Opinion: Absorption of youth

The Prime Minister recently launched the Youth Laptop Scheme 2025. Laptops were awarded to high achieving students at the launching ceremony.

While addressing the ceremony, he stated that his government would not hesitate to spend even five hundred billion rupees to equip the youth with modern gadgets and skills. Since 2011, 50 billion rupees has been spent to equip young Pakistanis with gadgets.

However, the magnitude of the youth absorption problem is substantially more than can be catered for by distribution of 100,000 computers to youth.

Pakistan has historically experienced a bulge of youth population. This has been the consequence of higher birth rates earlier. Fortunately, according to the Population and Housing Census of 2023, the bulge has peaked. The share of youth population has been recorded at 18.5 percent of the total population. This implies that the number of youth population, aged 15 to 24 years, was 44.5 million in 2023, and increasing annually by 1 million.

The fundamental question is the number of youth who are idle, that is, who are neither searching for a job nor are undergoing higher education, and the number of youth who are in the labour force but are currently unemployed.

The Population and Housing Census has given the magnitude of the number of ‘idle’ workers who are neither in the labour force or undergoing higher education. There is need to augment this number with youth who are active in the labour force but are currently unemployed. Priority will need to be given to absorption of these youth by provision of reemployment opportunities.

The number of ‘idle youth’ who are neither in the labour force nor studying is 18.2 million, according to the Census in 2023. This includes 5.5 million males and 12.7 million females. Accordingly, 23.9 percent of the male youth population is ‘idle’ and the corresponding magnitude for the female youth population is 58.4 percent.

There is need also to focus on the otherwise active youth population, which is currently ‘idle’ because of unemployment. The labour force participation rate of male youth is 70.2 percent, while that of female youth is 23.3 percent.

The respective unemployment rates were 10.1 percent and 14.4 percent, respectively, according to the Labour Force Survey of 2020-21. Given the pronounced slowdown of the economy in the last four years, the unemployment rates of youth are likely now to be substantially higher. Accordingly, the number of unemployed youth currently is estimated at almost 2.7 million. Therefore, the total number of youth who are effectively idle is approaching the 21 million mark.

This is a very large magnitude. It also reflects the lack of capacity for higher enrollment at the college and university level in Pakistan. The gross enrollment rates are very low and reflect the lack of capacity of higher education institutions in the country.

These institutions, which are government owned and managed, are running into severe constraints of finances. Enhancement of fees is preventing youth from low- and middle-income families from seeking admission. Less than 25 percent of the education budget especially of provincial governments is going to higher education. This is the right order of priority, given the relatively low levels of enrollment in Pakistan even at the primary and secondary school levels.

Further, there has also been a discouraged worker effect. With the GDP growth rate falling to only 3 percent on average since 2018-19, unemployment has been rising rapidly. Potential new entrants into the labour force have withdrawn from seeking jobs in the presence of the high unemployment.

The presence of 21 million youth in the country implies a number of serious problems. We have already seen demonstrations by youth can lead to a breakdown of the political system in a number of countries. The more prevalent problems include the higher incidence of crime, participation in acts of terrorism and illegal high-risk migration. Therefore, absorption of youth in productive and remunerative activities is very much in the national interest and must be given the highest priority, if a systemic breakdown is to be avoided. Therefore, the Prime Minister has rightly emphasized on the allocation of substantial resources for employment or higher education of youth.

Various programmes have been launched in different countries for achieving this objective of productive absorption of youth. The majority, over 63 percent, of idle youth in Pakistan are in rural areas. Forced migration to cities could aggravate the living standards and incidence of crime.

Some countries have, therefore, opted to target additional employment directly in rural areas by operating a rural employment scheme. This scheme provides a minimum number of days of wage employment. At least one-third of the beneficiaries usually are women.

The objective is to facilitate labour inputs for the creation of durable community assets, such as water conservation structures, afforestation, land development and rural connectivity roads. The vast delivery mechanism of funds developed by the BISP (Benazir Income Support Programme) for this purpose may be used for this purpose. However, this programme will be handled better by the District Councils and Union Councils once they are in place in rural areas.

The other approach is the expansion of small loans number by commercial banks and micro-finance institutions and the revival of the Kamyab Jawan Youth Entrepreneurship Scheme launched by the then prime minister in 2019. As of December 2022, the latter scheme had disbursed 29,990 loans only. The focus here will be more on urban youth

Currently, the commercial banks have a very small percentage of small loans of up to Rs 200,000 of only 0.6 percent out of the total advances. Microfinance institutions have expanded in recent years and are currently disbursing small loans of up to Rs 360 billion.

Fiscal incentives may be provided for disbursement of small loans, equivalent to a tax credit of up to 15 percent of the amount disbursed during a particular financial year. Further, tax provisions exist against the loss due to loan default.

Overall, the Prime Minister has identified the right challenge of absorption of youth with skills, modern technology and jobs. Top priority must be given to the productive placement of the 21 million ‘idle’ youth in Pakistan today.

Copyright Business Recorder, 2025