With the macro-stabilisation coming into effect, it is time for the policymakers and the government to turn towards alleviating the livelihood and social services, like health, education and nutrition for common citizens. Moody’s credit rating for Pakistan was last set at B3 with a stable outlook. The rating agency report has also stated, “Further reduction in external vulnerability risks, including through higher levels of foreign exchange reserve adequacy and/or increased economic competitiveness that were to lift export prospects, would also put upward pressure on the rating.”
It is also important to consider the growth prospects of the economy. According to renowned independent economists like Dr Hafiz Pasha, “The PBS preliminary estimates indicate that the GDP growth rate has fallen from 5.5 per cent in 2018-19 to 3.3 per cent in 2019-20.”
Moreover, factors contributing to low growth include scaling back of development spending, rising electricity and gas tariffs as well as low agricultural productivity.
The inescapable reality remains that people are deeply under financial duress due to a stagflation dispensation of the economy. It is high time that economic policies be aligned with greater social protection, employment creation and agricultural productivity to attain any kind of broad-based sustainable economic growth. Unemployment is being touted as one of the most hard-hitting problems for the common public, particularly the youth.
The employment situation is an economic and moral crisis for the nation
According to the Pakistan Employment Trends report (2018), labour force participation rate hovers around 51.9 per cent in 2017-18. Employment to population ratio increased from 49.8 per cent in 2006-07 to 50.7 per cent in 2009-10 and decelerated to end up 48.9 per cent in 2017-18. Youth (15-24 years) employment to population ratio came down from 40.9 per cent at the beginning of the period (2006-07) to a level of 36.9 per cent at the end of the period (2017-18), which is highly worrisome for a country with a sizeable ‘youth bulge.’
The recent Labor Force Survey (2017-18) further shows that the unemployment rate stands at 5.8 per cent (2017-18) proximate to the previous 5.9 per cent in 2014-15. Change is evident more in the case of females (9.0 per cent, 8.3 per cent) than males (5.0 per cent, 5.1 per cent) during the same comparative period. The unemployment rate in urban areas decreases (8.0 per cent, 7.2 per cent) while the level was the same in the rural areas (5.0 per cent, 5.0 per cent). The literacy rate has gone up (60.7 per cent, 62.3 per cent), both in the case of females (49.6 per cent, 51.8 per cent), and males (71.6 per cent, 72.5 per cent) during the same comparative periods (2014-15 and 2017-18).
Furthermore, the labour force increased from 61.04 million in 2014-15 to 65.50 million in 2017-18. Looking at the provincial estimates from LFS 2017-18, the volume of the labour force increased in the descending order of Punjab (3.06 million); KPK (1.12 million); Sindh (0.88 million) and declined in Balochistan (-0.6 million). On the other hand, the volume of unemployed increased in all provinces in the descending order in Sindh (0.09 million), Punjab (0.07 million) and KPK (0.04 million) except in Balochistan (-0.02 million), where a drop was observed.
With a fragile situation of the employment creation in the country with stymied business investment, high inflation and reduced government spending, the remarks of some federal ministers have been irksome on job creation. A couple of ministers openly declared that the public sector did not hold any responsibility for job creation. The government is thinking of cutting down on them. In fact, as a part of his confounding and conflicting remarks on a pressing economic problem, it was stated, “It is very imperative to get people to realise that the government cannot provide jobs.”
Firstly, the honourable minister needs to be apprised that it was the PTI’s manifesto that claimed of creating 10 million jobs in five years. Hence, it is his government, not the public, that needs advice on making lofty claims and hollow promises.
Unemployment is, however, not only an economic issue but also a social problem. Federal governments, particularly oriented towards welfare, are prone to providing incentives to “both” public and private sectors for greater job creation during periods of low growth across the world. The prime minister needs to seriously reprimand the ministers from making irresponsible and ill-informed statements to hurt the sentiments of the public already amidst despair and uncertainty. Instead of consoling the masses in a constructive and supportive way while being honest about the crisis, some ministers chose to make subliminal attacks on the people’s trust. This will only lower the public confidence in the government in not only keeping its word but also in its ability to deliver on important issues.
Prime Minister Imran Khan also made a statement to focus on job creation after stabilising the economy, which is reassuring for the people. Serious steps need to be taken across various sectors as well as the CPEC to boost job prospects.
On the contrary, twice in the past, during times of high unemployment, the US successfully turned to large-scale programs of direct job creation. During the Great Depression, public job programs employed millions and left a legacy of improvements in the infrastructure and public spaces. More than 100,000 miles of new roads, 35,000 public buildings, urban art and murals, soil conservation and many other valuable contributions were made by the public sector. A smaller program in the 1970s employed 750,000 people; gave on-the-job training that boosted the long-term income of hundreds of thousands of young people and the urban population.
The employment situation is an economic and moral crisis for the nation and requires an adequate, well-planned and comprehensive response by the federal government. The government, at both federal and all provincial levels, must revise policies and programmes instead of asking people to revise their expectations. The share of public-sector employment relative to total employment varies considerably across countries ranging from eight per cent in Korea and Japan to 35 per cent in Denmark. Governments also differ with respect to the constitution of goods and services (eg in education or health care) that they publicly provide to their citizens, and on how they provide those goods and services, either directly or indirectly. We can build on those successes across the globe to increase employment and household income in the communities, most severely affected by the economic downturn.
American Recovery and Reinvestment Act of 2009 was introduced, which had three main spending categories. It cut taxes by $288 billion. It spent $224 billion in extended unemployment benefits, education, and health care. It created jobs by allocating $275 billion in federal contracts, grants, and loans. It raised the national economic output by two to three per cent from 2009 to 2011. It prevented a significant increase in poverty without it; 5.3 million additional people became poor in 2010.
Hence, improving the functioning of labour markets is, thus, a major priority for policymakers across developed democracies. According to the International Growth Centre (2019), the interventions that certify skills are particularly effective at helping jobseekers secure higher-paying jobs. Earnings gain range between 10 and 30 per cent. These interventions are also cheap and highly cost-effective. Several recent studies also found that providing information to job seekers can significantly improve employment outcomes.
There can be no meaningful and sustainable growth and development without sizeable and quality job creation in both the private and public sectors. For that, there needs to be a policy to boost and train human capital in various capacities and spurring innovation to boost labour productivity. Local governments could design public-sector programs or select projects proposed by nonprofit organisations and public-private partnerships that can quickly employ residents of the targeted communities while delivering a high-demand service. It is also necessary to coordinate to the maximum extent pre-apprenticeship and apprenticeship programs. Also, it is desirable to provide jobs in sectors, where job growth is most likely and in which career ladders exist to maximise opportunities for long-term and sustainable employment for individuals.
The writer is a freelance writer and an Economic Analyst based in Lahore