By Faisal Bari
A small village only about 1.5 kilometres outside of Sheikupura is connected to the city by a good road, and the 1.5 kilometre distance is not a significant barrier to movement. Or so one would think. When I talked to the young women of the village it was amazing how much of an effect this 1.5 kilometre had had on their lives. Most of the girls had to leave their education post-matric as there was no college in the village and only a few of them could afford a secure, mechanised means of transport to be able to go to college in Sheikupura. None of the girls in the village could enter the workforce for the same reason.
Talking to a bunch of young boys and men there, I found that most of these young men dropped out of schools and colleges before doing their bachelors, though most of them had complete d their matric. Most were unemployed and were waiting for an employment opportunity to come their way. Their choice for employment was a government job `good salary, job security and almost no work` is how one young man described a government job. Most of them knew they had no hope of securing a government job of any sort. They felt they did not have the connections or the money to be able to pay the bribes needed to get such a job.
The area around Sheikhupura is known for the quality of its guavas and there are quite a few guava orchards there. All of these young men seemed to have a lot of knowledge about guavas, their varieties and qualities, and about managing guava orchards. A number of them were involved in the business as well, but none of them saw that as a career choice, and none of them wanted to develop any expertise in the area. They preferred waiting for a government job rather than to develop self-employment options. They also mentioned that eventually if a government job did not work out, they would try going to the Middle East for a few years to earn a better living. They did not see a future for themselves in Pakistan unless they could get a government job.
This is not an atypical situation. Labour force data does show some intriguing trends that confirm and complicate the story.
We are not creating enough jobs in our economy to absorb all the youth that are entering working age. Our manufacturing sector has collapsed and is not creating enough new jobs. Most of the jobs that are being created are in the service sector. A bulk of these jobs are low-skill, low-salary ones, and they are not the ones that can offer lucrative and satisfying career prospects for our youth. We also have evidence, from labour force surveys, that there is increasing casualisation in the job market: casual labour is usually daily-wage, low-skill and with no career development opportunities. A lot of the service sector jobs that we are creatingare ofthe casualnature.
Our data also shows that young men, who have a bachelors or higher degree, tend to enter the job market late. The peak is around 29 years of age. Most people graduate around 24-25 years of age even when they do a masters degree. What then is the reason of 4-5 years` gap between graduation and entry into the job market? The data does not allow us to look into this in more detail but we do have a few hypotheses. Graduates, after finishing their bachelors or masters, have high expectations of good jobs. When their expectations are not met, they choose to sit out and/or wait for the right job to come along. This is in line with the already given factoid that there is increasing casualisation of labour and most new jobs are in the service sector.
Eventually life catches up with these graduates and they have to take up whatever jobs are available. Joint family systems might also lend some support to young people and facilitate their unemployment for longer. It could also be that employers do not find young graduates to have the skills they should have and prefer to hire graduates who are a little older, and/or have had some formal/informal work experience. Whatever the explanation, the late job market entry of young educated people causes a significant loss to the economy/society of the country.
Few women enter the workforce in Pakistan. The percentage of women in our workforce is much lower than even our neigh-bours like Bangladesh and India. Most women work in Pakistan but most of them work at home, in agriculture and/or in areas where their contribution is not documented. We are making a distinction between work and being in the workforce. The low participation is regarding workforce participation. But it is not clear what the reasons for the low participation are. People talk of culture/traditions and/or social practices being a barrier to women`s entry into the workforce, but it is also the case that issues like non-availability of affordable and safe transport, lack of implementation of labour laws and other such issues also discourage women from entering the workforce.
The education gap between boys and girls still continues. At secondary level, especially in urban areas, the gap between boys and girls has all but disappeared. Number of girls in secondary schools has increased and at the same time a lot more boys drop out of education post-primary, making secondary school numbers look more even. But when it comes to entering the job market, very few women enter it compared to boys. And the trends have not changed a lot over the last few decades. For a developing country, allowing almost half of their population to not be economically active has a significant cost.In 2001, the renowned economist William Easterly wrote a paper titled `The Political Economy of Growth Without Development: A Case Study of Pakistan`. In the paper, Easterly argued that Pakistan presented a case in which a country had been able to maintain a high to decent growth rate for sustained periods but had failed to improve its social indicators correspondingly. `Pakistan has had respectable per capita growth over 1950-99, …and has a well-educated and high-achieving elite and diaspora. Yet Pakistan systematically underperforms on most social and political indicators…for its level of income. It systematically underperforms on improvements in these (social and political) indicators for its rate of GDP per capita growth over time.` Easterly called this pattern `growth without development`.
For the 1960s our GDP growth was 5.2 percent per annum, it was about 5.1 percent per annum over the 1970s despite the shocks that we had to bear in the early years of the decade, GDP growth rate increased to 6.4 percent per annum over the 1980s and even over the 1990s and 2000s GDP growth rate, per annum was 4.5 percent and about 4.7 percent per annum respectively. There has been a decline since the 1980s and in 2010 our growth rate was only 0.36 percent. In 2014, our GDP growth rate was 3.7 percent according to government claims.
Throughout the same period our expenditure on education has never touched even three percent of GDP in any given year when the minimum recommended internationally, is four percent of GDP. And we have, only recently, started spending about one percent of GDP on health. In 2014, we ranked 146th out of 187 countries on the Human Development Index (HDI).
HDI is a weighted average of variables that track health, wealth and education outcomes. We ranked 127th out of 162 countries in 2001. We are now 146th in the league of nations.
The argument that Easterly made in 2001, holds today as well.
We continue to perform very poorly on social and political indicators even in years when we have had decent growth.
There is an additional twist to the story. It seems that we have also been slowing down and thus it has been harder for us to have high growth and even harder for us to sustain high levels of growth. Easterly had, in 2001, pointed out the possibility that despite high growth if we were not investing in our social and political areas, one day the low human capital mightcatch up with us and constrain our growth going forward. It seems that that time has come.
Sixty-eight years after gaining independence, almost half of our population is still illiterate. An estimated 20-25 million children between the ages of 5-16 years are out of school. Out of 100 children who enrol in schools, only 6-7 percent or less make it to college-level education. For those who are lucky enough to survive within the education system, the quality of education we provide to almost all of our children is generally quite poor. Annual Status of Education (ASER) data, collected every year for the last few years, has consistently shown that most of our children have very low levels of numeracy and literacy skills: the gap between where a student`s learning should be going by her grade to where she actually is, is quite large. Children going to elite private or public schools have better learning outcomes but they only constitute 3-4 percent of all school-going children in the country. Similar problems continue to plague the entire education system. Quality problems at university level have been very ably documented and commented on by scholars like Dr Hoodbhoy and Dr Daudpota.
On the health side, with only about one percent of GDP going to health from the public sector, how can we provide even a basic healthcare system to all the citizens of the country? The state`s inability to eradicate polio, which almost all countries across the world have been able to do, is not only a comment on the abilities of the state, it is a very telling comment on the viability and functioning of our health system.
Are our low levels of human capital constraining our ability to grow, amongst other things? It would seem to be the case.
Low human capital does not allow high-tech manufacturing as well as advanced level research and/or development.
Employers cannot find potential employees that have the requisite educational quality or slcills (skills mismatch) while job seel
Our economy is not producing the number of jobs that we need to absorb the number of young people who are entering the job market. As we go through the youth bulge, the problem is going to get exacerbated. Most of the young people entering the job market have few or no skills and a relatively poor quality of education. Though they might have highexpectations, they cannot take up technical or high-skill jobs. On the job side, the bulk of the jobs that are being created in our economy are low-skill, service-sector jobs. These do not, usually, offer lucrative or attractive returns and/or career paths. Labour force data does show an increasing casualisation of the labour market reflecting the increasing number of service sector jobs and even in the service sector, increasing number of low-skill, daily-wage based jobs.
Over the same period, our economy has seen significant structural change as well. Manufacturing, especially largescale manufacturing has, at best, been stagnant or declining.
Service sector has been expanding rapidly. Employment growth has mostly happened in the service sector, but manufacturing is the sector that offers the best prospect for highskill, long-term and secure employment opportunities. The collapse of manufacturing has not only restricted growth directly, it has contributed significantly to the move towards casualisation of labour as well.
Entrepreneurship and self-employment are not considered as an active option by most youth entering working-age population. Given economic inequalities, lack of access to finance is also a significant barrier against self-employment. The average enterprise size in Pakistan is close to one. This means that the average firm employs one person (the entrepreneur). The overwhelming bulk of our organisations are microenterprises (not even small or medium enterprises). With increasing focus on service industry and poor quality of human resource coming through, it is not easy to see how the average enterprise size could be increased even if we tried addressing access to finance issues for micro and small enterprises.
Many experts and especially policymakers have been talking of a `demographic dividend` for Pakistan. We are a very young nation and our youth bulge is going to peak by 2035-2040. After which our population will slowly start aging. We do have a lot of young people growing up and entering the workforce. Given that a large proportion of them can barely read and write and the bulk of those who are considered to be educated have had a poor quality education, we should worry about the demographic `dividend` turning out to be a nightmare.
Traditionally, Pakistan has relied on investments in physical assets to get to a higher GDP growth rate and to try and remain there. This was the argument made by growth theorists in the 1960s (see writings of Dr Mahbub ul Haq on the issue) and it is still the same lens that the government is viewing the world through today. New growth theories and the experience of many countries has changed the debate completely in the literature. Amartya Sen has argued that the growth miracle of China is partially at least attributable to the significant investments that China made in human capital in the 1960-80s era. He argues that the same is true of India`s excellent performance over the last three decades. Human resource investments explain a significant portion of the East Asian miracle story too. But in Pakistan, we continue to under invest in human capital and see investments in physical capital and infrastructure as the means of development and sustainable growth.
The most recent and continuing episode is the enthusiasm about the economic corridor and the growth expectations associated with it. But, if the human development story detailed above has any explanatory power, it is likely that even if investments in physical infrastructure and assets provide us a healthy GDP growth rate, the poor human capital of the country will not allow us to take full advantage from the opportunity and it will also not allow us to sustain the high growth rate that we might be able to reach for any appreciable length of time. It will be dÃ©jÃ vu all over again. What is needed is a much stronger focus on investments in quality education, skills and other human development areas. But, for the moment, this does not seem to be where the growth debate of the country is.
From the Independence Day Supplement, Dawn, Pakistan, Friday 14th August, 2015.