Soaring Unemployment, Some measures to tackle the challenge

Soaring Unemployment

On January 13, the United Nations International Labour Organization (ILO) released its 2017 World Employment and Social Outlook report according to which global unemployment is expected to rise by 3.4 million. The increase, while a modest 5.7 to 5.8%, is due to deteriorating labour market conditions in emerging countries, particularly those in Latin America and the Caribbean. In the case of Pakistan, the situation is worse as the rampant joblessness has pushed 60 million Pakistanis below the poverty line. Even youth unemployment in the country is expected to decline only slightly as a result of the implementation of projects under the China-Pakistan Economic Corridor (CPEC), as per a United Nations study.

Unemployment perhaps tops the list of Pakistan’s most complex problems. Regardless of the approach one adopts to analyze the unique set of challenges Pakistan is faced with today, one thing is for sure true: lack of employment is at the heart of all those. Whether it is terrorism, health issues or political turmoil, it’s unemployment at which the buck stops. In spite of the fact that successive governments in Pakistan have made policies to address the issue, the problem has still plagued our society. And, the biggest reason why this issue is still lingering at a time when the country is witnessing a booming economy, and a plethora of government programmes, is the fact that successive governments had followed an approach that is so often marred by various flaws and lacunae. The present state of affairs is that the issue has reached such levels of gravity that even highly educated people are resorting to heinous acts such as extortion and blackmail to make both ends meet.

A careful, in-depth analysis of various researches on the subject reveals that there are some measures, or more rightly alternatives, that worked the world over but, unfortunately, they have gone unattended and unnoticed in Pakistan.

Studies suggest that the notion that the government has to create jobs is absolutely flawed and wrong. It’s not always the government’s job to create employment opportunities for the new graduates. A government is supposed to act as an enabler by creating an environment where private firms and businesses would grow, thus creating more and more jobs.

The incumbent government is also making a grave mistake as it is trying to create jobs without realising that throwing money at problems does not fix them; it just gives the illusion of doing so. Take, for instance, the funds thrown at the various schemes, like Benazir Income Support Programme and Prime Minister’s Youth Business Loans, over the years. In each case, the government starts out by trying to create jobs and ends up creating a huge bureaucracy that eventually ends with the government doling out money for political favours.

Let’s have a fleeting look at the example of the Benazir Income Support Program (BISP). Although the program’s income support component is useful and makes an impact, the loan scheme’s lacklustre performance in creating jobs could not stop the government from continuing it. In such a case, the taxpayers are paying for a job-creation program that has not only failed the purpose of its establishment i.e. to create a sufficient number of new jobs, but has also helped politicians gain favours for the people of their constituencies or those who obey them blindly.

Similar is the case with many other job-creation programmes. The problem is with the basic idea of doling out money out instead of using the same to subsidise new and existing businesses.

The governments must take into consideration the advice given by Maimonides who says: “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”

Secondly, it is commonly believed that traditional education helps more people to get jobs. Candidly, it’s an outdated perception but still most people consider higher education a key to landing a good job. This is a faulty mindset and it is due to this illogical belief that a horde of degree-awarding factories have mushroomed in Pakistan with fresh graduates assaying to make their way into the market, creating a market where the majority of the human resource is interchangeable and virtually identical in most of their capacities.

The one-size-fits-all trend has cloned entire armies of faceless graduates, often not knowing what they want and always unable to differentiate themselves from each other.

In such a situation, and especially when new openings are hard to come by, employers seek to hire the cheapest possible candidate, assuming the majority of graduates to be cut from the same cloth.

To compound this problem, there’s the issue of underemployment i.e. overqualified people working on basic jobs. The next time we have a rant on higher education; specific elements of instruction need to be stressed, simply building more universities and colleges will not equal the creation of more jobs in the long run.

Lastly, the obsession with starting new businesses is all wrong.

While the idea is adventurous and admirable, it is grossly overestimating the entrepreneurial skill set of the local population.

Entrepreneurship is one of the factors of production, and anyone who has studied economics will know that all factors of production are scarce.

The delusion that the economy will jumpstart with the state bankrolling hundreds of thousands of these new business ventures is an amount of crazy which even a 12-year-old will be able to spot.

Think about it, the essential logic here is that if you cannot find a job, maybe you should start your own business. And if you choose to go down that path, the government is ready to pay for the trip.

Here is the problem: According to economists and specifically a Forbes report, eight out of 10 new businesses fail within the first 18 months.

To put things in perspective, if the government plans on handing out 100,000 loans of even 100,000 rupees each, 80,000 of these loans or 8,000,000,000 rupees are doomed to be sunk within 18 months.

Assuming the rest of the 20,000 loans actually develop into businesses hiring an average of five employees at least, the government effectively just spent 10,000,000,000 rupees to create 100,000 jobs, which amounts to 100,000 per job.

Will that create even so much as a dent in a country where the Planning Commission estimated (in 2009) that 3.7 million jobs were needed per year against the availability of about 700,000 to 1 million jobs?

Unemployment is a serious issue that our governments have been merely been toying around with. We must rethink our approach to higher education and realise that it won’t be benefitting everyone. A lot of people are better suited for technical education which helps them get real jobs instead of turning them into easily replaceable cookie-cutter graduates.

In Germany, France, Canada and other developed nations, technical education receives significant attention and investment, which garners sustainable jobs and even leads to new business opportunities for students of technical institutes.

Secondly, apprenticeship programmes and tax credit programmes have done well in EU and the US. The idea is to subsidise employment through the private sector by giving private firms tax credits every time they recruit new graduates or take on apprentices. In each case, the cost of creating new jobs is significantly lower in the private sector on account of incurred public debt being much lesser than in a direct government job creation.

Lastly, but crucially, if we are serious about addressing unemployment, we first need to start accounting for ‘underemployment’ as a real statistic in our calculations.

The long and short of it is that our economy creates significantly lesser jobs than required, and the government by creating jobs directly raises the public debt even higher than its currently ridiculous level (about 62 per cent of the GDP based on 2012 estimates).

We could either go on serving destined-for-doom monetary handouts and creating colonies of faceless university graduates, or we could revamp our approach by focusing on technical education, creating apprenticeship tax-credits and addressing underemployment.

Or, we could just play the blame game while unemployment drives people of Pakistan to crime and corruption.

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