Domestic businesses create jobs, imports don’t. This is the go-to argument of businesses across the board (not just big business advocacy groups like the PBC either) against affordable (or cheap?) imported goods. They feel they are somehow entitled to protection entirely based on the sentiment of ‘Make in Pakistan’, import substitution, and job creation, regardless of their competitiveness. Let’s jump to a quick statistics then. The Labour Force Survey 2017-18 (as per PBS) shows that unemployment is significantly higher for more qualified individuals (20%) compared to those that are unskilled (5%). Unskilled labour and those with lower skills are higher in demand. The question then becomes: are mere job creation enough, and can businesses be handed out incentives just based on the number of jobs they create?
Naturally, if businesses are creating jobs, one must question, what kind of jobs are these? The fact that the existing labour force is less productive, less efficient and less technically skilled is widely supported by data. Data also suggests that even those who have some degrees and qualification are not employable because they don’t have the right skills set. The latter is an argument made often by businesses. But the onus has mostly fallen on the government where poor quality and quantity of primary and higher education, and a lack of focus on vocational programs are cited as reasons why Pakistani labour force is so far behind the curve. But, is the private sector taking enough responsibility?
One could argue that if Pakistani industries were in fact investing in innovation, technology and building their global competitiveness, they would demand more skilled labour; and invest in it, if the market was not already producing the required skills set. At the least, they would be more involved. It would become counterintuitive for these businesses to not be involved, because their productivity and costs would suffer if they weren’t. Skills development organizations like Aman Tech argue that the private sector should direct vocational training programs and help in skills need assessment but while some bigger businesses are waking up to this challenge, it is not an industry wide awareness. Industries are not heavily involved in the exercise as they should be (read more of the BR Research interview with Aman Foundation, March 1, 2019).
So why are businesses not advocating for skilled labour reforms, skills development, better quality education and so on, just like they advocate and lobby for protectionist policies, if the urgent need actually existed?
It has been estimated in a working paper published by the CPEC Center that 58 percent of the labour force employed in the construction phase of the CPEC projects has been foreign labour, 42 percent Pakistani. The differential is likely because of a shortage of medium to high skilled workers in the domestic labour market. Meanwhile, it is also estimated that 1.2 million jobs will be created by FY31 given CPEC and proposed Special Economic Zones (SEZs).
Moreover, the SBP’s special section on human capital a few days ago cites an interesting labour force survey statistic: that the Pakistani labour market is creating jobs requiring low, medium and high skill-sets in the ratio of 18:71:11. This the International Labour Organization (ILO) projects to be 18:60:22 by 2022 implying that higher skilled labour will take up more than 80 percent of the upcoming demand which points toward an increased need for a labour force that is trained for “advanced jobs”. The demand is coming. And suddenly, there is an increased noise on the need for skills development and education, than ever before.
There is a simple point to make. Businesses need to do their part. They need to invest and participate in creating a productive and skilled labour force, dramatically more than they are doing now. They need to create stronger linkages with universities, have in-house skills development programs or be affiliated to organizations that are providing these trainings.
Arguably, job creation is a great selling point. Political campaigns around the world are run on the back of employment promises. But the next time a business makes this argument. Ask them, what type of jobs, and ask about them about productivity levels. And their answer better be compelling enough.
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