. .



An analysis of national productivity

By Dr. K. A. Saeed*
Dec 18 - 24, 2000

While emphasizing the importance of national productivity, the Government is urged to declare this area as priority number one.

The paper is divided into three parts, namely national productivity movement, sectoral analysis and other aspects.

It has taken 52 years for Pakistan to announce the establishment of National Productivity Organization — starting a third round of Rip Van Winkle's sleep. The paper reviews pre-requisites to national productivity movement, presents an analysis of three sectors of Pakistan's economy, namely agriculture, industry and infrastructure. It reviews APO's guidelines in the above three sectors.

It ends up with a plea for a positive response by Government to develop an action plan to translate the objectives of NPO announced in April, 1999.

The importance of national productivity is stressing an obvious. This requires commitment by Governments to treat productivity as priority one. At the enterprise level, many organizations have given this a serious thought. No wonder positive results have been achieved. This movement must be continued with sustained vigour and zeal to achieve desired results.

The main emphasis of this paper is on national productivity analysis and excludes focus on enterprise level which constitutes a separate topic.

Constituents of the paper

The paper has been divided into the following parts:

Part Focus

A. National Productivity Movement
B. Sectoral Analysis
C. Other Aspects

It ends up with concluding remarks for a plea to the Government for developing an action plan for implementation.

PART A. National productivity movement: npo establishment

The national productivity movement has never been on the active agenda of the former Governments in Pakistan. The parliaments have been manned by persons for whom no minimum qualifications were prescribed. The output of the existing system leaves much too be desired. The macro leaderships failed to provide solid contributions for boosting national productivity.

Whereas several Asian countries, particularly Far East countries, have registered considerable increase in productivity, we in Pakistan have kept productivity increase at a low priority. Whereas we were born on August 14, 1947, the Government, vide notification of April 14, 1999, announced the establishment of National Production Council (NPC) with the following objectives:

a) To stimulate and generate productivity consciousness at macro and micro levels in the country.

b) To measure, evaluate and improve productivity of various sectors of economy.

c) To encourage and promote innovative methods and products for enhanced productivity and competitive edge.

d) To prepare master plan at national level to address needs of Human Resource Development (HRD) in the field of productivity.

e) To take steps to set up information collection and dissemination system.

f) To secure full benefits of Pakistan's membership of Asian Productivity Organization (APO).

g) To establish linkages between wages and productivity.

h) To examine and suggest ways and means towards improving existing mechanism for higher productivity.

So far only one meeting has been held. Whereas the above objectives are highly laudable, who will start the implementation. It is a pity that, for public consumption, we hear speeches of Government functionaries mentioning productivity but these were not backed up by logistics for an efficient and effective delivery system. When will we wake up from the third round of Rip Van Winkle's sleep?

Pre-requisites to national productivity movement

The general Asian experience reveals that the following ingredients encourage a strong national productivity movement:

a) Saving Rates - Higher Trends
b) Labour Force - Young and hard working
c) Entrepreneurship - strong culture
d) Education - strong inclination
e) Goals and aspirations - nationally shared
f) The presence of a vibrant, driving, result orient Nationals Productivity Organization

PART B: Sectoral analysis
Sectors

Three sectors are the constituents of an economy of a country.

Sectors of an Economy

1. Agriculture:

- Crops
- Livestock and Poultry
- Fisheries — Forestry

2. Industry:

- Manufacturing
- Mining

3. Infrastructure:

- Technological
- Physical
- Social
- Financial

A brief review of productivity analysis in respect of each of above will be presented later.

APO'S GUIDELINES ROLE

For increasing productivity in agriculture, the basic objectives of the APO's programme are as under:

a) To help member countries to deal with thematic issues and concerns in agriculture, and

b) To deepen their understanding of the appropriate measures and techniques for achieving sustainable development in agriculture.

Pakistan can learn a lot by comprehending the above aspects for implementation. APO has conceptualized the following three broad areas:

a) Agriculture Development and Policies

Four areas have been identified for promoting the following:

i) Agricultural development
ii) Agricultural diversification
iii) International agricultural trade, and
iv) Food security

b) Resources & Technology

Three areas for special focus in this respect are as under:

i) Achieve sustainable development and environmental protection in agriculture.

ii) Disseminate prospective technology for higher productivity, and

iii) Development human resources.

c) Agricultural Marketing & Institutions

Two aspects of attention are identified below:

i) Promoting the efficiency of agricultural marketing.

ii) Strengthening agricultural extension and delivery.

Agricultural output 1999-2000 - A Review

The agricultural sector of Pakistan recorded an increase of 5.50%. This was 71% more than 1998-99. For the first time in the history of Pakistan, we became exporter of wheat (one million ton) and got relieved from the consistent pattern of import of wheat for the past two decades. Wheat production was recorded 22 million ton. Rice registered an increase of 10.3% over 1998-99. Estimated production was 5.16 ton. Cotton production showed an increase of 28% over the last year. Estimated production was stated to be 11.24 million bales. However, the regret was in sugarcane which recorded a decline of 25%. This was due to many reasons. The major ones were non-payment by sugar mill owners to sugar growers and shortage of water.

Major Issues in Productivity

Major issues in productivity in agricultural sector in Pakistan are as under:
a) Weather

Effect of the vagaries of the weather.
b) Ownership

Ownership; patterns of the farm lands.
c) Yield

Yield per hector of the crops.
d) Inputs

Use of inputs and methods based on the latest results of scientific and technological research.

An analysis of Pakistan's position in respect of above and relating to productivity is as under:

Agriculture

As against the common belief that agriculture constitutes crops only, it may be stated for clarity that agriculture sector constitutes four parts.

Constituents of Agriculture

1. Crops
2. Livestock & Poultry
3. Fisheries
4. Forestry

Each of the above points for the analysis of productivity is now briefly explained.

Crops

(A) Pakistan is a four crop economy. Traditionally wheat, cotton, rice and sugarcane have dominated the agriculture scene. Productivity increase in terms of yields is the genuine need.

Yield of four crops
(Kgs/hec)

Crop

1995-96

1999-2000 (p)

Cotton

601

641

Rice

1,835

2,050

Sugarcane

49,968

45,904

Wheat

2,018

2,247

Source: Excerpted from: Economic Survey 1999-2000, pp.12-15

There is a need to optimize the use of farm inputs (fertilizer, seed, mechanization, plant protection, irrigation support price policy and agricultural credit) to increase productivity.

The education of farmers through electronic media and extension services can go a long way to ensure increase in productivity.

Besides agriculture research in the direction of development of new varieties, technology development can be of tangible help in achieving goal of increasing productivity.

B) Livestock & Poultry Analysis

Livestock represents 37% of agriculture value added, 9% of GDP, and 9% of experts of Pakistan. Around 35 million rural population is engaged in livestock raising.

There is a great need to increase productivity in the following two areas:

a) Livesock: cattle, buffalo, sheep, goat, camels, horses, asses and mules.

b) Production from Livestock: milk, beef, mutton, poultry meat, wool, hair, bones, fats, blood, eggs, hides and skins.

Production of poultry (commercial poultry, poultry products and rural poultry) requires to be carefully examined for increase in productivity.

C) Fisheries: Around 400,000 people work in fisheries sector (marine and inland). This is a non-traditional item to be pushed in exports. Due to excellent efforts of SMEDA, productivity of marine fisheries has registered a considerable increase. However a major breakthrough is needed to achieve higher productivity, the following suggestions are worth giving a serious consideration:

a) Improvement in extension services.
b) Introduction of agriculture techniques.
c) Improvement in post harvest techniques.
d) Strengthening infrastructure facilities.
D) Forestry

Analysis: 1999-2000

Forest sector contributes about 0.1% to GDP and 0.3% to agriculture sector.

Total forest area of our country including rangelands is 10.5 million hectares. This is considered as a low-forest cover attributable to the following two reasons:

—Skewed distribution of rainfall.

—Prevailing aridity.

Break up of provincial forest area including rangelands is as in table:

Provincial Forest Area (including Rangelands)

Province

Million Hectares

%

1. Punjab

3.3

32

2. Northern Area

2.9

27

3. NWFP

1.4

13

4. Sindh

1.3

13

5. Azad Kashmir

1.1

10

6. Balochistan

0.6

05

Total:

10.6

100

Source: Excerpted from: Economic Survey 1999-2000, p.23

The break up of above is: productive forests 1.40 million hectares, protective forests 2.21 million hectares and remaining one (6.99 million hectares) is rangelands supporting 110 million livestock population.

Productive efforts are needed to increase timber production to meet a demand gap of 735,000 cubic meter of timber which is being imported.

Avenues for boosting wood and wood based products exports need to be explored.

Manufacturing Sector

APO's Guidelines Role: APO's activities in the industry and services sectors fall into ten categories:

APO's Activities In Industry & Service Sectors

S. No. Activities

1. Socio-Economic Development
2. Sector Specific
3. Small Industry Development
4. Management
5. Human Resources Development
6. Productivity Measurement & Analysis
7. Quality Management
8. Production & Technology Management
9. Information Technology
10. Development of NPOs

Source: APO'99 Annual Report, Tokyo: APO, p. 23

Major thrust areas in industry and services sector of APO are as in table:

APO's Major Thurst

1. TQM = Total Quality Management
2. IT = Information Technology
3. GP = Green Productivity
4. SME = Small & Medium Enterprises
5. ICD = Integrated Community Development
6. DON = Development of NPOs.

Analysis

Manufacturing represents the second largest sector of Pakistan's economy and is 17% of GDP. During 1980s its average growth was 8.2% and this became 4.7% in the first half of 1990s and 2.5% in the second half of 1990s. Effective use of productivity tool can be instrumental in increasing productivity in important industries of large scale manufacturing e.g. textile, fertilizer, vegetable ghee, sugar, cement, automobile, jute, steel etc.

Small and medium enterprises deserve special attention for mobile training institutes by Small and Medium Enterprises Development Authority, Punjab Small Industries Corporation, Sindh Small Industries Corporation, NWFP Small Industries Development Board and the Directorate of Small Industries Balochistan.

A speedy privatization programme of public sector enterprises can help develop a favourable climate for increase in productivity. The Government has enacted law for comprehensive privatization programme but the process needs to be speeded up.

DFI inflow during the 1990s has been less than half a US $ billion, on an annual average, as against annual target of US $ 2 billion. Productivity increase through transfer of technology can be very helpful.

The contribution of mining to GDP is 0.5%. There is a vast scope for exploiting resources of baryte, dolomite, gypsum, rock salt, magnesitre, soap stone, silica sand, limestone, marble, onyx marble, granite, precious stones and previous metals (gold, copper tin, silver, antimony, platinum group of elements, tungsten, lead, zinc, chromite and lithium. Exploiting potential untapped mineral sources with a productive approach is the crying need of today. To achieve this goal, the following issues need to be addressed:

a) Non-availability of latest technology.
b) Inadequate geological data.
c) Lack of infrastructure in remote mineral bearing areas and geological environment.
d) Tapping mineral resources to real life situation.

Sick Industrial Units

There are said to be over 4000 industrial units in Pakistan. Before October 12, 1999, the focus was to appoint committees to tackle the problems relating to sick industrial units. Beg Committee and Legari Committee figured prominently.

Pakistan legislated Companies Ordinance, 1982. In it, Section 296 did include early warning signals for identifying sickness. This has not been operationalised and consequently the rehabilitation package under Section 297 has stayed as promise of tomorrow.

The present Government has now set up a Corporation as an institutionalized effort to handle sick industrial units. Some good work has been undertaken by the above Corporation. It is high time that the Indian experience be carefully studied and full time assignment to a Tribunal be given to study the sickness of industrial units and then develop rehabilitation packages. The Tribunal should be manned by Judges, Chartered Accountants, Cost & Management Accountants, Financial Analysts and other professionally qualified personnel. A delegation may be sent to study the system and initiate steps to tackle the problems through an institutionalized approach with full time personnel.

Infrastructure

Infrastructure is needed to accelerate the socio-economic development. One theory is that if infrastructure is developed first, rest of other results in the shape of quantum jump of economic development follow later. In this respect, it would be interesting to mention that productivity analysis should be focused on the four components of infrastructure, namely Technological, Physical, Social and Financial. A brief analysis of productivity in respect each of the above is presented below:

a) Technological Infrastructure

We achieved a great in the comity of nations height on becoming a nuclear power on May 28, 1998. However vast room of improvement exist in increasing productivity of the internal working of technological orientation and translation of the research output relating to forward linkages e.g. PCSIR, Agricultural Research Council etc

b) Physical Infrastructure

Physical infrastructure consists of roads, dams, telecommunication systems, energy set ups, bridges, motorways etc. Optimal utilization of available resources presents an agenda for productivity analysis for paving the way for improvement.

c) Social Infrastructure

Two components of social infrastructure include education and health. The users expectations are much higher than the existing system of social infrastructure. Wastages needs to be weeded out. Optimal use must be made of manpower, machines and materials available.

d) Financial Infrastructure

The story of non-performing loans of banks and development finance institutions is well known. Productivity of the use of money leaves much to be desired.

PART C: OTHER ASPECTS

Some other aspects are briefly reviewed below:

(a) Bureaucracy - at the service of people

The users of Government and non-Government services expect efficient, economic and prompt response. The misfortune is that the delivery system is far from even satisfactory. Whereas delight or height of delight is the expectation of users, in reality dismay and disillusionment is the fate. Similar problems were faced by several countries of the world. The situation improved by following five steps suggested by Moginson who is believed to be the father of Work Simplification. His model needs to be operationalised.

(b) Poverty Trend

The lack of use of resources productivity at national level has resulted in the rise of poverty in Pakistan. Based on available information, one third of population (45 million) are unable to generate income sufficient to provide minimum nutrition and other basic necessities of life. This includes 32 million people in rural area and 13 million people in urban area. Poverty is increasing in urban areas. Efforts are going on to utilize the manpower resources for alleviation of poverty through Integrated Small Public Works Programmes (ISPWP) and micro credit bank (now known as Khushal Bank). Zakat and Usher Programmes need to be intelligently utilized for starting income generating schemes productively.

For properly tackling poverty and increasing efforts for productivity at the national level, it will be befitting to recognize the following types of poverty:

1. Human poverty
2. Income poverty
3. Extreme poverty
4. Overall poverty
5. Relative poverty
6. Absolute poverty

(This is the international one-dollar-a day poverty line).

Productive efforts need to be introduced for alleviating poverty through operationalising indexation of wages via productivity and increasing functional literacy.

( c ) Beyond Productivity

Many new and powerful management tools have been innovated to boost productivity. The dominant ones have been TQM during the decade of 1980s and Re-engineering during 1990s. These tools together with the implementation spirit of ISO 9000 and 14000 series are seen logistics to beefing up the bottom line — beyond dimensions of productivity. Moreover a holistic approach is needed to translate the benefits of productivity to the advantage of the organization. The case in example is that of greater productivity in various cash crops in Swat due to Swis Technology group contribution but the benefits could not be achieved due to lack of logistics of distribution and marketing.

Concluding remarks

It is high time that the government in power should address productivity as priority number one on national front, institutionalize the affairs and develop an action plan to translate the objectives for which NPO has been announced. A positive response in this respect will enable Pakistan to march into 21 st Century with an assured confidence.

* Former President, ICMAP (1997-99).
Former Pro Vice-Chancellor & Founder Director, IBA, University of the Punjab, Lahore. Dean Executive Programs, Punjab College of Business Administration, Lahore. E-Mail: emba@pics.edu.pk