Demographic dividend or tax

Pakistan is the 6th most populous country in the world. With more than 60 percent of the population below the age of thirty and a median age of about twenty years Pakistan has a large amount of human capital, which if left unutilised; could become a burden. In the midst of worst law and order and economic conditions, few people lend ear to the issue of looming youth unemployment. Will governments short-sightedness and short term approach lead Pakistan nowhere or will it heed to people like Dr Ishrat Hussain (former governor SBP) who has time and again stressed on the need to train, educate and develop a skilled workforce? Dr Ishrat Hussain told BR Research in a recent interview that it is the lack of a skilled workforce that is hurting Pakistan and the root lies in the education system. He also said that "we have a mismatch in the demand and supply, especially in the area of skilled workforce; we have to encourage vocational training and education." In the past three decades East and Southeast Asian countries have benefited from their favourable demographics: "the demographic dividend". Before labelling Pakistans human capital a dividend or tax, Pakistan needs to assess the global and local demand for a skilled workforce. According to the ADB outlook 2011, China, Indonesia, Republic of Korea, Malaysia, Thailand and Vietnam were able to add more than one percentage point to their respective average annual per capita GDP growth in 1981 to 2010, because of their favourable age structures. At the moment Pakistan has an economic support ratio (the ratio of working age population to the total population) of 0.8 which East Asian countries had in the mid-80s. At present, the economic support ratio for East Asian countries stands around 0.9, while that of China is about 1.0,.showing that China and other developed Asian countries have an aging population. This aging population has already started to drag down their growth and is expected to subtract 1 percentage point per year from their average annual growth between 2011 and 2030. These countries have a strong demand for skilled workforce. Leading educations are of the view that Pakistan is not ready for the demographic transition that it will be undergoing during the next 10 years, since government has taken very few constructive steps to boost youth employment. The government by taking this opportunity more seriously and focusing on workforce development can earn demographic dividends not only by utilising workforce locally but also by regional cooperation and mobility of workers from young labour abundant countries to countries with aging population and insufficient work force.