Taxing companies to fund need-based vocational training

LAHORE: Successive governments have been burdening the taxpayers with innovative taxes over the years and no government has ever levied any tax specifically to fund the development of skilled manpower.

It would be prudent to levy 0.25 percent TEVT tax on turnover of all industries and service organisations for financing high skilled training institutes. The institutes should be established in partnership with the private sector and service organisations. It is better to first establish one high quality institute in each province. Each institute should impart middle skill training according to the market demand. The private sector should identify the fields and the equipment required to impart training. Private sector should also be engaged by the industry association to impart training to the trainees if the equipment is not available at an institute. This should be considered as a contribution towards corporate social responsibility of the industry or the service providers. The cost of use of equipment may be monetised. Each enterprise is entitled to use 15 percent of its taxable income for social causes recognised by the government.

We allocate heavy funds for general education, which does not provide jobs. Technical vocational education and training (TVET), which guarantees jobs or earning opportunities in Pakistan, remains underfunded.

Planners must realise that half-hearted efforts on imparting technical training will remain futile. The Punjab model of doubling the enrollment in skill training institutes by adding one more shift with almost the same training staffs is unlikely to give desired results.   Our TVET planners have not come out of the mindset of imparting obsolete skills training. 

What the country needs is training in modern skills needed by the high-tech industries. Skill and technical training is costlier than general education due to the equipment required for skills development. If this principle is faithfully followed, the cost of training will increase, but the economy needs proper skilled resources to operate modern machines in all the industrial sectors. 

Producing hair dressers, beauticians, plumbers or welders will not alone alleviate poverty. Those possessing these skills either get low-paid jobs or are self-employed and live at subsistence level. The more such labours we produce the more competition we create in these occupations. The result is the income levels of these skilled workers remain very low.

The government spends funds on such vocational trainings. Bureaucratic hurdles keep the training institutes underperformed in modern technology delivery and churning out students. 

World over, technical and vocational training is imparted in secondary/higher secondary schools. Several developed and emerging economies have private vocational training firms. In Pakistan, however, almost 80 percent of TEVT is funded by the government from tax revenues. Since the revenues are much less than the expenditures the funds for TEVT activities are also very low. These funds hardly cover the salaries of trainers or maintenance of the infrastructure. There are almost no funds available to upgrade the equipment. 

The government continues to operate these outdated institutes for political reasons and produce graduates copiously. This is the reason why almost 60 percent of the skilled persons who come out of these schools are forced to earn living through self-employment and most of the time, earn less than the minimum wage set by the government.

There are number of middle and high skilled jobs available in the local market. Most of the companies fill these jobs through in-house training programs. These trained persons are nurtured by the enterprise and are given market-based wages to retain them. Otherwise, these technicians move to other industries on fair wages.