Ample opportunities exist to improve productivity: experts

LAHORE: The demographic advantage Pakistan enjoys provides it with ample opportunity to increase productivity by 2030, simply if the lagging companies and public sector institutions could match the productivity of their best performing peers, experts said on Wednesday.
Unlike Pakistan, all advanced economies and many developing countries have to increase productivity through technology as they lack young and fresh workforce due to aging of population, they said. However, they warned the opportunities available today could fizzle out if needed actions are not taken on time.
“Businesses should upgrade their capital and technology by mobilizing talented workers and encouraging innovation,” said economist Faisal Qamar, while urging the government to accelerate liberalization of economy so that it could be integrated with the global economy. “To accelerate growth the cheapest stimulus any government can provide to private sector is confidence,” he added.
Government should ensure fairness and wide sharing of growth to instill confidence. He said this should be done without creating rift in the society as it erodes business confidence.
Qamar warned that survival would become increasingly harsh for Pakistan if it fails to take necessary measures needed to increase productivity and sustain growth, adding that failure to do so would keep poverty high and many social welfare objectives would be missed.
Economist Asif Shahid said it is a well known fact that the rising worker productivity results in higher wages and increase in disposable income, which in turn increases consumption and GDP growth. Rising labor productivity goes hand in hand with growth in disposable income, consumption and GDP, he said, suggesting that planners should remove regulatory barriers to boost growth and let entrepreneurs exploit the potential for the global economy. Infrastructure has to be modernized, he said as transporting oil around on trains is an obsolete technology.

“We need a far greater pipeline infrastructure to ensure seamless flow of oil round the clock,” he added. Moreover for optimum productivity gains we need a much more satisfactory broadband architecture than the one currently in place, he added.
Financial analyst Amina Usman said many studies by creditable global institutions have shown that the sunrise sectors of global economy are agriculture, food processing, automotive, retail, and healthcare, while adding that Pakistan has enormous potential to excel in these sectors.
Productivity in agriculture, accounts for only 45 percent of the employment in Pakistan and could be doubled through enabling policies by 2030, she said adding that there is a large scope for mechanization of agriculture in Pakistan, where nearly 30 percent of crop cultivation is still done by hand.
She said better application and supply of fertilizers, herbicides, and pesticides could increase yield, adding that agricultural planners should encourage the use of precision sensors and satellite data to increase crop yields. The overall productivity of food processing could rise by an estimated 59 percent in Pakistan through operational improvements, such as lean manufacturing and bigger processing facilities to take advantage of scale effects.
Usman said Pakistan fortunately has an established auto industry which boasts productivity roughly 95 percent higher than that of other industries, adding that big differences exist in performance of tier-two and tier-three component-supplier operations that should be narrowed to improve productivity.
Retail sector, she added, is a major employer in Pakistan but as around the globe its productivity is 30-40 percent lower than average productivity across other sectors. She said there are three broad areas where opportunities for increasing productivity exist, adding that policies should be devised to increase the share of more productive formats in retail sector and the gap between the least and most productive outlets in a given format should be narrowed.
Lastly, she added, the performance of best performers should be enhanced through use of technology. The total healthcare spending is growing faster than global GDP, which calls for most efficient healthcare system, she said, as far as Pakistan is concerned, there is an opportunity to save at least 25 percent of the health spending without compromising health outcomes.
“This can be done through best practices in operations and procurement, by reducing the number of clinically ineffective procedures and by developing innovative delivery models,” she added. Cost of drugs used in treatment of patients is only 15 percent in Pakistan, where the bulk amount goes to doctors’ constancy, hospital charges and diagnostic tests. “These charges should be rationalized through proper regulations to make Pakistan a similar hub for health tourism as is practiced in India,” she added.