it comes to job creation, one of the most effective spending solutions is education. But according to UNDP, only 14 out of 195 countries spend less on education than Pakistan.  Also, the country vocational education and training (TVET) system is facing multiple challenges including access, affordability, quality, equity and relevance to industry. According to government estimates, about three million young people enter the job market each year but the TVET sector can accommodate less than half a million trainees annually in its more than 3500 institutes across the country. In my opinion, more TVET institutes should be opened across the country to provide the required skills and training to young students closer to their homes. Overall, the budget allocation for education must also be increased significantly.

Being a successful entrepreneur and an employer, I have always advocated the importance of entrepreneurship for high-impact job creation. In United States, small businesses are often called the backbone of the economy. A news research at the Ewing Marion Kauffman Foundation shows that “nearly all new job creation in the United States has occurred in firms less than five years old.” This means that entrepreneurship is critical to the employment of young people because it is basic to the generation of new jobs. Pakistan has to focus this area to not only boost its growth but also achieve job target. The mini-budget announced by the government on 23rd January acknowledges the importance of SMEs (Small and medium enterprises) for Pakistan’s economy.

In the end, it is hoped that the PTI government will focus on these four areas to create one million jobs in the next five years.

The writer is an Entrepreneur, Civic Leader, and Thought Leader based in Washington DC. The views expressed here are personal

Published in Daily Times, January 31^st 2019.