The global economic turmoil has caused unemployment around the world and in Pakistan 3.4 million of the workforce is unemployed.
A mismatch in job and skills as well as the temporary nature of many jobs is problematic. Certain segments of the labour market do not offer secure employment, underlining the need for Pakistan to explore more markets to export its manpower as well as provide incentives for remittances to enhance its growth.
Globally, after the outbreak of the financial crisis, the outlook for job creation has been worsening. The baseline projection of the International Labour Organisation shows no change in the global unemployment rate between now and 2016, standing at 6% of the labour force.
Despite a moderate pick-up in output growth expected in 2013-14, the unemployment rate is set to increase and the number of jobless worldwide is projected to rise to more than 202 million in 2013, by another three million in 2014 and a total of 206 million by 2016.
According to data compiled by the Pakistan Bureau of Statistics (PBS), the unemployment rate in Pakistan dropped to 5.7% in the fourth quarter of financial year 2012-13 from 6.5% in the fourth quarter of 2011-12.
Pakistan’s unemployment rate averaged 5.41% from 1985 to 2013, reaching an all-time high of 7.8% in June 2002 and a record low of 3.1% in December 1987.
Pakistan has the ninth largest labour force in the world. According to the labour force survey, the total labour force is 57.24 million. Of this, 3.4 million are unemployed.
In the presence of high circular debt, rising inflation, unemployment and other macroeconomic imbalances, one factor that helped countries reduce poverty and improve income distribution is overseas employment.
In order to achieve this goal, Pakistan can follow Bangladesh’s model of manpower export. Recently, Bangladesh Minister of Welfare and Overseas Employment Khandker Mosharraf Hossain visited Malaysia, Indonesia and Singapore with a view to expanding the foreign job market.
On the external front, the Bangladesh economy is virtually reliant on manpower and readymade garment exports, which have emerged as key pillars for building the country’s foreign exchange reserves. Remittances from overseas Bangladeshis contribute 11% to the gross domestic product.
A comparison shows that manpower export from Bangladesh is higher than Pakistan. According to the Bangladesh Welfare and Overseas Employment Ministry, about 480,000 to 540,000 workers leave the country annually while from Pakistan only 150,000 workers go abroad in a year.
It is important for Pakistan to focus on sending more skilled workers abroad to raise earnings per worker. Otherwise, it will be tough to step up the pace of economic growth as well as remittances.
At present, 48% of overseas Pakistanis are working in the Middle East, 28% in Europe and 19% in the United States.
Saudi Arabia has become the largest market for Pakistani workers. Other Gulf states such as the UAE, Oman and Bahrain are also attractive markets for manpower export. In 2012, the number of workers that went to Saudi Arabia were 358,560 and to the UAE 182,630.
Worker remittances from overseas have been a major source of foreign exchange over the last few years. The remittances provide significant support to the balance of payments and also help stimulate the economy and alleviate poverty.
According to data, remittances stood at $11.57 billion in July-April 2012-13 against $10.877 billion in the same period last year, an increase of 6.37%.
Pakistan is the sixth most populous country with an estimated population of 180 million and annual growth of 2%. It is expected that Pakistan will become the fourth largest nation in terms of population by 2050.
The existing structure shows that the country has a 60% economically active population or workforce. This workforce can be a productive asset if properly trained through skill development programmes.
It is time to attach high priority to skill development to increase per capita income of migrant workers. In this regard, the government should initiate programmes for skill development and also explore overseas employment opportunities, which will not only reduce joblessness but will also enhance remittances.
The Ministry of Labour, Manpower and Overseas Pakistanis should send government representatives to countries such as China, Kuwait, Malaysia, Qatar, South Korea, Japan and the UAE to open up and withdraw restrictions on Pakistani workers.
While formulating a new manpower export policy, the government should take into account that because of a fall in oil revenues and rising unemployment, the Gulf countries, including Saudi Arabia, will be revising their manpower import policies, which may lead to the return of hundreds of thousands of expatriate workers.
The writer is a researcher at the Sustainable Development Policy Institute
Published in The Express Tribune, September 23rd, 2013.
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