If an empty mind is the devils workshop, Pakistan may have millions of demons to battle in the coming years.
Speaking to BR research, a prominent economist and policy maker remarked: "Although Pakistan has witnessed a stable growth in GDP during the early 2000s, most of these gains were made in the banking and telecommunications sectors, where relatively fewer jobs were created compared to the increase in output."
This relatively jobless growth has been followed by an even more dismal expansion in GDP since 2005, further widening the gap between job aspirants and employment opportunities.
A recent study published by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) entitled "Sustaining Dynamism and Inclusive Capacity" highlighted that the countrys labour force has expanded by an average 3.7 percent per year during the 2000-2010 period.
The pace at which Pakistanis are entering the work force outstrips the growth of labour force in India, Bangladesh, Sri Lanka, Vietnam and Malaysia. The report also projected that this pace will slow down only marginally to about 3 percent per annum between 2010 and 2015; remaining faster than that of regional peers.
In fact, the only two countries with a faster rate of growth in labour force, among all countries of the Asia-Pacific region are Afghanistan and Timor-Leste; both of which have much smaller populations contending for the job pool.
At the same time, the country has lagged behind its regional peers in terms of economic growth over the past dozen years, registering an average annual GDP growth of 4.7 percent. Over the same period, Indias economy has galloped forward at an average annual growth of 7.3 percent, while the other four nations have all expanded by more than 5 percent each year, over the same period.
Moreover, the nation has not inculcated a culture of savings as staunchly as have its neighbours. Between 1999 and 2010, Pakistan has had an average gross domestic savings rate of 14.6 percent compared to Indias 29.9 percent and Bangladeshs 19.2 percent.
The dearth of savings and an overall unwillingness to invest in new projects has in turn led to a dearth of investments into the economy, which could have generated more jobs. The countrys average domestic investments rate as a percentage of GDP stood at a dismal 18.4 percent over the period under consideration.
Regional peers have witnessed much higher levels of investments, both in absolute terms and as a percentage of GDP, spurring future growth and hence job creation.
The most disturbing aspect of rampant unemployment is that the youth of the nation have even fewer opportunities for employment. In fact, according to ESCAP, the youth of the region are up to 3.2 times more likely to be unemployed than adults.
"A post (2008) crisis macro economic framework should seek full employment for men and women as a core policy goal, besides economic growth targets, inflation and sustainable public finances," contended the UN-sponsored publication.
It also highlighted that India, Bangladesh and other regional peers have stepped up efforts to beef up social safety mechanisms and skill development initiatives. There are lessons to be learnt from these neighbours and Pakistans policy makers would be ill-advised to continue pursuing pro-trade policies at the expense of industrial expansion.
While the lack of fiscal space severely limits the governments ability to pursue any major social sector development programmes, it remains imperative that it takes immediate steps to facilitate the growth of industry, specifically among the SME sector, so that more jobs can be created for the legions of the unemployed youth in the country.
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REGIONAL COMPARISON OF ECONOMIC INDICATORS (AVG OVER 1999-2010)
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Country GDP Rate Labor Force Gross Saving Gross Budget
% Growth* as % of GDP Investment Deifcit
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Pakistan 4.7 3.7 14.6 18.4 -4.8
India 7.3 2 29.9 31 -4.9
Bangladesh 5.7 2.6 19.2 23.7 -4.6
Sri Lanka 5.2 0.7 16.8 24.9 -8.5
Vietnam 7 2.2 28 35.4 -5.1
Malaysia 5.1 2.4 42.4 21.7 -4.7
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Source: ESCAP Survey 2011 * avg. over the period 2000-2010
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