National emergency on skills development in Pakistan

An interview with CEO PSDF Jawad Khan:

Jawad Khan is the Chief Executive Officer of Punjab Skills Development Fund in Pakistan (PSDF). PSDF manages over USD 200 million in contributions from the Government of Punjab, DFID UK and The World Bank. The Fund is shaping the future wellbeing of the poor and vulnerable youth of Punjab, with a population of 120 million, by training them in demand-driven and market-relevant skills and supporting them in finding income-generating opportunities in Pakistan and beyond.

Before joining PSDF, Jawad has spent 15 years in the corporate sector in the UAE. He was the Chief Operating Officer of the international development division of the Investment Corporation of Dubai (ICD); USD 60 billion sovereign wealth fund of the Government of Dubai. Before that, he was associated with Dubai Holding and held various senior leadership positions including Chief Operating Officer of SmartCity Dubai, Chief Strategy Officer of TECOM Investments, Chief Operating Officer of Global Village and the Head of Strategy & Corporate Planning. During his association with Dubai Holding, he has successfully developed several mixed-use real-estates, industrial and entertainment mega projects in Dubai and smart cities in Europe and South Asia.

Jawad has a Master in International Finance & Business from Columbia University in the City of New York, USA.

BR Research recently sat down with Mr. Khan to understand the national emergency on skills development. Following are the edited excerpts.

BR Research: Tell us about PSDF. What is its mandate?

Jawad Khan (JK): Punjab Skills Development Fund (PSDF) is the largest skill fund in Pakistan. It’s a not-for-profit fund supported by the government of Punjab, DFID and the World Bank. Since it’s a fund, PSDF does not provide trainings; it manages funds that are invested in training and skills development. Our objective is to link the poor and vulnerable youth of Punjab with opportunities for skills development of the highest standards, and provide sustainable income generating opportunities not only in Pakistan but also overseas. We work with over 400 training partners across Punjab. We identify sectors and trades with income generating opportunities, and provide training contracts to the training partners through a competitive process; these training partners are primarily from the private sector and train on our behalf. Once the trainings are complete, we link the graduates with income generating opportunities.

BRR: What is the skill map (e.g. skill-sector pairing) of the country’s major industrial districts? Have such studies been undertaken?

JK: It is important to understand that skills mapping with opportunities is not an exact science. It depends largely on the economic situation of the country. Indicatively, we can predict sectors that offer opportunities. We know that there has been a considerable decline in textile sector while considerable growth has been witnessed in certain sectors under CPEC. These include the logistics, transportation and the power sector. Going forward, growth is expected in infrastructure and construction sectors,
especially after the announcement of Naya Pakistan Housing Program. However, it is very hard to match exact skills required for a particular industry or sector. PSDF conducts sector-based research for demand assessment and we have 7 sector studies on our website. Since we work with a lot of businesses, we are able to assess demand based on their feedback on existing and prospective opportunities.

BRR: How do the existing vocational training institutes fare globally?

JK: Most of the training institutes for skills development in Pakistan are in the public sector. It’s a little different in Punjab as PSDF works with over 400 private sector training institutes. But for the rest of the country, most of these training institutes are run by the public sector. If you compare these existing training institutes in the country with those in China, we definitely lag far behind. If you compare them with those in India, there isn’t much difference as skills development faces similar challenges there as well. However, there has been some improvement as Indian businesses are increasingly getting involved in skills development and training. When compared to skills development in the developed world, we stand nowhere.

The fundamental reason we lag behind is because our training institutes work in isolation; the engagement with the industry is minimal and they are unaware of what’s going on in the industries in terms of jobs creation and deletion due to the impact of automation. Secondly, most of them are in the public sector, the government does not have enough funds to continuously upgrade and enhance the capacity of these training institutes in terms of machinery, equipment, teachers’ training. There is a mismatch in what these trainees learn at training institutes and what the jobs require. This is a huge challenge not unique to Pakistan. Globally, educational and training institutes are not equipping the youth with the right combination of technical and soft skills.

BRR: What is the quantum of federal and provincial spending on skills development? Is it adequately focused on economic and social needs of the country?

JK: I believe that we need Rs1 trillion to equip the youth with entry level skills, while the public sector spending is only two to three percent. The funding need is huge compared to the limited resources of both the federal and the provincial governments. Therefore, it is important for the private sector to get involved.

BRR: What kind of role can the corporations and the private sector play here?

JK: There is only so much that the government can do. The government’s role is to facilitate, while it is the corporate sector’s task to get the workforce ready for the jobs they offer. There is a need for mindset shift. Instead of taking it as a cost, skills development should be considered as an investment by businesses. Right now, around 150 companies are actively engaged with us in skills development, and around 35 to 40 companies are training for us and also sharing costs. These are the companies that understand that skills development is inextricably linked to their own business growth. Private sector investment in skills development is not a utopian concept; we have tested this model successfully and we have used cases. Last year, PSDF raised $2.4 million from the industry. This model should be replicated at the national level and businesses should be incentivised to share the financial burden.

BRR: Does this mean that the MNCs are better at skills development?

JK: Yes. Not only do they have more resources; they have global requirements for skills training. The culture of skills development and training in local setups is new; though there are local players as well that are investing in skills training like those in the readymade garment segment, furniture segment, FMCG, F&B and retail.

BRR: Don’t you think that technology is making skills development and vocational training less desirable?

JK: Automation is something that has already started. Export oriented businesses are already adopting technology because they compete globally. The need for skills will always be there. What has happened is that with automation, the kind of skills needed has changed. If you look at the sports industry, a football stitcher used to stitch the entire football. Today, with the need for precision and higher global standards, the global players have gone into automation. The global export houses do not need a football stitcher anymore, what they need is someone with skills to work with the new machines. While one skill is disappearing, a new skill is emerging. It is very important to understand that automation is never going to replace the need for skills; it will replace the nature of skills.

BRR: What do you think about the recommendation that the technical training should be imparted from the secondary school level?

JK: That’s very important. It is necessary to change the image of skill development, because anyone who goes into skills training is considered second tier. It is not Pakistan specific; all emerging markets face this challenge. We have to create respect for skills in the schooling system and also have to make young children work with their hands. More importantly, there are some technological skills like AutoCAD and coding that must be taught to children in schools. Globally, there are specific vocational schools where the children get the conventional matriculation or intermediate in the skills space. Creating educational pathways for skills education all the way to higher education will also considerably improve the image of skills

BRR: What are some of Pakistan-specific challenges?

JK: Pakistan has a large uneducated workforce. 36 percent of our population is between the ages of 16 and 29. Roughly, 10 percent of them move from matriculation to higher education. So the education level of approximately 50 million youth is matriculation or below. Relatively uneducated with poor educational outcomes, no skills and lack of confidence to enter the job market are the challenges of the youth.

Second challenge is that of funding. And as I said before, it’s important for the private sector to get involved.

Finally, the lack of a proper governance model at the national or provincial level for the TVET sector is another big challenge. As skill needs become more global and complex, there is a need to revamp the entire structure. Unless, we disruptively change our TVET system, we cannot serve national growth, export skilled manpower and change the global perception that Pakistan has a low-skilled workforce. This perception will seriously hamper our ability to attract foreign investment.

BRR: Labour exports have seen a decline in recent times. How much of it has to do with lack of skilled labour?

JK: Not entirely. If your break down these exports, 60 percent of these come from the Gulf countries that have witnessed economic slowdown. In such a scenario, the very first people who get fired are the unskilled ones. 60-70 percent of Pakistanis who work overseas are unskilled. Secondly, when they go on a general labour visa, they are low wage workers. Low wage workers are only able to send back little in terms of remittances. This is the reason why our remittances have fallen. It is the job of the Ministry that deals with overseas Pakistanis to train and ensure international placements in skilled jobs. That’s what we do at PSDF. We train and place the youth in some of the best hotels in the Gulf. We run this program ourselves; we understand the value chain; and understand how difficult it is to train the youth properly in Pakistan and link them to international job openings.

BRR: The economy is back in the austerity mode. Do you think that the government will be focusing on skills development?

JK: The Government doesn’t have a choice. If you don’t train your youth and link them to income generating opportunities, the consequences can be dire as we have witnessed in past situations. We understand that the government does not have all the money needed, and that is why they have to facilitate the private sector to invest in skills development.

We expect that there will be increasingly more emphasis on skills development. It is important to understand that the existing models don’t work at the national level and they have to be radically changed whether it is governance; industry engagement; the kind of program being offered; and funding mechanisms.

BRR: What is PFDS’s focus going forward?

JK: Our purpose is linking youth with income generating opportunities. We work very closely with the industry for training and placing in formal employment opportunities. We support training in over 250 trades. This includes sectors like textile, hospitality, construction, IT, engineering and automobile, agriculture and livestock, etc. Our objective is to work with the industry, and build programs that are short and more targeted so that we get results.

Given a slow economic growth right now, there are not enough formal opportunities for employment. That’s why we have also started programs in entrepreneurship. Our signature program on entrepreneurship is called “Entrepreneurship on Wheels” where we have partnered with Apna Bank and Uber to create entrepreneurs in the transportation business.

Another huge challenge for us is getting women in the workforce, because women labour force participation rate in Pakistan is between 22 - 25 percent. Given our demographic structure, we simply cannot grow as fast as we want to unless women become active members of the workforce. Therefore, we have dedicated programs for making market-driven training accessible to women and linking them to income generating opportunities.

And then, training our workforce for international jobs is also our focus area.

PSDF was a very successful project 3 to 4 years ago. But now we have transitioned into an organisation that has a very results-focused and vibrant corporate culture. We deliver a lot of results for our stakeholders and we have many donors investing in multiple programs as they can see that we are able to give them a return on skills investment. We also have a very strong seat at the policy table whether it is at the federal level or the provincial government. PSDF is also represented on the national taskforce on skills development. We are also keen to share our experiences with other provinces as skills development is a national challenge and requires a collective response.