Pakistan Low productive jobs will not be able to

Pakistan is going through a rapid transition of youth bulge and in the greater labor force in labor market. This increasing working youth can be proved a dividend for Pakistan if it utilized properly. It is dire need of time to increase jobs in the market. It is estimated that Pakistan is in need of 1.9 million new jobs every year to cater the bulging youth’s needs (The Economic Survey of Pakistan, 2016-2017) and same is the case with the unemployment rate. It can be increased up to 20 percent by the end of 2020. This can be worrisome for the government as previous studies suggest that there is a strong correlation between unemployment and growing extremism, terrorism, crime rate and insecurity of lives. (Cheema, Hameed, and Khan, 2014). Creation of new jobs does not require an increase in numbers only but also demands quality. Low productive jobs will not be able to cope with the situation. Proper education and skilled education is required to fulfill the quality job gap. Pakistan’s more than 65 percent population comes under the youth category ranging from (15-29) year of age. This youth lacks behind in the realm of education. Most of the young people are uneducated and those who have education lacks in vocational education. The demand for skilled labor is higher in low poverty areas (Cheema et. al, 2012).

The most distinguishing phenomenon of Punjab province of Pakistan is its youth which is increasing both in quality as well as quantity more than other age groups. Among the working human population of Punjab, 36 percent are youngsters. Moreover, two million youth every year reaches to working age which is not only creating competitive environment but also making equally difficult for them to utilize their ability in a productive way. There is dire need to accelerate economic growth to harness the potential of the youth in a productive and constructive manner. For this revolutionary economic transformation, it must create sufficient jobs and it needs to enhance human capital in the workforce. In this regard, the Government of Punjab has taken some practical steps in the form of “Punjab Growth Strategy” and “Punjab’s Skill Development Sector Plan 2018” to ensure better employment atmosphere for the youth. The most direct step is its ambitious target to increase its GDP growth up to 8 percent annually along with training of two million youngsters till 2018. This study aims to highlight the employability and the skill level of youth in Punjab. It also puts light on some current efforts of Punjab Government regarding the progress of the youth. Furthermore, this paper suggests more investment in this sector for the promotion of employment-generating policies. 

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Punjab has tried hard to meet the job challenging but still more efforts are required to meet the challenge. Since last 15 years, Punjab’s economy is increasing in comparison to the total economy of Pakistan. It has recorded 4.5 increases annually. However, its labor market has not increased to that much level and remained at 2.8 percent annual increase. Employment sector has slightly shifted from agriculture to manufacturing sector. Although the employment rate has increased to 5.2 percent still its low.

Economic Policies:

In order to tap the demographic dividend Pakistan needs to put its economic policies in order. This can be done by encouraging trade with neighbours and opening new markets. The geography of Pakistan is such that it can be turned as a hub of the regional trade owing to its being surrounded by the resource-rich states. The likes of CPEC could play a vital role in this regard. In human capital the investment should be increased to firstly educate the youth and then sharpen their skill level to cater the needs of the market.

Reformation of the financial sector is important, only 14% of Pakistanis have bank accounts, this implies access to finance is very limited. https://www.theigc.org/news-item/discussion-on-economic-policy-and-reform-in-pakistan

 Besides these, land play a vital role in industrialization and urbanization and reforms are needed to make its distribution even. Furthermore, sectors of the economy such as health and education, State Owned Enterprises (SOEs), mobilizing the private sector, reforming tax, creating employment with the special focus on the female labor force, improving the security situation should be paid proper heed to reap demographic dividend of the youth bulge.

Taxation, Inflation, and Debt:

The demographic dividend can be materialized when a country is capable enough to productively employ the additional workforce and develop an economy that effectively absorbs the added number of labour entering the market. For the economy to stand on its own feet, one of the pre-requisites is a higher tax to GDP ratio. Besides some concerted efforts, our tax to GDP ratio has been dismally low. According to World Bank report, “Punjab’s revenue collection from its major taxes is currently 25 percent of their potential of Rs. 432 billion, suggesting an estimated tax gap of Rs. 324 billion.” Pakistan Development Update, Growth: A Shared Responsibility

May 2017, The World Bank

 This low collection is owing to several things; flawed tax policies, administrative short-comings, an overlap of federal and provincial jurisdiction, exemptions and low compliance level. The following sectors witness major gap which can be bridged, and the tax net can be broadened to a greater level.

GSTS

General Sales Tax on Services is one of the largest contributors to Punjab’s revenue collection. After the creation of Punjab Revenue Authority, this sector has recorded a 100% increase in its share, from 26 billion to 60 billion.

Urban Immovable Property Tax

This is the most underrated sector of Punjab Excise and Taxation Department and adds only 3% to its revenue collection. The low collection is due to the variance between official valuation and market rates, un-necessary tax exemptions and incomplete digitization of tax rolls.

 

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