In PTI’s ‘promised land’, job creation remains in a jam

LAHORE: Pakistan Tehreek-e-Insaf (PTI) has promised to create 10 million jobs in its tenure, but the current economic situation is so bleak that job creation, in this government’s first year, looks sloppy, while manufacturers are at loss on how to retain their skilled workforce.

Currently, country’s employment outlook looks alarming.

The manufacturers have been caught off guard by sudden decline in rupee value and an extraordinary increase in gas tariffs. They are bracing themselves for a power and petroleum product rates hike. Many of them depend on imported inputs that would cost them much higher that the rupee devaluation, as they will have to pay import duty and sales tax on duty-paid value of imports.

Manufacturers are worried because most of the consumers lack the capability to buy any product made from imported inputs. The cost will be very high. Industry fears that they will have to cut down production. The car production has already started declining. Increase in power rates would certainly impact the sales of home appliances like refrigerators and air conditioners.

The interest rates are likely to go further up as the inflation is steadily going up. Two months’ time is too short a period to judge the performance of the PTI-led government; however, the new government has not handled the situation prudently. The government right from the day one knew that it would need assistance from both friendly countries and donor agencies. There was no need for the prime minister to say that we would not go to International Monetary Fund (IMF).

Having said that he went to China and Saudi Arabia and returned with high hopes. Both the nations knew his desperation and delayed expected packages.

Most probably these two friends also wanted to pitch in their demands -Beijing regarding China-Pakistan Economic Corridor (CPEC) and Saudi Arabia on Yemen and Iran.

We then turned to the IMF that indicated harsh terms and conditions. The prime minister then decided to again try his luck with Saudi Arabia. All this shows desperation, which is consuming most of the time of the economic managers.

The devaluation of past one year has not paid its dividends. Before the recent massive devaluation the rupee had already depreciated by 18 percent since December 2017. The export data for first quarter shows that the exports increased by a paltry 4 percent which is disappointing. The manufacturing activities have also not picked up.

Booming construction business was a cushion against unemployment during previous government’s tenure, but this business is also slowing down evident from declining cement and steel demand. This sector absorbs most of the unskilled workforce that Pakistan has plenty.

Human resource managers in the manufacturing sector are hard-pressed to pursue their managements to retain the skilled workforce despite a decline in production.

Experienced human resource experts know that if these skilled persons were shown door during the current lean period, it would be impossible to find them again when the things started improving. These skilled persons would not be lured even by higher salary offers to rejoin the firm that threw them out when the chips were down.

Recession is usually the outcome of uncertainty in the economy that triggers a wave of layoffs, mainly in cyclical durable goods industries or when exports slow down due to global recession.

As labour market becomes clogged with job seekers, job finding ratio goes down and unemployment rises. Better skilled workers somehow find work in other professions, where they are able to easily edge out illiterate unskilled workers through better productivity.

The market is then left with overwhelming majority of unskilled employees. These workers do not qualify for skilled jobs and need at least six months training in skills.

The employment opportunities are low in job intensive construction sector due to current economic downturn, high inflation, and spiking interest rates. The textile sector has pruned its workforce in the last five years as it operated on the basis of available energy and power. Now that the energy constraints have eased they cannot find skilled hands in required numbers.

There are three types of job seekers in the market. One group consists on those who are unemployed, the other comprises those who enter the labour force yearly, and in the third are those employed workers, who are on the lookout for better opportunities.

In recession only a minority of new hires come from unemployed as the businesses prefer to recruit comparatively experienced hands. Availability of huge unemployed pool has also created a low wage culture in the country. Moreover, skilled workers also eye foreign jobs that creates further gap in the availability of skilled workforce.

For this to happen, investment in infrastructure for jobs needs to be manifolded. The government will also have to ensure that small and medium-sized enterprises (SMEs), which are the prime source of job creation, have hassle-free access to financing and management support. Moreover, the focus needs to be moved on to creating jobs for youth through efficient internships, orientation services, and entrepreneurship training for better school-to-work-changeover.

Thus, job creation is the most important channel through which the government can ensure a strapping economic convalescence.