Category: Blog

In Pakistan, some 15,000 youngsters turn 18 each day and will be eligible to vote in this year’s election. What lies ahead for  South Asia’s second youngest country and its booming youth population? In this blog, Hina Shaikh gives a detailed overview, the challenges and opportunities. 

A much-delayed decline in fertility levels has resulted in Pakistan becoming the second youngest country in South Asia, with nearly two-thirds of its 207.8 million population under the age of 30.

This youth bulge presents an unprecedented, but time-bound, window of opportunity to Pakistan in the shape of a ‘demographic dividend’, which may not arise again for several generations. UNICEF estimates the youth population (aged 15-24) now forms close to 36 per cent of Pakistan’s labour force, projected to rise to 50 per cent by 2050. Fertility rates are still high at 3.55 and working-age population is expected to continue growing even beyond 2050.

Unlike South East Asia, where the youth’s economic potential was identified in hindsight, with appropriate and urgent policy responses Pakistan may be in a better position to leverage the youth dividend.

As many educated Pakistani youngsters go without a decent job, it is not hard to imagine an uprising akin to the Arab Spring in Pakistan. Dealing with a rising youth population is not without monumental challenges even as it presents unique opportunities.

World Bank estimates that in the last decade, youth unemployment in Pakistan has exceeded the overall rate of unemployment. Labour Force survey 2014-15 shows around 4 million people aged 15-24 are unemployed. This number is expected to rise by 2020 to 8.6 million. World Bank further predicts the annual entry of at least 1.7 million people into the job market up to 2040, assuming an annual population growth rate of 2.07 per cent. This figure is likely to go up as the census reveals a higher growth rate of 2.4 per cent.

A consistent GDP growth rate of over 7 per cent is required to absorb the young workforce. The government has set a growth rate target of 6 per cent for 2017-18. Not only does Pakistan need faster economic growth, it also needs a kind of growth that scales-up employment opportunities. Every job in manufacturing for example creates 2.2 jobs in other sectors. Yet, value added manufacturing’s share in GDP has fallen from 14.5 per cent in 2012 to 12.8 per cent in 2015.

With almost 30 million of the 50 million people aged 18 to 29, residing in Lahore and Karachi alone, the demographic challenge is even more serious in the cities. While human capital development and placement in productive employment is skewed in favour of cities, a large number live in squatter settlements, energy use is expected to quadruple and clean drinking water is becoming scarce. Hence, economic growth has to translate into planned urbanisation to address growing pressure on Pakistan’s limited urban resources.

Quality of jobs

The employment challenge is not limited to generating more jobs but also extends to ensuring ‘gainful/productive’ employment. Job creation in Pakistan has had disappointing labour market outcomes. At least 25 per cent of the youth is engaged in unstable, low-paid employment without any benefits and 35 per cent (majority women) in unpaid family work. The continued shortage of skilled workers, despite a rising workforce,  is pushing more people into unemployment or informal work. Less than a third of the labour is employed in the formal sector.

Creation of poor quality jobs is closely associated with low labour productivity. Growth in labour productivity fell from 4.2 per cent during the 1980s to an average of 1 per cent since 2007. Low productivity is a manifestation of the poor quality of workforce, sluggish growth in investment as a share of GDP and a slow shift towards high-value added sectors (like manufacturing) from low-value added (such as in agriculture

Education and skills

Young entrepreneurs are essential to the creation of good quality jobs. This cannot be achieved when only 12 per cent of Pakistan’s youth graduate beyond grade 12. Pakistan has one of the lowest spending on education, hovering around 2 per cent of the GDP, in South Asia. It is also among the world’s top ten countries with the highest number of out of school children – estimated at 22.6 million — while around two fifths of its working age population remains uneducated. To achieve 100 per cent primary enrolment by 2030, Pakistan will have to increase its enrolment rate by four times.

Skill acquisition to offset educational deficits and ensure productive employment remains inadequate especially in poorer districts and for youngsters without formal schooling. Only 1.3 per cent of those entering the job market each year have vocational training.

Opportunities

Some economic benefit of the demographic transition has already begun accruing to Pakistan’s economy as the youth drives consumption in communication, electronics and retail, leading to a noticeable market expansion. Planet Retail, forecasts an annual 8 per cent growth in Pakistan’s retail market currently estimated at $152 billion.

Increase in remittances via export of skilled, as opposed to semi-skilled or unskilled labor is another key opportunity. The remittances sent by overseas Pakistanis witnessed an aggregate annual growth of 8.2 per cent between 2013 and 2017. By allowing rich countries to outsource specialised services, Pakistan can potentially earn foreign exchange worth $20 billion in the IT sector alone.

Youth vote as a driver of reform

At the time of the 2013 general election, a fifth of Pakistan’s 85 million registered voters were under 25 while 15 per cent between 26 and 30. Since then some 15,000 people are turning 18 each day, adding 10 million people to the voters list until the 2018 general elections. Young people value service delivery that responds to its needs: better health, better education, more jobs, clean drinking water to name a few. The incumbent and future government’s desire to capture the youth vote may drive the desire to tap into the youth’s aspirations and push for required reform.

Looking for solutions

Realisation of the demographic dividend is intrinsically connected to a) enhancing the economy’s capacity to absorb the young workers into productive employment, b) profound investments in education and skills training and c) empowering them to engage meaningfully across the social and political landscape. Policy actions for achieving these objectives must be underpinned by three fundamental principles.

The solutions have to be inclusive. It will be harder to leverage the demographic dividend without adequately focusing on the female youth. At 22 per cent, Pakistan has one of the lowest rates of female labour force participation in the world. Ongoing research on urban mobility to encourage women’s economic participation can help design suitable policies.

Governments have to encourage engagement with the private sector. Punjab has taken the lead by setting up the Punjab Skills Development Fund (PSDF), providing skills training in collaboration with private companies.

An integrated framework/policy is required to address youth development as a cross-sectoral issue. Pakistan currently lacks a national youth policy or a federal entity, post-devolution, to spearhead efforts for the youth. Policy interventions such as the internship programme, handing out of free laptops , and several other schemes under the Prime Minister’s youth programme, will generate only short-term solutions unless they are embedded in an overall reform to push for sound delivery of basic services, including interventions in education, skills, health, and labour.

Hina Shaikh is a Pakistan country economist at the International Growth Centre.

This article first appeared on the South Asia @ LSE blog and can be viewed here.

 

The idea that ICT facilitated and evidence-informed policymaking strengthens governance and improves service delivery is gaining momentum in the development discourse. In a first of its kind seminar held in Peshawar, solutions to removing governance and service delivery bottlenecks were presented and debated. Sessions on state capability, urban planning and growth opportunities of CPEC brought together researchers, policymakers, donors, civil society representatives. The seminar, a collaboration between KP Planning and Development Department and CDPR and supported by the IGC, showcased KP-based research funded by the IGC. KP relevant policy research completed elsewhere in Pakistan was also presented.

ICT based solutions to improving service delivery  

Zia Mehmood, a researcher with the World Bank, presented his team’s work on the use of ICT in the livestock sector. Artificial Insemination (AI) technicians, employees of Punjab’s Livestock Department, were asked to upload their visits to farmers for impregnating their livestock to a central dashboard. The details of the visits were recorded via a smartphone based application installed on their phones. This intervention improved the success rates of insemination by an average of 27 percent. The rankings of the AIs were also visible to farmers that chose to opt more for government than private service providers.

The use of ICT to improve governance and service delivery is demonstrated in health and school education as well. A recent study, ‘Monitoring the Monitors’ discussed at Peshawar seminar by Zia Mehmood, reveals how IT-based interventions improve attendance of health officials in Punjab. Sahar Asad, LUMS, presented the findings of ongoing research on KP school education that she is doing along with a team of international researchers. The  study uses ICT tools to strengthen school inspections and linking teacher promotions and postings to learning outcomes of students. Senior Officers of KP education department emphasized their keen interest in scaling up the ICT techniques of the study in all districts.

Oriana Bandiera, Professor of Economics at LSE, shed light, via a recorded presentation, on the benefits of improving procurement processes in government departments. An intervention she had helped design  showed how appropriate incentives (in the form of a reward or autonomy) to procurement officers in Punjab resulted in 17 percent less expenditure on the same goods. However, the penalty for using their own discretion, even for procuring low prices, resulted in demotivation and inefficiency. The online procurement system developed by the team is now being used across Punjab’s departments in all districts.

While showing enthusiasm for using ICT-based solutions to improving governance, KP’s Finance Secretary, Shakeel Qadir, argued that existing organisational structures need to be well-understood before introducing such interventions. Faisal Bari, Director IDEAS, added that without reforms of archaic bureaucratic structures, human agency or discretion is rendered ineffective for successful service delivery and use of ICT.

Promoting Inclusive Growth

Women’s mobility and subsequently their representation in the labour force is restricted in cities due to patriarchal norms that discourage men and women to travel in close proximity and harassment on public transport systems. Uzair Junaid, a researcher based at Center of Economic Research Pakistan (CERP), presented his team’s research on understanding the impact of improving women’s access to public transport on their economic participation. Findings of the study confirm women’s desire to work even though few are able to do so.

Enhanced safety measures for women including the induction of trained women police at bus stops and provision of women-only conveyance can be some simple solutions. KP’s Transport Secretary, Kamran Rehman Khan mentioned the province was soon starting a women-only public bus service. Dr. Anjum Altaf, Former Dean at LUMS, added that while it is imperative to design mass transit projects like the Bus Rapid Transit and expressways based on evidence, informed interventions alone will not be adequate to counteract women’s safety issues unless culture and societal impediments are also addressed.

 Managing urban growth

Census 2017 confirms KP’s cities have grown faster than the rest of Pakistan’s. Cities grow through agglomeration as discussed in KP’s growth strategy. Extending this discussion, CDPR fellow Suleman Ghani, argued that KP’s urban planning should also address the proposed integration of FATA with the province. For successful economic integration, KP regulations must be uniformly implemented in FATA as well.

Businesses grow faster via agglomeration of complementary services in close proximity. An on-going study in Peshawar is piloting an inner city census by gathering data on economic activity. A better understanding of the forms, patterns and geographic linkages of inner-city businesses with the rest of the city and region can help identify obstacles faced by businesses. This emphasizes the need to base decisions about major infrastructure projects on business needs instead of just political concerns.

KP Additional Chief Secretary Shahzad Bangash, stressed that cities can become drivers of growth if they offer a clean environment, ease of doing business and a sound legal framework to attract investors.

Leveraging growth opportunities of CPEC

KP can benefit from CPEC as it offers North-South connectivity for regional trade, a role KP had played very well in the past. The province can benefit from business-to-business opportunities with Chinese businessmen if a framework for facilitating business is devised. Hasaan Khawar, a CDPR fellow, explained growth opportunities on offer by CPEC in agri-trade sector and its potential impact on alleviating rural poverty.

Former Governor SBP, Dr. Ishrat Hussain, pointed out several interventions that would enhance the benefits of CPEC for KP. These include infrastructure development – a roadwork linking to Karakorum Highway, energy projects – particularly hydro projects – and industrial zones along the western route – as joint ventures.

Information gaps and weak coordination across economic institutions and provincial departments also limits exploitation of CPEC-related economic growth opportunities. A focus on institutional building as part of KP’s evolving growth strategy, discussed by Syed Zafar Ali Shah, KP’s Secretary of Higher Education, is an attempt to address these concerns.

KP’s Information Secretary Qaiser Alam added that CPEC has necessitated a revision in the role of the provinces Information Department. The department will now not only focus on dissemination but also soliciting feedback from citizens.

Future Engagements with researchers

KP Additional Chief Secretary Shahzad Bangash emphasized the importance of future collaboration with researchers and partners to help devise a new development strategy (in light of the CPEC opportunity) for the province by the end of 2018 especially in areas of urban planning, employment generation and tourism. Other areas of IGC and CDPR support include strengthening the Information Department in formulating a new communication strategy, and developing a plan for the potential integration of FATA with KP.

Sharmin Arif is the Communications Assistant at the Consortium for Development Policy Research.