Bridging the gap between education, employment, and entrepreneurship

Some institutions are referred to as ‘greats’ in the world of higher education and professional desires. Among these are the Indian Institutes of Technology (IITs), having graduates synonymous with the future innovators and captains of industry.

However, within this rosy picture, a more sobering reality has surfaced: reports have shown that 36% of recent graduates from the prestigious IIT Bombay are either unemployed or underemployed even after two years of graduating, mirroring larger problems related to India’s job market.

As the narrative unfolds within the boundaries of India, it throws a poignant reflection on the neighboring country, Pakistan, where a similar dynamic unfolds against an economic flux and an evolved landscape of employment.

Here, the struggle saga of IIT Bombay becomes not only a national issue but a story whose message resonates across the world; it enlightens shared experiences of people and poses reflection on whether higher education is really reaching its effectiveness to the requirements of the ever-flowing global economy?

Surprisingly, graduate unemployment is nearly three times higher than the unemployment rate in Pakistan (PIDE, 2023), becoming a serious challenge to the education narrative:

There are four major reasons for this trend; first, a high disparity between the education offered and the needs of the economy. Second, weak university-industry linkage translates to the fact that the graduating disciplines are not what is required by the industry or the country.

Third, the growing number of job seekers, coincides with a shrinking economy and macroeconomic imbalances, which have led to business shutdowns which hinder both expansion and new investments. According to the World Bank, Pakistan is at 63rd position out of 163 countries in the University-Industry linkages index.

Pakistan is even lagging behind India (26th rank) and Sri Lanka (53rd). It displays quite an alarming state of our graduate unemployment.

Historically, at Independence, there were only 2 universities in the country with approximately 600 students. In 1998-99, the number increased to 26. 1999-2000 is the time when the universities touched the count of 27. And from 1995 to 1999, in just four years, the Government issued charters to about 20 universities. Out of these 20, 16 were in the private sector, while 4 were public sector universities.

In sum, as of 2000, we had 59 universities. In 2022-2023, the number rose to 247 total HEIs in the country. Punjab leads with 88 HEIs, followed by Sindh with 71. Khyber Pakhtunkhwa has 43 HEIs, while the Federal area contains 25.

Balochistan hosts 11 institutions, Azad Jammu and Kashmir (AJK) has 7, and Gilgit-Baltistan has the fewest with just 2 HEIs (HEC Annual Report, 2022-2023). This distribution reflects the disproportionate allocation of educational resources across the country’s regions.

The rapid proliferation of universities since the Higher Education Commission (HEC) took over from the University Grants Commission (UGC) in 2002 represents an unfortunate shift in the higher education thinking whereby quantity is being preferred over quality.

The number of universities rose from 185 in 2016 to almost 250 last year, reflecting a deliberate policy of higher educational expansion. This surge in the establishment of Degree Awarding Institutions (DAIs) raises questions about the strategic objectives and impacts of such growth.

The question is: are the current educational strategies effectively preparing students for employment, or are they merely contributing to the swelling ranks of educated yet unemployed youth? This predicament necessitates a critical reassessment of education policies in relation to the economic realities and job market needs of Pakistan.

According to PIDE, youth employment requires more than sustained 8% growth for 30 years. The projected rise in Pakistan’s working-age population, defined as individuals aged 15 to 64, demands a significant increase in job creation for economic stability.

Annually, this population is set to grow by 4 million, necessitating at least 8% economic growth per year to match the rising number of potential workers. Higher growth rates are essential to enhance labour force participation, especially among women.

Without this growth, the job deficit will widen, exacerbating unemployment and hindering economic development. Promoting rapid economic expansion and job creation, through entrepreneurship, innovation, and enhanced vocational training, is critical for Pakistan’s future social and economic wellbeing.

Pakistan’s significant untapped resource includes its female workforce, which remains largely underutilized due to low labour force participation—a fatal flaw for the economy and women’s empowerment. Cultural norms, safety concerns, and inadequate transportation are perceived barriers that prevent women from working, despite their eagerness to contribute economically.

This situation is highlighted by the high NEET(Not in Education, Employment, or Training) rates, particularly among women, with Balochistan experiencing the highest at 77.6% and Islamabad the lowest at 44.7%. The gender disparity is stark, with female NEET rates up to 62% nationally, compared to 12.2% for males.

This underscores the critical need for interventions to close the gender gap in education, employment, and training, and fully harness the potential of Pakistan’s youthful demographics, especially for women. To effectively harness this untapped potential, strategic initiatives must be launched to modify cultural norms, enhance public safety, and improve transportation, creating a supportive environment that enables women to enter the workforce safely and conveniently.

Essential solutions include aligning TVET programmes with industry demands and promoting entrepreneurship, which equips students with marketable skills and creates new job opportunities. By adopting modern technologies and fostering innovation, Pakistan can rejuvenate its industries, drive economic growth, and create more opportunities. This integrated approach not only addresses immediate skills gaps but also prepares the workforce for future demands.

Pakistan’s Technical Vocational Education and Training (TVET) system has been a pivotal element in addressing the persistent challenges of youth unemployment and the broader underutilization of the workforce, particularly among women.

The system, comprising various educational pathways from informal industry-based apprenticeships to more structured diploma programmes, has expanded significantly over the years. As of 2018, more than 3,600 vocational and technical institutions were operational, with enrollments surpassing 400,000 students, primarily in urban areas like Punjab and Sindh.

Despite this growth, the TVET sector currently only accommodates about 13% of the nearly three million young people entering the job market annually, highlighting a gap between the availability of vocational training and market demand for skilled labor.

One significant study supporting this argument is by Dearden, Reed, and Van Reenen (2006), which found that in British industries, increasing the share of trained workers by one percentage point was associated with an increase in per worker value addition of about 0.6 percent. This empirical evidence underlines the direct impact of workforce training on labour productivity, which in turn can lead to more export-oriented and competitive firms.

The era of jobs for life has passed; recognizing this sooner rather than later is essential for adapting successfully to the rapidly changing employment landscape. The shift from traditional employment to entrepreneurial ventures is becoming essential as AI reshapes the job market. By emphasizing entrepreneurship, we can counter AI’s disruptive effects, using new technologies to foster both small and large business opportunities and stimulate economic growth.

AI’s role in driving innovation opens avenues for entrepreneurs to leverage cutting-edge technologies, enhancing productivity and creating competitive advantages in various industries. Like past technological shifts, AI may displace workers. However, supporting entrepreneurship is critical to effectively navigating the significant impacts AI is precipitating.

The government can aid this transition by providing youth with vocational training and entrepreneurial skills, enabling them to launch ventures—from AI driven projects in marketing (for example young entrepreneurs can launch AI-driven digital marketing platforms that automate and optimize marketing strategies for SMEs, tapping into advanced analytics to enhance business reach and efficiency), pottery studios to small garment factories, design studios, roadside stalls, etc., or literally anything that can help them become self-employed in this new era. These ventures can in time become the nuclei for modern companies and businesses.

Entrepreneurship, entrepreneurship and entrepreneurship: Deeply embed entrepreneurship education across all levels of TVET and higher education systems to instill a business-oriented mindset among students. Establish specialized entrepreneurship development centers that provide practical training, mentorship, and resources to facilitate business startups, especially in high-growth areas such as digital technology, green energy, e-commerce, and AI-driven sectors. These centers should emphasize the use of AI and digital technologies to innovate and streamline business processes, enhancing the entrepreneurial capacity to adapt to new market demands.

Government support for startups: Implement policies that reduce bureaucratic hurdles and provide fiscal incentives such as tax breaks and grants for young entrepreneurs. Expand access to microfinance and seed funding specifically targeted at youth and women entrepreneurs to encourage diverse business ownership and innovative start-ups in sectors like artisanal crafts, technology, and agriculture.

Skill development for modern industries: Integrate market-driven skills development programmes into the educational curriculum that align with industry needs, especially in digital literacy, coding, and technical skills that are pivotal in the modern economy. Partner with industries to ensure that the training is relevant and includes opportunities for real-world application through internships and on-the-job training.

Encourage local manufacturing and crafts: Support small-scale manufacturing units and local crafts by providing vocational training in relevant skills such as garment manufacturing, pottery, and other traditional crafts that have export potential. Enhance the marketability of these skills through branding initiatives and access to both local and international markets.

Facilitate access to markets: Create platforms such as e-commerce websites and trade fairs that help young entrepreneurs reach wider markets. Provide training on how to effectively use these platforms and access logistic support, enabling entrepreneurs to overcome barriers to market entry and expansion.

Robust mentorship networks: Develop mentorship programmes that connect experienced business leaders with young entrepreneurs to provide guidance, industry insights, and networking opportunities. This will help bridge the gap between theoretical knowledge and practical business operations.

Universal free internet access: Implement a nationwide policy providing free internet access to all citizens to ensure that every individual, especially the youth and entrepreneurs, can tap into global resources, learn new skills, and participate in the digital economy. This policy will help overcome geographical and socioeconomic barriers, create an informed and connected citizenry, and stimulate entrepreneurial initiatives and digital literacy at a broad scale.

Promote AI development to spur innovation: Encourage the development and integration of artificial intelligence technologies across all sectors of the economy.

By supporting AI research and development through funding, incentives, and partnerships between academia and industry, Pakistan can foster significant innovation, opening new avenues for employment and economic diversification.

Copyright Business Recorder, 2024