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Tuesday March 19, 2024

Pakistan yet to address poverty at par with regional economies

By Mansoor Ahmed
November 27, 2018

LAHORE: Major poverty alleviation in the history of mankind occurred in economies surrounding Pakistan. For decades back, poverty rates were much higher than Pakistan in China, India and Bangladesh. However, these countries have adequately addressed the poverty issue.

These countries work on poverty reduction continuously and regularly as they remain on a stable growth trajectory, whereas in Pakistan, the booms and busts in our economy impact the poor the most.

Growth in China, India and Bangladesh has been stable for over a decade. Economic boom that started in China in 80s is still ongoing. India went on the growth path in the 90s and has never looked back, while the growth trajectory of Bangladesh has been going up since the start of the century.

Here in Pakistan, there have been periods of high and low growth with every change of government; and governments changed here frequently since 1989. In all these countries, including Pakistan, families have been living in poverty for centuries. They did not have assets to fall back on in case of any economic mishap.

The bread earners hardly earned enough to partly meet the family expenses, and had to borrow informally. That resulted in them remaining in debt of informal lenders for generations.

Industrial revolution that helped the west to attain independence from feudal lords did not help people living in this region, because the factories were run by the families that were already influential in the society.

The only hope for the poor was sustained growth and industrialisation that could provide livelihood to more than one person in the family. In fact, it was the industrial revolution that broke the culture of one bread earner in a family in the western societies, and these countries were waiting for this to happen here as well.

This change happened in China, India and Bangladesh, and a little later these countries earmarked on a sustained growth path. China grew well over eight percent for more than two decades and its current growth rate of six percent is very high because of its huge GDP.

India has grown over seven percent for a little over a decade, and is still maintaining this growth. Bangladesh has joined the seven percent growth club in recent years, but has been maintaining six percent growth rate for the last one decade.

Pakistan has seen average five year growth rates of five, six, four, and even three percent. The average growth during the tenure of the last government was little less than five percent. In its last year, the growth was above 5.7 percent. A decline has already started, as during the current fiscal it would hardly reach five percent, while predictions for next year were 4.5 percent of the GDP.

This region has a male dominated culture. The earning hands were generally men only. The workers profile in our neighbouring countries changed rapidly, and women are now also entering the workforce rapidly.

In China, the male dominance has sharply diminished, while in Bangladesh more women workers have entered workforce than males in the last one decade. Indians are also catching up rapidly with their progressive neighbours.

This has rapidly changed the concept of one bread earner in a family to two bread earners. The culture in Pakistan has not changed so fast. We have the lowest women workforce in the region. We unfortunately also have the lowest literacy rate.

Because of these two disadvantages, we have the largest unskilled workforce in the region. In this era of high technology this is a big disadvantage. These unskilled workers cannot operate high-tech machines and have become obsolete for the manufacturing sector. They get work in the construction sector and agriculture only or as daily wagers to do menial low wage work.

The families of these unskilled workers almost always live in poverty. The first reason is that they are paid less than skilled workers and the second is that they are severely impacted by the boom and busts in our economy.

In the manufacturing sector where the jobs are stable we have seen stagnant or even retarded growth. Those that got laid off during bust fall back to poverty. Since women are rarely employed, the chances of living comfortable for families living just above poverty line are very dim. We need sustained GDP growth of above seven percent and inclusion of women in workforce to address the poverty issue permanently.