Meeting the unemployment challenge

Muhammad Jahangir

According to a recent survey, the number of unemployed people in Pakistan now stands at 1.5 million, higher than in 2013. The last time the unemployment rate was so high was in fiscal 2002, when it stood at 8.3% during the early years of the Musharraf administration. During the entire period of the Zardari regime, the unemployment rate went up by only 1%, rising from 5.2% in 2008 to 6.2% in 2013. By contrast, the unemployment rate has increased by more than twice that much during 5 years of the PML-N government.

At the end of fiscal 2017, the unemployment rate jumped to 7.3%, as 800,000 more people joined the ranks of the jobless due to the slow economic growth rate of only 4%. The pool of unemployed people had increased to 4.6 million by June 2016. During the fiscal year 2017, another 700,000 people were added to the unemployed population and the unemployment rate stood at 8.3%. The pool of unemployed people has grown to 5.3 million, as the government again missed its economic growth rate target of 5.1%. The latest UN Human Development report says that 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.

Pakistan is one of the world’s most populous countries and blessed with plenty of untapped human resource. 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.

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.  Experts say that Pakistan needs an annual growth rate of at least 7% to create enough jobs to absorb new entrants into the labour market. The ranks of the unemployed are expected to rise by another 400,000 people in fiscal 2019, taking the additional number of jobless people to 1.9 million. The unemployment rate is expected to jump up to 8.6%, a number that could be even higher if the government’s target growth rate is missed.

As the economy is not growing at the required pace, finding jobs has become a serious problem for a majority of the people, especially the youth. As we all know, government jobs are few and far between, while in the private sector, opportunities are shrinking due to the slowdown in industrial growth caused by energy shortages and security issues. Karachi is the economic engine of Pakistan but for many years it has not been working to its full potential. Pakistan has numerous natural resources but the problem is that they are not being fully utilized.

To fight unemployment, we need to speed up the pace of industrial development in the country. To this end, the energy supply should be sufficiently augmented to feed the existing industries and encourage the establishment of new ones. The government also needs to promote the establishment of small industries in the undeveloped areas, an initiative which has been found to be a good solution to the unemployment problem in many countries. The agro-industry is another sector whose development can go a long way to absorb the youth bulge in the rural areas. Side by side, steps should be taken to reshape the education structure in Pakistan to produce more specialized and technically qualified manpower to fill the skill gap in many sectors of the economy.

 For the purpose, more technical training institutes need to be established all over the country. A growing economy is the best insurance against rising unemployment. To this end, the PTI government should do perspective planning, focusing on areas with the highest potential for job creation. Few months ago, the government had announced a number of incentives for businesses in its mini-budget, aimed at getting the wheels of the economy moving. The measures announced by the finance minister, if implemented honestly, can create more jobs.

Keeping in view the fact that there is a close link between growth and jobs, the government should target a higher growth rate to achieve the goal of 10 million jobs. Explaining the relationship between the GDP growth and employment in one of its recent reports, the State Bank of Pakistan has noted that every percentage point increase in the growth rate translates into the creation of 0.2 million jobs. By this count, the government should aim for a 10pc GDP growth rate to create 2 million jobs every year throughout its term in office to achieve its goal. This is a big challenge for the PTI government which should marshal all its resources to overcome it.