With the contribution of human capital in total wealth growing globally, the creation of a skilled labor force that is more productive and better able to adopt and adapt to new technologies is at the core of a long-term growth path for Pakistan. To this end, improvements in education and learning need to go hand in hand with improvements in health and well-being to maximize the cognitive potential of both men and women in the population. Pakistan has made progress on these fronts, but it is uneven and slow. If Pakistan is to grow in an inclusive manner, the government must prioritize and invest equitably in the development of its human capital — the country’s most important resource.
Achieving Pakistan’s growth potential requires an increase in productivity, which cannot take place without major investments in human capital. A simple way to comprehend the link between human capital and productivity is by asking: given poor health and education conditions in Pakistan, how much human capital will a child born today acquire by the end of secondary school? To address this question, one must focus on three core components: survival, education, and health. Fewer children die before the age of five today, as the country has seen an average annual reduction of 2.2 percent in under-five mortality over the period from 1970 to 2016. However, this is not enough: in 2016, there were still 79 under-five deaths per 1,000 live births (about 400,000 children under-five died in 2016). This points to the need for Pakistan to accelerate investment in basic medical services, including vaccinations, nutrition, and access to clean water and sanitation.
Further investments must also take into account existing health disparities across regions and income groups. For example, while the overall immunization rates for children between the ages of 12 and 24 months have improved, only about 33 percent of children in the poorest wealth quintile are immunized compared with 94 percent of children in the richest wealth quintile.
Enrolment rates have increased consistently over time. However, the pace improvement has been persistently slow. Pakistan still has a very large number of children out of school: an estimated 22.8 million children are not attending school, 18 million of whom are between 10 and 16 years old. But being in school does not necessarily mean that children learn very much. In 2016, in rural areas of Pakistan, 48 percent of Class 5 students and 83 percent of Class 3 students could not read a Class 2 story in Urdu/Sindhi/Pashto; 54 percent of Class 5 students and 85 percent of Class 3 students could not read Class 2 sentences in English; and 52 percent of Class 5 children could not do two-digit division. The education system not only needs a targeted focus on increasing enrolment but also, and most importantly, needs to ensure that learning outcomes are commensurate with the age-group benchmarks.
Low basic skills hamper the development of higher level skills and the ability to increase individual productivity, either as employees or as self-employed individuals. Skills accumulation through formal education depends on investing in a child’s health, nutrition, and adequate stimulation. Stunting is a fundamental development challenge in Pakistan.
After four decades of stagnation, the country has made progress in improving nutrition, but stunting rates remain very high. Preliminary results from the Pakistan Demographic and Health Survey (PDHS) 2017/18 indicate a reduction in rates for stunting from 44 percent (FY11) to 37 percent. The challenge is to continue this progress in reducing stunting and enhancing nutrition across the country, and across income levels. While life expectancy continues to increase, the existing weaknesses in the health-care system and high out-of-pocket medical expenses serve as a deterrent for Pakistanis to seek medical assistance and treatment regularly, and when it is most needed. These are key issues that need to be addressed and resolved to ensure a healthy and more productive work force.
Moving forward, if Pakistan is to grow in an inclusive manner, the government must prioritize and invest equitably in human capital development, as the economic potential of the country can only be unlocked by embracing its population as its most valued asset for sustained growth.