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CPEC, economic uplift and youth

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Ali Raza

OSAMA Bari, 20, was the only one in his extended family to vote for the PTI in the 2018 general election. One of the main reasons for his support for the party was its promise to create millions of new jobs for the youth.

“It’d be foolish to expect a change in three months. But I’m sure my income will increase in a couple of years,” says Mr Bari, who recently started working for an informal parking service provider in Saddar for Rs10, 000 a month.

One of the major manifesto pledges by the PTI was to generate 10 million jobs over the next five years for the youth.

According to the State Bank of Pakistan (SBP), the economy must create around 1.3m jobs every year just to maintain the current employment level. The International Labour Organisation puts the unemployment rate for Pakistani individuals between the ages of 15 and 24 at 10.8 per cent, which is higher than India and Bangladesh.

Important government documents like the federal budget and the economic survey do not shed light on annual employment generation numbers.

Prime Minister Imran Khan promised to unveil the country’s “most ambitious job creation strategy” within the first 100 days in power.

The progress tracker on the prime minister’s website shows the government has successfully developed and unveiled a national job creation strategy.

But no such document is publicly available. A quick internet search threw up no news coverage about its unveiling. The spokesperson for the federal government on economic affairs, Dr Farrukh Saleem, said he was unaware of any national job creation strategy.

But he expressed optimism about achieving the target of creating 10m jobs in the next five years. “We’ll rely on economic growth drivers, such as housing sector development, to create jobs,” he said.

Pakistan is expected to sign up for a bailout package from the International Monetary Fund (IMF) to ease pressure on its balance of payments. Loan conditions by the IMF typically include cutting government expenditure, raising tax collection and eliminating subsidies — measures that are likely to put a dampener on the economic growth rate.

Explaining the relationship between the GDP and employment in one of its recent reports, the SBP noted that every percentage point increase in the growth rate translates into the creation of 0.2m jobs. By this measure, the government should aim for a 10pc GDP growth rate to create 2m jobs every year throughout its term in office to achieve its goal.

The IMF forecasts that the growth rate will be 4pc for the current fiscal year.

The multi-billion-dollar China-Pakistan Economic Corridor (CPEC) is being hailed as a game-changer for the national economy. However, its impact on job creation hasn’t been quite pronounced so far.

According to Dr Shahid Rashid, executive director at the Centre of Excellence for CPEC — a joint initiative of the Ministry of Planning Development and Reform and the Pakistan Institute of Development Economics — about 75,000 jobs were created under the CPEC in the last five years. This means the CPEC has created only about 15,000 new jobs every year on average so far.

“The next phase of the CPEC consists of special economic zones, which will create lots of jobs for our youth,” the government spokesperson on economic affairs said.

Recently employed Mr Bari is lucky in the sense that he’s not among the 3.5m working-age Pakistanis who are currently out of work. But the fact that he’s an unskilled high-school dropout holding a low-paid job in the informal sector with no long-term security or growth prospects makes him a ‘casual’ worker.

A steady rise in the number of such workers leads to the ‘casualisation’ of employment, according to the United Nations Development Programme (UNDP). “Most of the new jobs being created in Pakistan are in low productivity sectors, preventing the youth from improving their quality of life,” it said in its latest National Human Development Report.

In fact, most employment opportunities created over time in the country have contributed little to human development and economic growth given the shockingly high rate (59pc) of ‘vulnerable’ employees in the economy, it claimed.

This is perhaps the reason why four of the five ‘milestones’ listed on the government’s 100-day performance tracker under the rapid job creation tab relate to skill-building strategies by the federal, Punjab and Khyber Pakhtunkhwa governments.

Technical and vocational education and training (TVET) enrolment in Pakistan is only 13.6pc, according to the UNDP, as over 70pc skilled workers are trained in the informal sector through the age-old ustaad-shagird tradition. This means about 350,000 trainees enrolled in 3,580 public and private institutions in 2016.

One of the reasons for the low enrolment in TVET institutions is that they require applicants to have at least eight years of schooling. This marginalises a large segment of the working-age population as about 30pc of the country’s youth is illiterate, it said.

“Most public-sector TVET institutions have become redundant. They’ve been either shut down or in an extremely poor state. Polytechnic institutions that would train thousands of industrial workers back in the day have become dysfunctional,” said Karamat Ali, executive director of the Pakistan Institute of Labour Education and Research, a Karachi-based labour advocacy group.

The share of the manufacturing sector in the employed labour force is 15.3pc while that of agriculture and services sectors is a little more than 42pc each.

“I have yet to see any serious document outlining a concrete plan. A revival of TVET institutions should precede any expectation of massive job creation in the industrial sector,” he added.

 

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