HUMAN CAPITAL FLIGHT: POSITIVE FOR THE ECONOMY

SAAD ANWAR HASHMI
(feedback@pgeconomist.com)

Jan 16 - 22, 20
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Pakistan has a population of 180 million with a median age of 21.5 years for both male and female. Literacy rate of age group above 15, those who can read and write, is estimated at 49.9 per cent (male 63pct and female 36pct).

Young population forms over half of the population in the country. A challenge is to impart training and education to them in order to make them economically active.

Human capital is comprised of competencies, knowledge and personality attributes. It is particularly important and focused towards improving the skills of workers who are involved in manufacturing, land improvements, construction, trading, farming, and machinery coupled with education and related experience.

Human resource development helps an individual increase his/her competency in performing a particular task. The specialization and technical skill set eventually leads to sharing of knowledge to improve the competency of those who are undertrained.

English is fast becoming a common language in the county with an estimated 18 million Pakistanis having command over the English language, which makes Pakistan the 9th largest English speaking nation in the world.

However, the country has one of the highest illiteracy rates in the world. One of the reasons for low literacy is the lack of focus by government towards providing quality education and vocational training.

The country only spends 2.1 per cent of its GDP on education whereas neighboring countries e.g. India spends 4.1 per cent with a literacy rate of 74 per cent and Sri Lanka spends 5.5 per cent with a literacy rate of 96 per cent.

Economic growth is directly proportional to education spending: the more allocation to education sector, the better growth rate.

The lack of focus on education by successive governments has resulted in widespread unemployment, brain drains, and increase in the level of crime year on year. Since employment opportunities are further squeezed due to economic downturns, younger generation seeks employment opportunities abroad.

The conditions of government schools, colleges, and universities show that neither the budget allocated for education is sufficient nor the allocated fund is utilized properly. Underutilization or misappropriation of funds is attributed to the corruption.

Vocational training institutes are instrumental in providing skills to those who are less fortunate and eager to attend schools. Vocational training is specially important for special people to make them productive resource capable of earning money. Those who receive vocational training are facing difficulties in finding the jobs for which the skill is acquired due to economic recession.

Additionally, blue-collar jobs, specially in rural areas are given through personal contacts, race and ethnic background which further add to the challenge. Special people who acquire skills for a certain job are discriminated due to their disability. Employers do not keep a provision to hire special people and pay lower than market average if they are hired. The equipments used for training at vocational schools are outdated.

Vocational schools do not provide advanced trainings as the instructors themselves lack training.

As a new initiative, the government has announced Waseela-e-Rozgar scheme under the Benazir Income Support program. As per the scheme, one member from each household will be provided with vocational and technical training free of cost and a stipend of Rs6,000 will be given to him/her during the duration of the program.

Forty-nine vocational training institutions mainly located in urban localities such as Karachi, Lahore, Rawalpindi, and Peshawar will provide the training.

With two third of population living in rural areas, the success of this program is doubtful since the institutes are located in urban districts and not rural areas where training is actually required.

Pakistan is estimated to have 3,100 vocational training institutes, which could be instrumental in providing vocational training to the rural community. Required funding seems difficult in the current economic situation.

Human capital flight, large-scale emigration of a large group of individuals with technical skills and knowledge, has been witnessed over the years.

The reasons for capital flight include lack of employment opportunities, political instability, economic depression, and high inflation.

Human capital flight is not something encouraged by any nation since resource, which can be useful for the economy, serve other nations in their developments.

Pakistan, however, receives an average of one billion dollars month in worker remittances. $5.2 billion was received from the expatriates during July up to November 2011.

Migration of workers is also a blessing in disguise. Pakistan ranked among the top 10 developing nations in the world in terms of remittances.

A sizable portion of remittances inflows is received through illegal channel commonly known as Hawala.

The improvement in human capital in Pakistan will start with efficient allocation and use of budgets for education, vocational and technical trainings. As more individuals are trained and pursue a job in line with their training, the success can be measured through reduction in crime rate. Once again, this cannot be seen in isolation since the government needs to provide avenues through development projects to create employment opportunities.

Human capital can be the country's largest exports that in turn can earn it substantial foreign reserves and continue to shot in the arm of its economy by reducing its current account deficit.