Quaid-e-Azams dream of
exploiting the immense natural resources of the country for the best possible benefit of
the people did not come true
By Syed M. Aslam
July 05 - 11,1999
The founder of Pakistan, Muhammad Ali Jinnah, had dreamt of exploiting
the immense natural resources of the country for the best possible benefit of the people.
Accordingly, he eulogized the people to "work, work and work" to make Pakistan a
prosperous state where Muslims of the sub-continent would have better religious, economic
and financial freedom unlike the limitations imposed on them by the Hindus in the
After over fifty years, today, the dream of Quaid-e-Azam still remains
to be materialized as the successive governments failed to exploit the natural and human
resources wisely. Arguably, the economy is in such a worsening state which the country
never experienced before. It is obvious from the fact that the biggest portion of the
budget today goes towards the payments of foreign debts. Little is left for education,
health and development. This has taken a serious toll on the employment opportunities in
the country where finding a job at all levels is becoming harder by each passing day due
to frequent lay-offs in the public sector in particular and private sector in general.
There are many seekers but few jobs. In a society where who you
know has replaced what you know as the major criteria for jobs, chances
of employment are bleak due to massive downsizing in the public sector. Tens of thousands
of graduates leaving the universities every year are finding it harder to find a suitable
Not only it is hard to find a job but the high level of unemployment
has also hurt those already employed in a distinct way. With the abundance of workers the
employers have leverage to hire and fire at will, play loose with the benefits and offer
lower salaries and those who are not satisfied with the working conditions are always
welcome to leave. Of course, there are thousands who are willing to fill the space at
whatever the salary may be.
Unemployment undermines the economic and social stability of any
society. Societies which fail to provide gainful and secure employment to their people
invite political instability, social unrest and economic insecurity. The link between
unemployment and crime has also been well established.
Employment is also directly related to all industrial and trade
activities. These activities slow down when there is a high level of unemployment but
increases when it is low. In an inter-dependent world the unemployment issue has taken a
global perspective. This is evident from the following example: The average annual rate of
growth in global exports was 6.6 per cent during 1965-80. It declined to 4.1 per cent
between 1980-91. While the developed world enjoyed the biggest share of the global
exports, the slow-down not only affected it but also the developing countries, as
declining industrial activities in the former decreased the prices of primary commodities
in the latter. In addition, many of the developed countries became more protectionist
raising new protective barriers against imports, particularly the competitive products,
from the developing countries to further worsen an already bad situation. The situation
has worsened with the eroding of trade borders and supersonic speed of communications and
transfer of money today.
The socio-economic fall out of the high unemployment rate in Pakistan
is evident from the drastic increase in the crime wave. Today robberies, dacoities and
kidnapping for ransom have become a fearsome fixture of life in the country. The resultant
lack of civil peace and the rule of the law undermines the very basis of all industrial,
economic and trade activities in the country. The case for sustainable development for
employment can hardly be argued more forcefully.
Economic policy plays a vital role to help keep the unemployment rate
under check. According to a UN report, the East Asian economies in the 1980s avoided
stagnation and unemployment did so because they got their domestic policies right by
prudent borrowing, creative use of foreign exchange rates, promotion of exports,
protection of food growers and restraint of nominal wages. All these measures have
combined to keep the growth of employment in step with overall economic growth. Can we
learn a thing or two from this?
The theme of The First United Nations Decade for the Eradication of
Poverty (1997-2006) was "Eradicating poverty is an ethical, social, political and
economic imperative of humankind." UN Secretary General Kofi Annan delivering his
message on the International Day for the Eradication of Poverty observed on October 17,
1997 that "some individuals today are enjoying wealth on a scale previously
unimagined. Yet victims of poverty still endure intolerable forms of deprivation. They
continue to be marginalized and excluded."
He also said that though overall, the relative incidence of poverty
declined, yet the number of worlds poor has risen considerably as almost one quarter
of worlds population still lives in a state of poverty. For instance, he added, the
number of people with incomes less than $ 1 a day increased by almost 100 million between
1987 and 1993 and 1.3 million people, one-third of world population, live with an earning
of less than $ 1 a day.
One of the primary aims of any government should be the elimination of
unemployment. Although achieving zero level unemployment is not only highly
impossible but also undesirable at various levels to check the inflationary trend.
It is imperative that all governmental policies need to be directed towards achieving this
goal. Identifying the problem is the first step towards successfully solving it. However,
a look at officially compiled statistics shows that unemployment level in Pakistan is much
higher than that portrayed by the government.
This is primarily due to the criteria used for the measurements of
labour force, employment and unemployment. Population census and periodic Labour Force
Surveys are the major sources of data on labour supply, employment and unemployment in
Pakistan. In addition, agricultural census also provides information on employment in the
agriculture sector, the biggest employer of labour force, over 44 per cent or 15.98
million people in 1999.
Many changes have been made to define the meaning of labour force and
employment in Pakistan The Population Census of 1951 defined the labour force as all
persons of 12 years and above were self-supporting, partially self-supporting or seeking
work. In 1961, its definition was changed to include all those of ten years and above who
were working for profit or wages or helping their family members. Not only the change
lowered the age but it also included the unpaid family members in the employed.
Today, Labour Surveys define employment as "all persons of ten
years of age and above who worked at least one hour during the reference period [the year]
and were either paid employees or self employed." Based on this
definition, the total number of employed labour force in 1999 is estimated at 36.2
The basis for the measurement of Labour Force and Employment; all
persons of ten years of age and above in the first case and a minimum work of just one
hour during the year in the second, tempts to under-estimate the level of unemployment in
For instance, based on a population of 134.5 million today and a
participation rate of 28.7 per cent, the total labour force in Pakistan comes to 38.6
million of which 36.2 million were employed. This also shows that only 2.4 million persons
were unemployed in the country which reflected an affordable unemployment rate of 6.1 per
cent. In fact, unemployment is a much more serious problem than the official statistics
This also poses another relevant and worrying question. If the
unemployment rate of 6.1 per cent is correct, the employment rate is an ideal 93.9 per
cent. Those who know Pakistan, and there are many, find this highly unpalatable.
Unemployment in Pakistan today is prevalent at all levels. It does not
spare the highly qualified professionals any more be they doctors, engineers and MBAs. It
hurts the illiterates, non-skilled, skilled, educated and professionals alike. However, it
hurts the first two disadvantaged classes more than the others.
While the weekend editions of major national dailies appear to be full
of help-wanted advertisements they only tend to give a wrong picture of the
unemployment situation. Firstly, the majority of jobs advertised are aimed at the highly
qualified professionals whose share in the total employment is just 3.6 per cent. There
are little or no vacancies advertised for the two biggest occupational groups
skilled agricultural and fishery workers whose share is 36.8 per cent and the elementary
or unskilled workers whose share is 22.9 per cent. (See Table 1)
In a country like Pakistan, where less than 1.4 per cent of the
children, enrolled in primary school, manage to reach universities and professional
colleges, the increased demand for professionals in the job market could hardly make any
difference for the majority which drops out at all levels of the academic progress. (See
The over emphasis on the maximization of the GDP has also led to uneven
distribution of income in Pakistan. The data on income distribution, based on Household
Income and Expenditure Surveys conducted by the Federal Bureau of Statistics during 1963
to 1994, shows at least four distinct phases of inequality at the ratios of the highest 20
per cent and the lowest 20 per cent income groups.
The first phase between 1963-71 shows that inequality in income
distribution narrowed the ratio of highest to lowest 20 per cent income group decreased
from 7.1 per cent in 1963-64 to 4.9 per cent in 1970-71. The second phase, from 1971-79
widened the income inequality from 5.4 per cent to 6.1 per cent. Once again, the ratio
declined in the third phase, 1984-87 from 6.2 per cent to 5.5 per cent. In the fourth
phase, 1987-93, the inequality in income distribution worsened as the ratio sharply rose
by 2.3 per cent to 7.8 per cent.
The inequality between the household income shares of the lowest 20 per
cent and highest twenty per cent is obvious from the data collected by the Federal Bureau
of Statistics from 1979 to 1993. In 1979, the lowest 20 per cent enjoyed a share of 8.3
per cent of the total income while that of the highest 20 per cent was 41.3 per cent. By
1992-93 the share of the highest 20 per cent increased by 7.6 per cent to 48.9 per cent
while that of the lowest 20 per cent decreased by 2.2 per cent to 6.1 per cent. The middle
60 per cent share also declined from 47.6 per cent to 45.6 per cent during the same
But the statistics also tend to give the false impression about the
share of family income due to very basic flaw in the criteria for measurement of the
labour force which includes all those over ten years seeking work during the year.
The sharp decline in the household income shares of the lowest and the
middle income groups can be attributed to unemployment and under-employment.
Downsizing in Public Sector Enterprises
Today global free trade pacts such as Uruguay Round of the GATT and
regional trade alliances such as NAFTA and EU, tie the national economies closer like
never before. The communications revolution moves goods, services and capital around the
world at a speed never before witnessed in the history of mankind. This economic
integration makes it impossible for any country to grow and create employment in this
inter-dependent global economy.
These developments impose new constraints on national economies,
particularly those in the developing countries like Pakistan, as they limit taxation,
interest rates, exchange rates and public sector deficits. Many governments have to
suddenly retrench their work force under pressure from the international lenders. This
also happened in Pakistan where people in the nationalized financial institutions and
public sector companies were entrenched en masse.
True that a swollen and under-employed public service imposed an
inflationary burden on exchequers to keep the salaries very low in Pakistan, like all
developing countries. The massive retrenchment displaced thousands from their jobs, the
majority of which were not well equipped to make the career change. Not only there were no
new jobs but even those that exist were seen by the retrenched as low paid, less secure
and lower quality than they had left.
The abolishment of octroi, the tax on the inter-regional movement of
goods within the country, in the Budget 1999-2000, will result in loss of livelihood to
some 100,000 workers in Pakistan. From July all octroi posts in the country have stopped
functioning. The privatization of many public sector enterprises such as Karachi Electric
Supply Corporation (KESC) would result in further retrenchment of thousands of workers.
The unemployment is feared to soar.
While the very purpose of economic policy is to deliver social
progress, this particular objective is denied when there is high and persistent
unemployment. With the massive retrenchments at all levels and sectors of the civil
services will result in rising unemployment in Pakistan. The pressure exerted by
international lending agencies to cut the public expenditure will further result in
deterioration of job opportunities in the country.
Demand and Supply
In a perfect economic scenario it would be lovely if the supply of
labour matches the demand for jobs. Unfortunately, this could only be an utopian
situation. Pakistans current employment situation is a nightmare and is feared
likely to grow into a problem of more immense proportions unless concrete measures are
With the increasing number of educated people entering the work force
every year and the ongoing retrenchment which will continue in future the supply is feared
to surpass the demand. Can the government be blamed?
The UNDP report does not exonerate the government from its
responsibilities noting that at times of high unemployment when supply supersedes demand
in the job market the fault lies with the government. Such a situation means that the
governments macro-economic policies fail to ensure the efficient use of resources,
particularly of labour.
While most new jobs are created through self-employment and the
informal sector. This is true for Pakistan where the government has initiated loans of Rs
10,000 to Rs 500,000 for individuals for small businesses and loans of Rs 500,000 to Rs 5
million for small industries. Till March 27 this year, Rs 5.5 billion loans were
sanctioned and Rs 3.9 million was disbursed through the participating nationalized banks
under the self-employment scheme.
The government has also established Small and Medium Enterprises
Development Authority (SMEDA) to create jobs and facilitate business expansion. The
Authority serves as the key institution in designing training programmes for entrepreneurs
and organizing workshops and seminars on various topics.
The Prime Minister has announced a public transport scheme under which
vehicles would be provided to unemployed persons on easy installments. A repeat of the
Yellow Cab Scheme, introduced by the Nawaz Sharif government in its first tenure in the
early nineties. The current scheme envisages to provide some 5,000 taxis, 2,000 pickups,
1,000 trucks and buses, 5,000 auto rickshaws and 25,000 two-wheelers. The scheme is
expected to provide not only self-employment opportunities to thousands of people but many
more indirect jobs in the auto repair and maintenance markets.
But besides creating new job opportunities it is also imperative to
rights of the persons who are already employed. Job creation depends on a rapid economic
growth which in turn is dependent on good macro-economic management, bureaucratic
flexibility and institutional corruption. Good governance and the rule of law are also the
two basic domestic basis for the economic growth.
In an inter-dependent world the importance of domestic policies make
all the difference to keep the unemployment level in check. A stable and non-inflationary
currency plus a high rate of savings and investment are some of the conditions necessary
for the sustainable growth needed to create jobs. But this is not all, an effective law
and order and an efficient civil administration are also the necessary prerequisites for
the economic growth and progress.
Education and Training
The most important contribution that the national governments can make
to economic growth and an efficient labour market is education and training. According to
the UNDP report there is overwhelming evidence that the best investment countries can
make, is the basic education.
The fact that the retrenchment displaced thousands, the majority of
whom were not equipped to take up the new activities, and with fewer new job opportunities
many of which are less well paid, less secure and of lower quality also pose many
challenges for the government in Pakistan. However, while many public sector enterprises
were forced to cut their work force the government can still ease the situation by
focusing its attention on the transfer of employment from declining to growing sectors.
It is important that the opportunities to increase employment in
declining sectors should not be forgotten. For instance, Pakistan has the biggest canal
network in the world. While the agriculture sector still remains the biggest employer in
the country the project to clean the canals to facilitate smooth flow of water to the end
users is a must to increase productivity in agriculture as over 60 per cent of exports
pertain to a single commodity cotton. Investment in irrigation can create new jobs
in the labour intensive sector of the country.
Tens of thousands of employees in the private sector have lost their
jobs during the last couple of years including over 20,000 in nationalized banks and
state-run non-banking financial institutions; Pakistan International Airlines, Steel
Mills, Karachi Port Trust, Karachi Water and Sewerage Board, Railways, and many government
ministries and departments.
Did the golden handshake scheme, encouraging the public servants to
take early retirement for a financial package, work? For few in the executive positions
whose financial benefits were bigger, choose to invest their moneys in one of many fixed
deposit schemes to earn a fixed interest. For most in the lower income groups, the small
sums received have long been spent to meet the needs of a particular occasion. Many, both
in the high and low grades, are seen hectically searching for a suitable job. Needless to
say, those in the lower strata in the semi-skilled and non-skilled grades are the worst
sufferers in a job-deficient economy.
All this demands an immediate and affective action by the government.
As global trade in services have grown much faster it is imperative
that government should devise policies which encourage and promote relative education in
the particular field.
Persistence of unemployment amid poverty is not unusual but it takes a
high toll on the economic growth and progress of the country. The relevant question
is Whether governments still have the capacity to influence employment? John
Langmore, director of the Division for Social Policy and Development of the Department for
Policy Coordination and Sustainable Development at the UN Headquarters, replied in
affirmative during a press conference in February 1997. He said, "Even though
national autonomy is reduced by globalization, there is still a high level of scope for
independent action by governments. If governments acted in cooperation, the scope of that
action would increase."
He said that one of the problems that had led to the growth of
unemployment in the last few years had been corporate downsizing, mainly in large
companies. There had, however, also been a fashion for downsizing which had led to more
retrenchment that might have been judged to be desirable. The experts now argue that
increasing the turnover and profits required not downsizing, but strengthening the
innovative capacity and dynamism of enterprise, he added.
A paper, The Employment Challenge, prepared for the UNDPs
roundtable conference in 1994, said that "With the conclusion of the Uruguay Round of
bargaining in the GATT, the conditions have been established for worldwide freer trade in
goods and services. International cooperation is more than ever necessary if full
advantage is to be taken of this opportunity to put more people to work."
It is imperative that the government should come up with policies which
address the issue of unemployment in the country based on the global realities as only a
faster growth in an interdependent world economy can help put the jobless to work. While
many measures have been taken by the government to provide jobs to the people thousands
still face retrenchment not only in public sector but also in the corporate sector.
It is imperative to provide basic education to the young and retraining
to the adults to increase and upgrade employment. They should also be supported by
increased and better technical assistance, particularly the transfer of education
Employed Work Force by Major Occupational Groups (1999)
Legislators, senior officials and managers
Technicians and Associate Professionals
Service Workers and Shop and Market Sales Workers
Skilled Agricultural and Fishery Workers
Craft and Related Trade Workers
Plant and Machine Operators and Assemblers
Source: Economic Survey 1998-99
Enrolment In Educational Institutions
|(Arts and Science)Colleges
Source: Economic Survey 1998-99