The youth bulge

The high rate of population growth of Pakistan, among the highest in the world, has led to the emergence of a large youth bulge. Demographers and social scientists have argued that this could have positive or negative implications depending upon the nature and state of the economy.

The positive impact is based on the presumption that large entry of youth into the labor force and employment will lead to the unleashing of more creative energy by these youth, who are likely to be better educated than the older population. This will lead to bigger gains in productivity and facilitate faster economic growth. Further, the fall in the dependency ratio will lead to a higher level of national savings and investment.

However, there is the contrary view that the youth bulge will only have a positive impact if the economy is strong enough to absorb the new entrants in the labor force in productive jobs. Otherwise, there is the risk that idle and frustrated youth would raise the incidence of crime, violence and embrace radical political and religious views.

We have seen in Pakistan two incidents of the problems arising due to the burgeoning number of idle and unemployed youth in the country, estimates of which are given below.

The first event is the indiscriminate and widespread burning of government buildings and historical emblems of bravery and service to the nation on the 9th of May 2023. The second more recent event is the consequence of hazardous smuggling of Pakistani youth to European countries in the search of remunerative jobs. The ship carrying Pakistani and other country workers drowned recently and hundreds of lives were lost.

How large then is the youth population of Pakistan and how effective is their productive absorption into the national economy?

The youth population of Pakistan consists of males and females in the age groups of 15-19 years, 20-24 years, and 25-29 years respectively. According to the latest Labor Force Survey by the PBS (Pakistan Board of Statistics) in 2020-21, male and female youth comprise 13.1% and 13.2% respectively of the total population in the country.

Their combined absolute number is 58.7 million. The first Labor Force Survey was in 2001-02. At that time, the shares in population of youth, both male and female, was somewhat lower at 24.8%, with the number at 35.3 million. The annual growth rate of youth population from 2001-02 to 2020-21 is estimated at 2.7%. This is faster than the overall population growth rate of 2.4%.

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                                                 Table 1
                                  Number of Youth and their Different Roles
                                                in 2020-21
                                                                                                     (million)
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                  Total       Outside      Labor       Employed      Unemployed       Studying      Unemployed
                  Number      Labor        Force                                                            or
                              Force                                                                       Idle
Male Youth        29.3        7.9          21.4        19.5          1.9              2.9                  6.9
Female Youth      29.5        22.4         7.1         6.2           0.9              13.6*                9.7
==============================================================================================================
Total             58.8        30.3         28.5        25.7          2.8              16.5                16.6
==============================================================================================================
*also including recently married
==============================================================================================================

A sharp contrast can be drawn with the growth rate of youth population in Bangladesh and India. The former country has been able to bring down the population growth rate to only 1.3%.

The annual rate of increase in the youth population is ever smaller at 1.0%. The corresponding number for India is 1.6%. Therefore, with a much higher growth rate of 2.7% Pakistan has a much bigger problem of productive absorption of these youth.

The next question is what is the rate of entry of youth into the labor force annually in Pakistan? According to the 2020-21 LFS, the number of youth, both male and female, in the labor force, according to this survey, is 28.6 million. This represents a share of 40% of the total labor force.

The labor force participation rate of male youth is 73.2%, while that of female youth is still low in 2020-21 at 24.2%. However, the rate of increase annually of females entering the labor has risen rapidly to over 5%, while that of male youth is 2.2%. As of 2020-21, the share of males in the youth labor force is 75%.

The annual number of youth entering the labor force is estimated currently at 0.8 million. This is equivalent to over 40% of the total labor force entrants annually. About 60% of the youth entrants are male.

We now come to the rate of employment absorption of the youth labor force. The unemployment rates are relatively high and worrying. It is 8.7% in the case of male youth, as compared to 5.5% in 2020-21 of all male workers.

Similarly, female youth in the labor force have a very high unemployment rate of 12.6% as compared to 8.9% for all female members of the labor force. Overall, over 2.77 youth workers were unemployed in 2020-21. The number has probably exceeded 3 million in 2022-23. This number is as high as 61% of the total number of unemployed workers in the country. It clearly highlights the failure of the economy in absorbing the youth productively.

The next issue is the role of youth who do not join the labor force. How many of them are pursuing further education and how many are actually ‘idle’?. This information is summarized in Table 1.

The bottom line is that there are now over 17 million youth in Pakistan who are either ‘idle’ or unemployed and almost 7 million of these youth are males. They all represent a veritable lack of utilization of the human capital in the country.

Many of the ‘idle’ workers may have searched for a job earlier but have been discouraged by the lack of success. These are potentially the youth who are likely to be induced into illegal immigration if enough resources are available for such a move.

There is also a need to identify where youth unemployment rates are relatively high. The LFS of 2020-21 reveals that the unemployment rate is 39% higher in urban areas of the country as compared to the rural areas. Also, the provinces of Punjab and Khyber Pakhtunkhwa have substantially higher unemployment rates of male youth.

The presence of 17 million unemployed and ‘idle’ youth in Pakistan is potentially a very serious problem. This is magnified by the fact that the unemployment rate is the highest at over 21% in the case of graduate male and female youth. This represents an almost criminal waste of the scarce human capital in the country.

The time has come for a large allocation of resources for expansion in technical and vocational training programs, setting up of IT institutes in various cities for graduate youth, support to youth both financial in the form of subsidized credit and in project design and implementation.

The scale of these initiatives must be large enough to attract diverse male and female talent. Otherwise, there is the risk that if the frustration and unhappiness of our youth increases, we may see the beginnings of an Arab Spring.

Copyright Business Recorder, 2023