Job growth

The World Bank in its recent report titled "Jobs Diagnostic Pakistan" has used empirical data, in contrast to the overly-optimistic scenario presented by the Prime Minister and all of his cabinet colleagues to conclude that growth in productivity has been negligible, which is a prime indicator of job creation in an economy. While the data used is up to 2017, before the Khan administration assumed the reins of government on 18 August 2018, yet with productivity on a negative trajectory, large-scale manufacturing sector has, except for the month of January, witnessed negative 6 percent growth in recent months (with a major negative fallout on downstream industries operating in the medium and small enterprises sector leading to across the board job losses that some estimate at over 50,000 to date) the fact remains that a 2.4 percent growth rate, projected by the International Monetary Fund (IMF) for the ongoing year it is rather unlikely that there would be any growth in the job market.

The report has made the following three disquieting observations. Firstly, human resources are underutilized, a fact that has been acknowledged by administration after administration and while their plans have been ambitious yet little has been done to improve the ground realities no doubt partly because of serious financial constraints and partly because constituency politics has other priorities. The report further maintains that women labour force's participation rate is very low though truth be told as the bulk of jobs in the agriculture sector is in the informal sector that may partly explain under-reporting of women's contribution to Gross Domestic Product (GDP).

Secondly, as Pakistan is undergoing a demographic shift with the number of working age individuals continuing to grow at a faster rate than the overall population, a fact that was raised by the Prime Minister and formed a major component of his government's 100-day plan, three critical aspects of the job market that would have enabled the government to reap the benefits of a young labour force remain missing as per the report notably quantity (the job market is shrinking given the state of the economy today), quality and last but not least inclusiveness of jobs.

And finally, the report suggests fuelling private sector activity (which has been curtailed since July 2019 due to a discount rate of 13.25 percent), focus on raising tax revenue rather than reforming the inequitable and anomalous tax system, an improvement in business environment (though the government is crowing about Pakistan's improved ranking yet given that it is not being translated into higher output, therefore, the linkage between the ranking and productivity is tenuous at best in Pakistan), reducing tariffs gradually (a policy that would further compromise the revenue target shortfall agreed with the IMF) and of course human capital building.

Prime Minister Imran Khan's vision for generating jobs in the short-term was to be through his housing for the poor policy. Unfortunately, however, details of that scheme remain sketchy at best, and there is an urgent need to identify the cost of the project, the sale price, whether a difference between the two, if any, is to be borne by the government or the purchaser and finally the cost of borrowing for the government and the buyer if any. Be that as it may, there will be an initial, intermediate and perhaps long-term cost to the exchequer and given the state of the economy any further disbursement under social sector protection seems unlikely. Todate, little of the 190 billion rupee budgeted Ehsaas programme allocation has been disbursed. The reason: till end-December 2019 a survey was being carried out by the relevant ministry but it remains to be seen whether the government would be able to meet its pledge that it would release the entire budgeted amount this year.

To conclude, growth must pick up before job creation in the short-term can take place and this is not possible during the stabilisation phase that is focused on reducing aggregate demand primarily through contraction in imports. In the medium-term, there is a need for sectoral governance reforms particularly in the power and tax sectors and; according to John Maynard Keynes, the polemicist, 'in the long run we are all dead'; a fact which may account for successive administrations' failure to focus on social sector development.