The government has recently launched the Rs 100 billion 'Kamyab Jawan Programme' for youth. The primary focus is on providing opportunities for acquisition of skills and for access to subsidized credit for small projects to generate employment and incomes. This is indeed a very welcome initiative.
The roots of the growing problem of absorption of youth into the mainstream of the economy lies in the 'youth bulge' that the country has been facing for over four decades. According to the Population Census of 1981, the share in the total population of youth, aged from 15 to 29 years, was 23.7 percent. By 2018, the share has increased to almost 27 percent. In effect, the youth population has been growing annually at the rate of almost 3 percent as compared to the overall population growth rate of close to 2.5 percent.
The youth bulge has the positive dimension of providing the economy with a stock of able-bodied workers with relatively higher levels of education. It also implies a lower dependency ratio in the country. But the risk is that if the youth population entering the labor force is not productively absorbed than it could lead a large-scale expression of frustration by disgruntled youth and eventually acquire the nature of a wide public protest of the Arab Spring type.
What is the current position with regard to employment of youth? A crucial magnitude is the extent of unemployment among youth who have completed their education and have entered the labor market. In addition, there is need to determine the magnitude of 'idle' youth, who have either been discouraged by the failure to a find a job or are waiting for a suitable employment opportunity.
Fortunately, relevant information is available from the latest Labor Force Survey carried out for 2017-18 by the Pakistan Bureau of Statistics. According to the Survey there are currently almost 54 million male and female youth combined in Pakistan who are aged from15 to 29 years. The proportion of females is somewhat higher at 50.8 percent. Almost 48 percent of these females are married.
The labor force participation rate of male youth is 72 percent and it is substantially lower for females at 21 percent. Consequently, out of the 54 million youth almost 25 million have entered the labor force. This includes over 19 million male youth and somewhat less than 6 million females.
The rate of productive absorption of these 25 million youth is currently disappointingly low. The unemployment rate for male youth is close to 9 percent and significantly higher at almost 13 percent in the case of female youth. These employment rates are visibly higher than the national unemployment rate of 5 percent.
Consequently, the number unemployed is almost 2.4million consisting of almost 1.7 million male youth and 0.7 million female youth. These unemployed youth are almost 45 percent of the total number of unemployed workers in the country. This highlights the magnitude of the youth absorption problem.
The next question is what the over 29 million youth who have not yet joined the labor force are doing currently? This includes 7,5 million male youth and over 21,5 million female youth. The number of married female youth is almost 11 million. Presumably they are in the process of bearing children and are generally unlikely to be motivated to find jobs unless they are close to or below the poverty line.
Therefore, 18 million youth are not in the labor force. A proportion is enrolled in educational institutions and completing high school or studying towards intermediate or college degree or post-graduate qualification. The Pakistan Economic Survey provides estimates of enrollment at different levels of education. 2.8 million male youth and 2.3 million female youth are in the process of completing their education.
This leads to the key estimate of the number of currently 'idle' youth in Pakistan. The resulting magnitude is of 4.8 million male youth and of 9 million female youth. Combined with the number unemployed, we have the colossal magnitude of almost 17 million idle or unemployed youth in the country. This includes almost 6.5 million males and 10.5 million females. In effect, almost 24 percent of the male youth population and 40 percent of female youth are currently not engaged in any productive endeavor. This is a tragic waste of the potential productive capacity of the youth of Pakistan. In effect, the youth bulge has become one of the most fundamental problems for the country.
One partial solution is for a fast and big expansion of the higher education system of Pakistan. Unfortunately, partly because of the lack of market relevance of the knowledge acquired and partly due to lack of growth in the demand for highly educated workers, their unemployment rates are currently the highest. The unemployment rate for workers with graduate or post-graduate qualification is over 11 percent as compared to 3 percent for less educated or illiterate workers. The expansion of the present higher education system could only add to the population of unemployed youth.
Therefore, direct intervention to tackle the massive youth absorption problem is the right approach. The Kamyab Jawan Programme is the right response. It has to proceed at an appropriate pace and at a scale to address the potentially rising frustrations of unemployed and idle youth. The ruling Party had promised during the elections buildup to provide two million jobs annually if inducted into power. Instead, in its first year, there has been a big economic slowdown and a large number of workers have been rendered unemployed. In the absence of corrective actions, the growing frustration may lead to more crime or a reversion to religious extremism. Beyond a point, it could even lead to a protest movement.
The resolution of the problem requires operations at two levels. First at the more macro level this requires providing a stimulus to economic activity. Fortunately, the stabilization process is going well and the most serious problem of a large current account deficit has been effectively tackled. It is down by as much as 64 percent in the first three months of 2019-20. Therefore, this is some space for pursuing expansionary policies. These will include reduction in interest rates, larger allocation for development spending and restoring fiscal incentives for higher exports.
Second, there will have to be interventions at the more micro level like the Youth Programme. Initially, there should be greater emphasis for imparting more marketable skills to youth. This will require not only enrollment in vocational and technical training Institutions but also more internships in productive establishments. Both approaches are being adopted in the Youth Programme. In addition, tax credits may be offered to employers for providing job opportunities to youth in their establishments.
The second and larger component of the Youth Programme is the provision of credit to eligible youth at subsidized and even zero interest rate for relatively small loans. This must be based on the presentation of a feasibility of the proposed initiative by a youth or by a group of youth or in collaboration with one SME. In the short-run, given the slowdown, there may not be many new opportunities for profitable ventures. Therefore, this component of the Programme may need to be up-scaled more gradually. Simultaneously, a food for work programme may be initiated in the rural areas leading eventually to an employment guarantee programme.
The proposed banking channels are public sector banks like the National Bank of Pakistan and the Provincial Banks. These banks may not have the capacity or motivation to handle small loans. As such, there should be greater resort to Micro Finance Institutions like the Akhuwat Foundation, the Rural Support Programme and the Pakistan Poverty Alleviation Fund.
In conclusion, the Kamyab Jawan Programme is a potentially very important and strategic initiative. It will need to be expanded based on the extent of initial success. The youth are the future of our country. They must stay in the mainstream of the national economy so that they can make the requisite contribution to Pakistan's development and have productive lives.
(The writer is Professor Emeritus at BNU and former Federal Minister)
Copyright Business Recorder, 2019
The writer is Professor Emeritus at BNU and former Federal Minister
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