Creating the right kind of jobs should be the priority for Pakistan

In an evolving world of work— the rapid creation and destruction of jobs— the issue of unemployment has acquired centrality in the development process and has led to the question of whether jobs, or workers, should be protected?

Looking from an egalitarian perspective, the welfare of millions revolves around four things: full employment (including self-employment), fair wages, reasonable prices and an accelerated programme for community development.

But policymakers in Pakistan have accorded very low priority to job creation and distribution of income and assets. On the assets’ distribution front, for example, the half-hearted efforts earlier made by the Sindh government to distribute state land to landless peasants have been abandoned.

As consumer prices continue to increase owing to a largely manipulated market, funding for self-employment remains low.

The actual performance of micro-finance in improving borrower livelihood is murky. While lenders measure their success by the volume of micro-credit lent and the level of loan recovery, there are complaints that the loans are often not utilised for the stated purpose and the poorest of the poor are ignored in the process.

On the other hand, the number of vulnerable people under such relief schemes like the Benazir Income Support Programme (BISP) is increasing rapidly.

Last month the ILO pointed out that real wages in Pakistan have increased for technicians and professionals but fallen for unskilled workers. This indicates a shortage in the market for skilled professionals and that the pace and level of development of the sort of skilled labour needed for a transforming economy is slower than required.

But here it may be conceded that the minimum wage of blue-collared workers is neither linked to an increase in national income (GDP) nor is it fully adjusted to inflation.

And brain drain still continues for want of local lucrative opportunities for the talented.

According to a study of the Institute of Policy Studies based on Labour Force Survey 2014-15, the unemployment rate among literate workers is more than twice that of illiterate workers, and three times above the national average for those with degrees or post graduate qualifications.

This, then, has more to do with a mismatch between what education institutions produce and the changing domestic demand for different kinds of skills.

The ILO has advised provincial governments to amend existing laws to ‘avoid inconsistencies in wage-settling’ and include minimum wage for farm, public sector, coal mine workers and charity organisations.

The ILO study points out that there is ‘no agreed data sets to be used to determine economic conditions and cost of living’. The report was compiled with particular focus on the textile and garment sector— the largest segment of the country’s industrial economy.

But for ad hoc minimum wage announced by the government— partially implemented because of an ineffective monitoring system — there is no well-thought out income and asset distribution policy.

In some segments of the salaried class government servants are better paid than private sector employees. Wage earners in the informal sector, that constitute well over 70 per cent of the country’s labour force, are the most ill-paid.

Whatever the inconsistencies in wage setting, the difference between the bottom and top jobs is very wide.

The outsourcing of corporation’s non-core functions is a device to save labour cost by accessing workers available at the informal sector wage rates; although the formal sector is also able to attract workers from the informal sector owing to better compensation.

The timing of the ILO study coincides with an UNCTAD report which stresses that the “world, both at the national and international levels, should focus on job creation and distribution of wealth.” The eminent UNTAD economists have also urged states to give organised labour a stronger voice.

The recommendations of the two international organisations appear both timely and appropriate when seen in the background of ongoing developments: the IT’s role in destroying old jobs and creating new jobs; the social exclusion that the present phase of market evolution is producing; and the gradual withering away of the traditional welfare state.

Creating mainstream jobs is a huge challenge with corporations and businesses shedding wage workers, hiring contract labour and outsourcing jobs. Physical infrastructure projects including CPEC ventures under execution are mostly creating temporary jobs.

The quality of education, literacy, skill development and spending on health is low thereby impacting quality of productivity and economic development.

Such foreign aided programmes as the Sindh Community Mobilisation Programme funded by USAID for improving the quality of education and increasing the number of school students should be replicated by local community organisations/NGOs.

In the 2013 World Development Bank report on ‘Jobs’, the World Bank ‘takes centrality of jobs in the development process as its starting point to pose pertinent questions in an ‘evolving world of work’ where creation of new jobs and destruction take place rapidly and simultaneously.

“Should countries design their development strategies around growth or focus on jobs? Should the focus be on protecting jobs as opposed to protecting workers? Which needs to come first in the development process — creating jobs or building skills?”

These are difficult questions to answer at this point in time but bring to light the enormous challenge policymaker’s face in providing livelihood to the common citizens while pressure mounts on the political system to deliver.

This is why the immigration issue is so contentious and has had such far reaching consequences in the west: a surge in votes for the nationalist and Populist Party in Germany, the Brexit vote in England and the electoral victory of Donald Trump. Blue-collar workers feel threatened.

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Published in Dawn, The Business and Finance Weekly, October 9th, 2017