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Boosting remittances through manpower export

The government has failed to adopt what is normally termed ‘any marketing strategy’ to boost manpower exports with a view to enhance declining home remittances. On the other hand, India is on a rampant path to take over Pakistani manpower market in the Middle East for which Indian Prime Minister Narendra Modi visited United Arab Emirates (UAE), Saudi Arabia and Qatar last year and successfully achieved new workforce supply orders, no doubt, at the cost of Pakistan. India is said to have made inroads in Gulf Cooperation Countries (GCC) which had traditionally been Pakistani manpower market. Unfortunately, no attempt was made by the current government to raise the issue of Pakistani manpower with GCC and other Middle Eastern countries.

Kuwait has imported only 1,000 Pakistani workers in the last 17 years while Qatar accommodated 10,000 Pakistani laborers which speaks volumes about the declining manpower export. Last year Saudi Arabia, UAE and Qatar received 450,000, 275,000, and 10,000 Pakistani workers, respectively, which is considered too low and needs to be increased. The persistent lags in human development, compared most of all with India and Bangladesh, are one of weakest aspects of Pakistan’s economic history. More importantly, without a much faster rate of development in educational, skill and literacy levels, future growth will be severely constrained. Skilled and highly educated manpower is the best potential resource for rapid economic growth in the future.

In 2015, the net enrolment at the primary level was 73 percent of the age group concerned, as against 99 percent for India and 96 percent for Bangladesh. The adult literacy ratio in India and Bangladesh in 2015 was 72.2 percent and 61.5 percent respectively as against 56.4 percent in Pakistan. The neglect of basic education will continue to have consequences for Pakistan’s growth and political stability for the next several decades. Even though the literacy rate has nearly trebled in the last 55 years from some 20 to 57 percent, the number of illiterate persons (10 years or older) also trebled to about 50 million over the same period. The mass of illiterate people threatens to become a major long-term drag on national productivity.

The public allocations for education at 2 percent of GDP are woefully inadequate and need to be increased. However, the management of public education is an even bigger problem as the decline in the quality of public education is increasingly forcing parents to opt for the private sector. The problem of poor governance in the education and health sectors cannot be resolved without major devolution of authority to the local governments.

By spending less on education, we are losing on two counts. On one hand, our semi-skilled labor force could not fetch the much-needed foreign exchange for the country, while on the other hand, those wishing to pursue their dreams over here are constrained by illiteracy. It is important that the Federal Government increases education budget to 4 percent of GDP. Only then provinces will be able to increase their allocations, as promise of increasing education budget to 4 percent of GDP was made by the government.

 

One of the key strengths of Pakistan is the demographic bulge especially growing proportion of young adults unlike some of the developed countries which are having increasing proportion of aged citizens. Pakistan has capacity to send across large number of young unskilled and semi-skilled people. Having over 30 million plus population in the age group of 25-35, Pakistan can put this valuable asset for the good of the country by imparting training in different technical fields to respond market needs abroad. Certainly, there is no second opinion about restricting the flow of manpower to different countries as it brings both social and economic benefits to our country such as it reduces poverty and unemployment, it helps increase foreign remittances, which could be diverted to viable development projects. The returning workforce brings back the experience and knowledge that facilitate in technology transfer, skills development and knowledge exchange.

There is no doubt a large labor force is available; but there is a dire need for the training and development of this manpower export. 85 percent of our outgoing workers are illiterate both in terms of education and in terms of financial literacy. If we can tap them and train them properly before sending them abroad, then not only can we prevent them from using informal channels for sending their remittances but also give them basic financial literacy and can improve financial inclusion in the country. Financial literacy is the need of the hour. In view of declining remittances and expulsion of expats from Gulf countries, it is pertinent to promote entrepreneurship through SMEs for which the corporate sector and academia must play their role by setting up startup funds for SME financing.

Pakistan has important strategic endowments and development potential. The increasing proportion of Pakistan’s youth provides the country with a potential demographic dividend and a challenge to provide adequate services and employment. In the near future, the government must carefully manage external debt, the balance of payments and their financing requirements, while instituting macroeconomic and structural reforms to support economic stability and expansion as well as to make Pakistan more competitive and fiscally sustainable. This has become increasingly important given the increasing government and CPEC-related repayment obligations.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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