Employment and productivity

LAHORE: The relationship between employment and productivity is complex and interconnected. Employment refers to the number of people who are actively working and being paid for their services, while productivity refers to the efficiency with which resources are utilised to produce goods and services.

The level of productivity in an economy can significantly impact employment, and employment levels can also influence productivity. Labour productivity is a major issue in Pakistan and is one of the reasons that increases unemployment in the country.

Higher productivity can lead to increased employment opportunities. When businesses are more productive, they can produce more output with the same or fewer resources.

This often results in business growth, leading to increased demand for labour and, consequently, more job opportunities.

We are increasingly relying on imports because low productivity increases the cost of production compared with imported goods.

The concept of reducing the number of workers and forcing the retained workforce to maintain productivity seldom works. There are business activities where an increase in employment can lead to higher productivity under certain conditions.

Hiring additional workers can improve the overall efficiency of operations and enable companies to produce more output or offer better services.

Moreover, the relationship between employment and productivity can be cyclical particularly in Pakistan where its economy frequently undergoes bust and boom cycles. During economic downturns, businesses usually cut back on employment to reduce costs, which can negatively impact productivity.

On the other hand, during periods of economic growth, businesses may hire more workers to meet increasing demand, leading to potential improvements in productivity.

Pakistan has faced significant challenges in generating sufficient employment opportunities for its growing workforce.

The country’s population has been increasing, and the job market has not kept pace with the rising number of job seekers, leading to issues of unemployment and underemployment.

Pakistan’s overall productivity levels have been relatively low compared to some other countries. Factors contributing to this include limited access to modern technology, inadequate infrastructure, lack of skilled labour in certain sectors, and bureaucratic hurdles for businesses.

There are many factors that have kept Pakistan’s productivity low. Pakistan's economy has been historically reliant on the agricultural sector, which has relatively low labour productivity compared to other industries.

A shift towards more labour-intensive and technologically advanced sectors could potentially boost overall productivity and create more jobs.

We must mechanise agriculture and free the low productive labour force for industrial sectors in the urban centres or at the periphery of rural regions.

It is now an established fact that a significant portion of Pakistan’s labour force operates in the informal economy, which often involves low-productivity activities and limited access to social protection measures.

Bringing informal workers into the formal economy can help improve productivity and working conditions. This remains an uphill task for the economic managers, who find it difficult to bring the informal sector into formality.

It is important to note that the economic landscape is continually changing. But

for Pakistan, the change is on the negative side.

We need relentless efforts to improve productivity and increase industrial production that would absorb a large number of youth entering the job market every year. It is unfortunate that in the past two decades, the size of our manufacturing sector has been declining in terms of GDP.