Unproductive workforce

LAHORE: Pakistan is facing a strange employment dilemma not only because of subdued economic activities but also due to the unavailability of mid-level skills needed by the existing industrial and services sectors.

When industries upgrade or an industry with new technology is setup, the required skill force is often not available. Entrepreneurs either train the required skilled force through foreign experts arranged by equipment suppliers or send their workers abroad for training.

In both cases, expenses are exorbitant, which most investors cannot afford. This is the reason that greenfield projects in Pakistan are few and commissioned by large entrepreneurs for large-scale industries.

But there is no investment in small and medium industries, as the skills required in high-tech industries are not available in Pakistan, and they cannot impart the required skills from their resources.

Then there are chances of trained workers being poached by competitors who might opt for the latest technologies. The case of large industries is different as they retain the individuals they train as there are few investors to challenge them.

This is the reason there is a dire need to ensure a sustained supply of skills needed by small and medium enterprises to acquire new technology. Even the most developed economies are facing skilled workforce shortages, but the reasons are different.

They could not train the required number of skilled workers because they are short of young people, and their population is aging. It is different in Pakistan, where young people are in the larger number than the market could absorb.

But even if these larger numbers are trained, they could easily be adjusted in developed economies. The ability of an economy to compete globally depends on the sustained supply of a talented and qualified human resource.

The imbalances occur when the availability of workers is inadequate and low skilled. This inadequacy puts immense pressure on the economy that also threatens the social and political stability of the country. Pakistan is suffering because of this inadequacy.

We are losing GDP growth because of labour force imbalances. Low-skilled labour results in lower productivity, which has in Pakistan’s case resulted in losing global competitiveness. Our stagnant exports are because of this low productivity. Even emerging economies, which are currently enjoying robust growth, are at risk of a sudden halt in growth because of human capital imbalances.

According to the Boston Consulting Group, only India among BRICS countries is on track to produce a balanced work force till 2030. Other members, namely Brazil, China and Russia, would face skilled labour shortages in the next 10-15 years.

The rule of thumb is that an unemployment rate of less than 5.0 per cent indicates a possible shortage of labour. GDP growth rates usually plunge if required human capital is not made available in the economy either through domestic education and training or through immigration. Pakistan has an unemployment rate of over 6.0 per cent but human resource imbalances are impacting its growth as well.

Accurate data on employment is essential to planning the need-based training of skilled labour. Unfortunately, unemployment data in Pakistan is skewed as all governments try to categorize individuals earning part-time as employees. This denies the planners the statistics about the shortage of skills in the workforce.

Moreover, workers operating in the undocumented economy do not appear in employment statistics. Pakistan is one of the many developing economies where numerous small businesses conceal their employees from the labour department.