Employment through digitalization of economy

It is needless to emphasize the significance of employment generation in the existing economic scenario of upward prices, shrinking demand, and public's inability to provide with sustenance to family. Although promises of employment to youth have not been fulfilled yet one should not lose hope as efforts to do so are underway. However, young labor force needs to be vivid about current facts about economy by making rough estimates of job creation. Last year, GDP grew by 3.3 percent amid the downward growth of agriculture (0.85%), industry (1.4%), and services (4.7%) sectors. One can never expect to have better performance of all sectors in the wake of double digit inflation (14.56%) and an upward policy rate of 13.25% in current year. Given the employment elasticity of 0.46 and last year's GDP growth, the employment growth of this year will probably be only 1.52 percent providing new jobs to roughly 1.0 million which is far below the promised and required number of jobs.
Understanding the gravity of the problem, a few days back, Ministry of Planning, Development and Special Initiatives organized a seminar on "Creating gainful employment opportunities" where renowned academia, ILO representative, and government departments participated with their optimal measures and critical analysis. A number of useful ideas were discussed such as, engage double edged-sword of youth by making cities as engine of growth, allow street vendors/hawkers, make effective use of data, evidence-based policy making, encourage capital venture, adoption and adaptation of technology, promote self-employment/start-ups, and regularization of jobs in informal economy, etc. While discussing the current challenges posed by the Pakistan's youth, one of the panelists rightly pointed out that we are still using the obsolete means of work and unable to adapt ourselves with today's technological-oriented work delivery, which is very threatening in 4th (new) industrial revolution - the blend of digital, biological and physical worlds, i.e., advancement in technological use. Consequently, it will keep our productivity at lower levels. She also acclaimed that in our country jobs are not being created through private sector and civil society's initiatives. Private sector of Pakistan cannot absorb 60% of young people under 30 years of age given the current economic scenario, thereby it all rests with the government.
Now it's high time to have a new thinking in growth paradigm which must encompass digitalization of economic sectors to fully utilise their potential as required in today's world. It is quite unfortunate that we have not been able to change the employment structure such as the agricultural sector's contribution in growth has been fluctuating around 18 to 22% for the past 30 years. Likewise, agriculture has employment contribution of 38 to 41% with a very low labour productivity and manufacturing sector's contribution is 18 to 22% over the past three decades. Though, services sector has recently touched the level of 61% but its output is not adequate. Within many sub sectors of Services sectors, the digital economy contributes only 0.5% to the employment generation which is very surprising seems working under its full potential. Instead, now the future of work lies in technology driven employment opportunities. The policy makers need to pay special attention to digitalization of economy while designing the upcoming macroeconomic growth framework.
A number of noted economists advocated structural transformation for sustained economic growth which could easily absorb surplus labour. Unfortunately, Pakistan like many African countries could not expand its production base and diversify away from agricultural dominance. It has been observed in many countries that structural change in overall labour productivity along with technological advancement helps improve the economic growth as South Korea is one of the most recent and celebrated examples in this context. Pakistan on short-term basis with its existing project and plans, can adopt the following measures: (i) Abridging the gap between skilled labour and industrial need. Apparently, there seems to have been no policy in vogue by the government in managing labour demand and supply. A huge lot is being produced with skills training (Kamyab Jawan is the recent
example) but they are left at the mercy of market. The government should also consider facilitating and supporting those relevant industries through incentivizing tax, technology adaptation etc. where this skilled youth could be utilized; (ii) the government needs to improve agricultural productivity through new technology, irrigation development, market channel improvement massively and shifting to higher value added cash crops; and (iii) in order to engage youth - NEET (youth not in education, employment or training) an advocacy campaign under "Skills for All" scheme may be conducted especially in rural high schools and colleges where large drop-outs occur and motivate and support them for self-employment/entrepreneurship. The general public awareness pertaining to skill development is also required among rural parents who either want their children to become doctors or to leave education. There is no harm in acquiring skill education but we unfortunately prefer to remain idle instead of learning skills. Since, the budget exercise and annual plan for FY2020-21 are being prepared, the policy makers must incorporate the digitalization need of economy in every sector as it has huge potential not only to boost GDP but also create employment for youth in the current hard time.
(The writer is Assistant Chief, Planning Commission) [email protected]