The week in focus

The government indicates it will focus more on agriculture and small and medium enterprises.

The unemployment rate in Pakistan started rising from 2007 because of the economic slowdown, reversing the declining trend over the period between 2003 and 2007, the State Bank of Pakistan (SBP) said in a report released last week.

At the end of 2009, around 2.98 million people, or 5.35 per cent of the labour force, were unemployed compared with 2.73 million in 2007. More worryingly, the devastation caused by widespread floods in the previous quarter (July-September) this year is feared to further worsen joblessness in the country.

From 2007 to 2009, the labour force increased by 3.26 million to 55.67 million. The agriculture sector has the largest share of 45 per cent in the employed workforce while the manufacturing sector employs 13 per cent.

Floods have badly hit livestock – one of the main sources of income for the rural population, and agriculture – the major absorbent of labour force. According to the central bank, around 1.2 million large and small animals perished in the floods while more than 17 million acres of agriculture land was inundated.

“Consequently, a rise in unemployment will have devastating impact on the poverty status of the country,” the central bank said.

According to the International Labour Organisation (ILO), more than 5.3 million jobs have been lost and affected by the floods across Pakistan, prompting the need for productive and labour-intensive job creation programmes to lift millions out of poverty.

Literate vs illiterate

The SBP said that the education-wise break-up does not present a bright picture as the illiterate labour force surpasses the literate labour force. The higher the education level, the lower is the percentage share, meaning that those with a pre-matriculate qualification have a larger share of more than 50 per cent in the labour force,  while those with an intermediate degree have a much lower share of below 12.5 per cent.

However, over the last financial year employment increased among the literate while jobs declined for the illiterate. This came as industries, encouraged by economic recovery, tried to utilise jobs efficiently by hiring more educated and technical employees.

Owing to the higher percentage of the illiterate workforce, there is a dire need to focus on education and technical training, the central bank said.

According to the second Poverty Reduction Strategy Paper (PRSP), the government is focusing on boosting job opportunities through labour-intensive public works and credit-based self-employment.

Remedial measures

In order to tackle unemployment, one of the many options available is to encourage local and foreign investment in a country which has no dearth of opportunities. Investors may be willing to pour in money but they are deterred by the law and order situation and high charges of utilities.

“Investors need a safe environment and uninterrupted supply of power and gas – and that too at a low cost. Besides, streamlining of regulations is a must,” said Khurram Shehzad, Research Head at InvestCap.

He suggested the setting up of economic zones that would provide investment and tax incentives. To come to grips with acute power shortages, he stressed the need for tapping alternative energy sources, which include electricity produced through solar panels, wind mills and biomass.

Citing the example of previous government, Shehzad said it promoted the telecommunications and media sectors which brought many overseas mobile phone operators and led to the introduction of a host of television channels. Consequently, this development created thousands of jobs across the country.

Sounding optimistic, he pointed out that the reconstruction and rehabilitation phase after the floods and the government’s plans to offer cheap loans will give an immediate boost to employment. The government has already indicated that it will focus more on agriculture and small and medium enterprises.

The writer is incharge Business desk for the Express Tribune.

Published in The Express Tribune, November 1^st, 2010.