Unemployment issue: employment

generation and skill-development

By Muhammad Javaid

On the unemployment issue, government policies have to be made keeping in mind the yearly addition, the new entrants to the work force as well as to absorb the current number of unemployed.

It is not merely an economic but also a social and political issue. Socially, unemployment causes frustration and unrest, resulting in increase of criminal activities, therefore maintaining or attaining a high employment level is considered to be one of the foremost objectives by government in every country. In Pakistan, the growth of capital lacks far behind that of labour.

Profile of the workforce: With a population of 160.9 million in mid 2008, we are 6th most populous country in the world. Labour force participation rate is 31.82 per cent according to last labour force survey 2006-07. Although accurate measures of employment and unemployment are difficult to assess from labour force surveys, the current labour force consists of approximately 51.20 million men and women. Also, it is estimated that the work force is currently growing at the rate of 3.1 per cent annually.

Out of the figures quoted above, about 43.6 per cent are engaged in agriculture as their primary occupation, 14.4 per cent in wholesale and retail trade, restaurants and hotels, 13.5 per cent are engaged in manufacturing, 14.4 per cent in service sector. In other words, these four sectors employ over 86 per cent of the work force, and the balance is employed in the other sectors.

Depending on the survey measure applied, unemployment is estimated at 5.32 per cent of the total labour force, youth unemployment is 13 per cent in the age group 15-19. Employees and self employed respectively account for 37.26 per cent and 34.95 per cent of the total employed workforce, followed by 26.91 per cent unpaid family helpers and 0.88 per cent employers. 69:31 is the ratio of employment generation between rural and urban respectively

Several significant conclusions can be drawn from the above profile:  Economic growth and unemployment: Average economic growth of Pakistan has been around 5 per cent. With this figure it can be estimated that it is generating around one million additional employment opportunities every year by routine processes. High rates of urban unemployment can lead to rising discontent and violence. Urban economy is generating insufficient employment opportunities to absorb most new entrants and migrants from rural areas causing high rates of urban unemployment. Therefore it is becoming necessary to do something in the rural areas for employment generation to stop migration an over crowding of urban areas.

Agriculture sector: While the percentage of the workforce employed in agriculture is declining, total employment in this sector also continues to decline, though at significantly slower rates. A reduction in the proportion of the population employed in the primary sector is a natural and inevitable trend that is spurred by rising expectations and changing attitudes as much as by rising levels of farm productivity and mechanisation. However, this does not mean that the potential for employment in this sector is being fully exploited. In the short term, strategic initiatives to modernise and diversify agriculture sector can generate employment opportunities for very large numbers of people.

Service sector: The traditional path of economic development was a progression from agriculture to manufacturing to services. Recent development in IT and IT-enabled services is only one indication that this formula need not necessarily apply in the context of today's global economy where the demand for services internationally can rapidly expand employment opportunities domestically. Research is required to more carefully document growth of the service sector, particularly its informal portion, to assess the potential demand and most effective strategies for accelerating growth of employment. These trends suggest that rural sector has the opportunity to leapfrog over the traditional path to development, moving directly from agriculture into services.

Employment generation: The international commission on peace and food, in its report entitled uncommon opportunities: agenda for peace and equitable development examined the process of employment generation in society and concluded that full employment was a realistic and achievable goal for all countries in the foreseeable future. Economically, employment generation is determined by how fully and productively society utilises the material, technological, organisational and human resources at its disposal.

The fact remains that the more productive the society is, the greater the quality and efficiency with which it produces goods and services, the greater the demand for those goods and services in the marketplace, the more employment opportunities and purchasing power is created.

Through the enhancement of skills, knowledge and attitudes, the productivity of the human resource is growing by leaps and bounds. At the same time 47 per cent of the population is still illiterate. There is enormous scope for enhancing the knowledge and skills of Pakistan's workforce.

The Medium Term Development Framework (MTDF) for the period 2005-10 envisages generating seven million additional employment opportunities within 5 years. In view of employment absorption capacity, four sectors have been identified where employment opportunities would be created namely Agriculture, Housing and Construction, Small and Medium enterprises (SMEs) and Information Technology and Telecom sector.

The strategy may be adopted to directly utilise agriculture as an engine to raise on-farm incomes and purchasing power, generate additional on-farm employment opportunities, and stimulate rural industrialisation and services. These would in turn increase demand for agricultural products, manufactured goods and services throughout the economy, creating a multiplier effect that generates jobs in other sectors. The specific focus on the strategy may be on raising on-farm productivity and fostering closer linkages with industry and markets through innovative approaches to the organisation of the rural economy.

Vocational training: The speed of a nation's development is directly related to the quantity and quality of vocational skills possessed by its workforce. The wider range and higher the quality of vocational skills means that the faster the growth and more prosperous the society.

Annually 3.1 per cent Labour Force enters in the labour market in search of employment. There is a strong need to improve labour productivity through education and training policies, both for the new entrants and the current labour force. Currently only 46 per cent of the country's labour force has one year education or less.

The availability of employable skills is one of the major determinants of how readily new job seekers find employment. The very low level of employable skills makes the search for work much more difficult. It reduces the market value of the job seeker and adds to the costs of employers that must train new recruits from scratch.

There is a great unmet need for shorter vocational training programmes that job seekers can take on their own time and at their own pace and at relatively low cost. In addition there is also need for a wide range of vocational courses for those who are already employed but seek to broaden or upgrade their skills to keep pace with changing needs and to further their career opportunities.

The lack of vocational training applies at all levels, from basic mechanical skills needed for operating and repairing equipment to jobs in sales, administration and management, including specialised occupations such as bookkeepers, insurance agents, pharmaceutical marketing, travel agents, food service managers, journalism, etc.

Accelerate employment generation

There are three broad approaches that can be adopted to stimulate greater employment generation:

(i) Expand existing activities by Introducing measures to stimulate more rapid proliferation of existing activities which are already growing rapidly.

(ii) Adopt activities prevalent in other countries which have not yet introduced in Pakistan

(iii) Promote culturally compatible activities based on local environment (e.g. mini-power plants, rural information centres, contract farming agencies, marriage halls etc.)

Several different modes of action can be adopted to stimulate these activities:

(a) Increase access to credit, (b) provide incentives for new initiatives, (c) strengthen or enforce legislation, (d) impart training, (e) use insurance as a stimulus, and (f) publicise opportunities in the media

Recommendations: The following recommendations will help to generate additional employment and self-employment opportunities to absorb the existing as well as new entrants.

The major recommendations are as follows:

(i) The economy is already generating approximately one million employment and self-employment opportunities per annum; most of them in the informal sector, but there is a serious lack of accurate information on the types and numbers of these jobs

(ii) There is enormous scope for raising the productivity of Pakistan agriculture, doubling crop yields and farm incomes, and generating significant growth in demand for farm labour.

(iii) Rising rural incomes consequent to higher productivity will unleash a multiplier effect, increasing demand for farm and non-farm products and services, thereby stimulating rapid growth of employment opportunities in other sectors.

(iv) Agriculture sector is constrained by weak linkages between agricultural training and extension, crop production, credit, processing, marketing, and insurance. These can be improved for bringing together all these elements in a synergistic manner by establishing of village-based farm schools to demonstrate and impart advanced technology to farmers on their own lands.

(v) In order to ensure ready markets for the crops that are produced, focus should be on the potential for linking crop production with huge untapped markets and specific agro-industries, including energy plantations to fuel biomass power plants, bio-diesel from ethanol from sugarcane and sugar-beet, edible oil from paradise tree, horticulture crops and cotton.

(vi) It is recommended to create a national network of 'job shops' linked to the rural information centres and offering televised multimedia training programmes and computerised vocational training programmes.

(vii) It is recommended to restructuring of Economic and Research Section of Planning and Development Division to provide accurate information on the growing demand for different occupational categories, the natural rate of employment generation by category and skill level, and other issues required to promote full employment in the country.

Labour force suffers from a severe shortage of employable skills at all levels and that intensive development of vocational skills will act as a powerful stimulus for employment and self-employment generation.