Skilled migration

Lahore: Pakistan has a huge advantage of a young population below the age of 35 that, if nourished properly, could fill the labor shortages in most developed economies. These low-hanging fruits would get rotten if they remain deprived of the needed skills.

There is an acute labor shortage in almost all European countries, in Malaysia, Japan, Canada, because of either the aging population or because the labor cost for low value products has become unviable. Development experts point out that when a society moves from an agricultural to an industrial economy, the balance of labor demand and supply shifts as well.

In the initial stage of development, most people remain in rural areas, engaged in agricultural production. When this concentration of workers leads to underemployment in rural areas, the industrial sector can expand and increase its labor force with no pressure to raise wages.

Thus there may follow a period of industrial growth with no rise in real wages. However, as the industrial sector develops to the point where the supply of labor from the agricultural sector becomes limited, industrial wages begin to rise quickly.

Based on the historical experience of developed countries, Lewis in 1954 first conceptualized this process of economic transformation. In the literature, the structural change from an excess supply of labor to one of labor shortage is often called the Lewis turning point.

When an economy reaches the Lewis point, it starts relocating its low value industries to other countries, like Japan did after the 1970s in East Asia or America did by relocating industries in Mexico and other low cost Latin American countries and now China is doing in former socialist economies of East Asia or some African economies.

Unfortunately, China refrained from relocating its industries in Pakistan as the absence of required skills in the country was one of the several reasons in this regard.

However, when an economy attains developed status, its population growth rate declines and average age increases.

This creates a shortage of young workers. Pakistan is among the few countries which failed to match the speed with which its neighbors developed.

It is also a country with the highest birth rate in the region. Its industrial growth is declining and agriculture is still the largest provider of work. It is sending youth around the world where job opportunities exist. Most of its overseas workers are semi-literate with basic skills.

This is the reason that they are hired at very low wages. Still, these workers remit over $30 billion annually to Pakistan, which is higher than our current annual exports.

Now the demand for low skilled jobs is waning. The developed economies need mid-skill or highly skilled workers. The state should take steps to train as many workers in mid-skills as possible so that they may get jobs abroad at decent wages.

We need a technically skilled workforce both for domestic industries and for their placements overseas. The IT ministry has unveiled a plan to train 200,000 youth annually in basic IT skills.

These IT professionals would be able to earn a decent amount by working for foreign firms while stationed in the country or by going abroad. We need similar plans in other engineering fields to make them acceptable for countries short of labor.