Government is no employment bureau

Fawad Chaudhry, Minister for Science and Technology, in yet another statement made controversial by the Opposition, has argued that the public must not look towards the government for jobs but towards the private sector. Most economic theories support his statement as does Pakistan's experience. Previous administrations, particularly during the tenure of Pakistan People's Party, used state-owned entities (SOEs) as recruitment centres for their loyalists accounting for their massive overstaffing which, in turn, explains their appallingly poor financial health today. Examples abound including the ratio of staff in Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM) and Pakistan Railways (PR) being well above the ratio of staff in such entities in other countries compelling successive Pakistani administrations to extend annual budgetary support to keep them operational. And in one case, notably PSM, millions of rupees continue to be approved by the finance ministry to this day to pay the salaries of its staff even though it has been non-operational for the past four to five years. In total terms, our budget extends more than 1.5 trillion rupees to keep all SOEs operational - a major cause of the high budget deficit and the government's inability to inject the necessary amounts for social and physical infrastructure improvements.

The minister also revealed that the Pakistan Tehreek-e-Insaf (PTI) government is going to disband 400 departments. Again one can support him on economic grounds as subsequent to the passage of the 18th Amendment, the envisaged disbandment of federal entities dealing with subjects that were devolved has not taken place. Today there is a federal ministry of health, education, agriculture - subjects that are no longer within the purview of the centre.

Be that as it may, the National Finance Commission (NFC) award envisaging higher revenue for provinces is being implemented in spite of the fact that provinces have not yet taken on the additional responsibilities of the devolved subjects. Not surprisingly this was dealt with in the ongoing Extended Fund Facility programme of the International Monetary Fund whereby the Pakistani team leaders, Dr Hafeez Sheikh and Dr Reza Baqir, stated that a "rebalance" of intergovernmental relationships in the context of the ongoing NFC award was necessary and itemized the following actions: (i) passing on additional spending responsibilities from the federal to provincial government, which has not yet taken place; (ii) creating a jointly-funded contingency fund for economic shocks and natural disasters (the federal government has set up a fund of 115 billion rupees in the budget but this is not reflected in the provincial budgets); (iii) provinces will take steps to increase own tax collection in sales tax on services (Sindh remains in the forefront), property tax (with many low income home owners suffering an erosion of their earned income) and agriculture income tax (which remains toothless); and (iv) reducing the scope of the divisible pool in the context of the ongoing NFC award (a commitment that should not have been made by our non-elected economic team leaders given the fact that a constitutional amendment would be required to implement it and the PTI does not have the numbers to do so).

True that PTI did claim it would create jobs if elected to power yet the modus operandi was always to jump-start some sectors particularly the housing sector with the capacity to promote 40 plus associated industries. Fawad Chaudhry's statement was bold and relevant especially given the state of the economy today. Those who argue that attacks by members of the opposition are not justified in this instance would however be better advised to consider one major political fact: each party has its own economic roadmap based on numerous policy options - a fact that militates against the likelihood of an agreement on a charter of economy.