Covid-19 and the job market
The writer is Assistant Professor of Economics at IBA, Karachi. She has a PhD from the University of Southampton, UK.
The world’s economy has been thrown upside down with the arrival and impact of Covid-19. America’s economy shrank by over 9% in its second quarter of the current fiscal year, the highest contraction ever in its history.
Pakistan’s economy is no different. The SBP has estimated it will shrink by 0.4% in 2020 while multilateral organisations have indicated that the shrinking may be of a greater magnitude. Time will tell how much exactly the economy will shrink by in 2020-21, but one thing is for certain: hundreds of thousands, if not millions, of Pakistanis have lost their jobs and the end to this is still not in sight.
This brings us to the first pressing and immediate challenge that will soon be felt in the country. Scores of university students graduated in the midst of the Covid-19 pandemic. In many instances, because exams couldn’t be held, students in their final year were declared passed and graduated on the basis of their performance and results to date.
The question is: what will these tens of thousands of university graduates do in terms of finding employment, given that jobs even for those with experience are hard to come by these days? What are they going to do if they don’t find gainful employment? Will they end up not being a burden on their families and indirectly on the economy instead if they stay unemployed? Does the government have any policy to deal with this very real and pressing challenge? Has the government even anticipated this issue and planned accordingly?
Of course, when an economy goes into recession, as Pakistan’s has, jobs will be hard to come by, and indeed unemployment levels will rise. But it is nonetheless the responsibility of the government to ensure that such an impact is minimised and that it enacts a policy that facilitates in the help for jobs, as well as creating an environment where new jobs can be created.
Three points need to be made here for the government to consider.
The first relates to identifying sector(s) where either jobs haven’t been hit hard or where there is potential for absorbing fresh graduates, despite the Covid-19 impact. The sector that immediately comes to mind is digital and online services as many existing businesses seem to be switching to greater use of these services not only in delivering their products to customers but also as a means of operating — i.e. greater use of work-from-home policies, and so on. This trend is here to stay and is expected to rise given that over half of Pakistan’s GDP comes from the services sector, which is flexible enough to be able to pivot to greater use of digital and online services in its operation and services/products delivery. Keeping that in mind, the government needs to enact policies that facilitate the hiring of fresh graduates by these sectors. This could include a mix of incentives for universities that teach digital and ecommerce degrees to businesses that hire such graduates.
The second point related to the need by the government to determine how small, medium, and large scale businesses, that are very much a part of the informal economy, can be brought under the tax net to generate the ever so important revenues.
The third point relates to the importance of entrepreneurship education. Clearly, with the changing post-Covid economy, there will be a greater emphasis on people undertaking their own business ventures and on out-of-the-box thinking for ways to earn livelihood. This by its very nature will reward those with greater and sharper entrepreneurial skills. In short, those with such skills will have a natural advantage in Pakistan’s post-Covid economy.
Universities and even schools should incorporate entrepreneurship and entrepreneurial education into their curriculums so that our children, and future business leaders and entrepreneurs of tomorrow are educated and made aware of this increasingly important facet of the economy, and something that they stand to personally benefit from by gaining a greater understanding of.
The government must be lauded for its foresightedness of identifying and adding entrepreneurship education as one of the points in its national unified curriculum for schools and colleges. However, this is just a start, and will lay the basis for a foundation on which to build on.
Published in The Express Tribune, August 16th, 2020.
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