A new commission on poverty reduction

The government's poverty reduction plans moved a good step forward last Thursday when, as per the recommendations of a task force constituted a while ago, Prime Minister Zafarullah Khan Jamali approved the setting up of a new body called Commission on Poverty Reduction and Employment.
The commission is to review and co-ordinate the on-going projects on poverty reduction, and also devise a strategy for combating poverty through both long and short-term measures.
These measures must form part of a comprehensive policy aimed at addressing the inextricable issues of employment generation and poverty alleviation.
Creditably for them, our economic managers have achieved notable successes in improving the country's macroeconomic picture. During the last fiscal year, they were able to claim the GDP growth rate at 5.1 percent, which exceeded the target of 4.5 percent; and a 20 percent increase in exports.
Also, the country's foreign exchange reserves have stayed at a satisfactory level, the foreign debt situation has improved to the point where the government has told the IMF no more loans are needed from it.
In short, things are looking up, but not for the people at the lower rungs of society. In fact, the situation of the poor and the jobless has gone from bad to worse during the recent years.
Even though the government claimed only a few days ago that poverty has decreased by two percent, there is little concrete evidence of that having happened. Like before, the daily press has continued to carry reports of people committing suicides due to financial difficulties.
If the economy is getting better and yet poverty refuses to make a retreat, that means the rich are getting richer, and the poor poorer.
That is surely not something for the government to be proud of. It must devise its policies in such a way that all sections of society enjoy the fruits of economic progress.
The ultimate measure of its success has to be its ability to bring more and more people above the poverty line through meaningful employment generation schemes.
In his comments at the inauguration of the Commission on Poverty Reduction and Employment, the Prime Minister said that increased allocations to the next year's PSDP and launching of mega infrastructure projects would generate economic activity and create a lot of new employment opportunities.
The problem with mega projects, though, is that they have long gestation periods, which normally stretch from three to four years or more. It takes them a few more years to come to fruition.
That is not to say that they are not needed, but that side by side with big projects the government must also advance labour-intensive employment generation schemes such as the Small and Medium Enterprises (SMEs).
Towards that end, it must remove the bottlenecks that have kept the sector from making worthwhile headway despite repeated pledges of support from various government leaders.
SMEs need the government to come to their assistance in two important areas. In the first instance, the financial institutions need to be encouraged to overcome their hesitancy in extending loans to genuine but un-influential people who are desirous of setting up new businesses.
The government has been repeatedly making the right noises on the subject, yet not much has changed for those actually looking for help. With the setting up of micro-finance banks this problem is likely to be mitigated significantly.
The other problem area where the SMEs would want the government to provide them with some breathing space is the application of labour laws as soon as they start functioning with a ten-member workforce.
No doubt, it is important to implement labour laws in order to protect the workers' rights and prevent their exploitation, but applying them to a small newly established commercial outfit with ten workers, can easily prove to be an unbearable burden.
The policy serves no useful purpose. It can only perpetuate the trend of the rich getting richer by increasingly relying on mechanisation and thereby curtailing the chances of the job market's expansion.
Given this obvious disadvantage, the government would be well advised to review the manpower threshold of application of labour laws and raise it to 100 employees.
Such changes in the existing laws and policies that would assure the growth of the SMEs and consequent increase in employment opportunities would not be a bad deal at all.
Housing and construction with its linkages with the forward and backward sectors is another area that has the potential of creating jobs in a big way. This sector is yet to take off.
The impediments in the way of a construction boom need to be addressed urgently in a manner that is consistent with town planning and environment laws and rules. As regards the Hi-tech projects, it must be borne in mind that for every rupee invested the number of jobs created is meagre because of the high degree of automation.
There are constraints in this sphere too because of the dearth of trained and educated work force that is required for Hi-tech projects. It is then the SMEs that provide the best route to job creation in the short term.
Although the report of the task force has not been revealed but we are sure that it would deal with these issues and its recommendations will form part of the terms of reference of the commission to combat poverty.