Pakistan unable to profit from youth bulge: Study

Published: August 19, 2012

The number of people in the 15-49 years group and the total labour force are projected to nearly double by 2050. DESIGN: MAHA HAIDER

KARACHI: 

The youth is the future, politicians loudly proclaim at every rally. But do they have a plan to manage the ‘future’ – the burgeoning group of young people who will be joining the workforce?

A new paper for Oxford Analytica, authored by political economist Dr S Akbar Zaidi, looks at the demographic transition in Pakistan. The paper notes that this had led to two different views: “one celebrates the emergence of a young and dynamic population as a harbinger of prosperity; the other expects that an inability to house, feed and provide jobs to the youth will pave the way for instability, possibly even anarchy.”

Dr Zaidi says that a young population is considered a harbinger of prosperity because it can be put to better use with its education and skills and contribute to the economy and society.

However, he doesn’t subscribe to the theory that unemployment will lead to social upheaval in Pakistan, or that it leads to ‘Talibanisation’.

“There continues to be an extraordinary ability of the economy to absorb people into the workforce,” he told The Express Tribune, especially because of the informal economy. The paper also notes that while unemployment is officially an estimated 5.6%, the figure is unreliable and the presence of a large informal economy – including in the agricultural and services sectors – conceals actual unemployment figures.

On the other hand, the paper states, “Given that developed-world countries have rapidly declining fertility rates and ageing populations, Pakistan’s growing ‘talent pool’ is expected to play a larger role in satisfying global demand for workers in the 21st century and contribute to the well-being of Pakistan as well as other parts of the world.”

Dr Zaidi cited the example of China, which has a problem now because of the low numbers of young people which is the outcome of the country’s one-child policy. “In this case, India is much better off,” he said.

He does stress the need for enhancing skills. Brain drain exists – as DrZaidi highlighted, it has since the 1970s – and could be further fuelled by the lack of opportunities for highly skilled graduates, political instability and the state of security. The only way it would be reversed is if Pakistan is seen as a “land of opportunity” as China is.

Even though there is rising demand for quality education in Pakistan, related job expectations would be difficult to meet by the economy. The paper notes, however, that the need for more schools is an investor opportunity, and several business groups in Karachi are currently catching on to this by backing business schools.

But do policy makers care? Dr Zaidi, who works for Oxford Analytica, a global analysis and advisory firm, remarked that the government “doesn’t have a plan, because they don’t have a plan for anything” when it comes to managing population and the demographic transition.

According to the paper, the number of people in the young age group (15-49 years) and the total labour force are projected to nearly double by 2050. This requires a growth strategy that focuses on creating employment and have high employment elasticity, but the paper notes that economy and policy-making are currently unable to profit off this ‘dividend’ of demographic transition.

China, which has a problem now because of the low numbers of young people which is the outcome of the country’s one-child policy. “In this case, India is much better off,” he said.

He does stress the need for enhancing skills. Brain drain exists – as DrZaidi highlighted, it has since the 1970s – and could be further fuelled by the lack of opportunities for highly skilled graduates, political instability and the state of security. The only way it would be reversed is if Pakistan is seen as a “land of opportunity” as China is.

Even though there is rising demand for quality education in Pakistan, related job expectations would be difficult to meet by the economy. The paper notes, however, that the need for more schools is an investor opportunity, and several business groups in Karachi are currently catching on to this by backing business schools.

A note of caution

Economics professor at the University of Hawai’i and a senior fellow at the East-West Center Andrew Mason sheds further light on the perception that an increase in the labour force is favourably linked to the economy. He has co-authored an Asian Development Bank 2011 study called ‘Population, Wealth, and Economic Growth in the Asia and Pacific Region’.

“There is mounting evidence that countries have experienced a demographic dividendwhen fertility declines because the share in the working ages increases,” he said. “The basic idea is simple there are many more workers per person and, hence, higher standards of living can be achieved.” But some people are misinterpreting this, saying that rapid growth in the working age population is highly favourable for economic development and leaving off the critical element – the decline in the high burden of the large dependent child population.

The ADB study highlights that the support ratio in Pakistan (effective number of workers per effective consumer) will grow at about 0.6% per year. “This is the amount added to per capita income by changes in population age structure due to the ongoing decline in fertility rates in Pakistan,” he said.

“There are some important secondary effects that could perhaps double this effect. So I would say that fertility decline in Pakistan should have favourable effects on the economy over the coming decades.  More rapid fertility decline would push these benefits higher and help with some of the problems that arise with such a large and growing population – congestion, environmental stress.”

Published in The Express Tribune, August 19th, 2012. 

Reader Comments (9)

  • BlackJack
    Aug 19, 2012 - 1:42PM

    The demographic ‘dividend’ is in reality a double-edged sword; while there is no doubt that having a larger working age population in comparison to seniors is ideal, there are certain prequisites – investment is required in creating opportunities for employment, education and vocational training in areas where population is booming; the alternative is that these youth are more likely to become anti-social elements resulting in law and order concerns (example – contributory factors in the turmoil in Arab states), and thus a drag on GDP growth rather than the other way around. While it has become acceptable rhetoric to ring the demographic dividend bell whenever discussion of China vs India is brought up, the fact is that a large part of this youth bulge in India is in the least productive states. This is why the 11% p.a GDP growth of Bihar is so promising – we urgently need more of the same.

    Recommend

  • afzal
    Aug 19, 2012 - 1:47PM

    pakistan’s fertility rate continues to be high…. we need to implement one child policy.. but if we do that then i guess there wil be at least a dozen of blasts in karachi…lol

    Recommend

  • Aug 19, 2012 - 4:32PM

    An educated, skilled forward thinking youth is the future – NOT madrassa hatched Mullahs that are being produced up and down this country

    Recommend

  • Aug 19, 2012 - 4:38PM

    In entire South Asia Muslim populations have stubbornly high population growth. Even in India, the Muslim ghettos that have formed are overcrowded.

    The astonishing part is even wealthy Muslims seem to have a problem with adhering to the 2 child norm.

    India is growing but I doubt Pakistan will be able to absorb the population that comes out every year into the job market.

    Recommend

  • Eye
    Aug 20, 2012 - 12:16AM

    The youth of Pakistan is so stupid, so easily swayed by crude demagoguery and identity politics that I see no hope for this country. The youth of this country will finish their elders job of ruining this land

    Recommend

  • antanu g
    Aug 20, 2012 - 1:26AM

    @BruteForce:
    you are mimicking the propaganda of RSS which is baseless and only used to spread hatred against muslims.Recommend

  • antanu g
    Aug 20, 2012 - 1:28AM

    @Eye:
    your comment is absurd….you HOPE or not…things are going to change there in next 5 yearsRecommend

  • Gratgy
    Aug 20, 2012 - 5:54AM

    Antanu g

    If the truth seems baseless to you then you have serious issues. And you are as Indian as George bush is a pakistani

    Recommend

  • Sidewinder
    Aug 20, 2012 - 10:09AM

    @antanu g,you HOPE or not…things are going to change there in next 5 years
    things are definitely not going to remain same, the only concern is they are going to change for worst.

    Recommend

More in Sindh