When employment keeps shrinking

LAHORE: There are two types of jobs that exist in Pakistan. Most of the jobs are temporary with no career path and only a few jobs are permanent that promise future well-being.

Temporary jobs include scores of daily wagers, jobs created at the sites of development projects and contract workers recruited by the manufacturing and services industries. These workers operate outside the ambit of labour laws.

They are not entitled to the benefits and facilities available to the permanent workers under labour laws. The temporary workers can be given marching orders without any notice.

The number of workers registered under the social security departments in all provinces is around 1.1 million. These 1.1 million workers are formally employed and are entitled to all benefits available under the labour laws. This is less than 0.5 percent of the total population.

Rest of the workers, if employed by the private sector have no rights and no guarantee of a job. It also includes self-employed and the workers that labour in agriculture.

Majority of the temporary workers are denied the minimum wage notified by the state. They work at half or even lower wages which is the reason they remain poor throughout life.

They have no career path. They enter the labour force as labourers, house servants, daily wagers and die in the same position or are refused a job if they become physically weak.

When the chips are down, the temporary workers are first to be given marching orders. They do not enjoy severance benefits.

Temporary nature of jobs is the main reason for persistent increase in poverty. It is because of poverty that the families send their children for menial labour that earns them 20 percent of the minimum wage for 12-16 hours duty.

It is because of lack of resources that the children of low-paid workers remain out of school and remain unskilled. The only skill some of these children get is the one imparted through apprenticeship in car/bike workshops, carpenter, welding, or at electricians’ shops.

These skills are rudimentary; but still these children are better off than the house servants in adult life. This shows the power of skills.

It is because of the lack of skills that entrepreneurs do not invest in high-tech industries. They base their business models on ground realities, realising that there is no answer in the short-term to the energy and power crisis, corruption, and inept government policies.

They realise that the cost of doing business is high not only due to government policies but also due to lethargy on part of the productive sectors that continue to operate with low power and energy efficiency, lower workers’ productivity, higher wastages and low marketing skills. But this strategy is no longer effective. Liberal imports have exposed domestic products to better quality as well as efficient technology.

The local industries (domestic suppliers) are losing to imports. It is indeed surprising that the industrialists in Pakistan remain in their shell.

They do not take clues from the exporters. In fact, some of them think exporters waste a lot of money on the welfare of their workers. They do not realise that the inefficient industries they operate are losing out to efficiently produced imports, while the exporters are penetrating the global markets by producing better quality efficiently.

They give above minimum wage to their workers, provide them a safe and pleasant manufacturing floor, look after the workers’ families in case of death, and provide them the government's overtime.

Despite these expenses, they are flourishing. They continue to operate even in recession, while during normal times they are fully booked for a year or so.

They are expanding and upgrading technology and creating their own skilled human resource by regularly recruiting apprentices for on job training.

Unemployment is high in Pakistan because most of the job seekers are unskilled and illiterate. Most of them are unemployed, out of the labour force or employed in jobs that they would like to leave. In recession, only a minority of new hires come from unemployed as businesses have the choice of recruiting comparatively experienced and skilled hands.

Separation rate, that is the rate of departures from job for various reasons including playoffs, quits, firings, and termination of time-limited employment is expected in even normal times. However, what is going on in the manufacturing sector is job destruction.

There is a vital difference between job destruction and job separation. At the manufacturing level, job destruction occurs when employment shrinks, which means it is the separation rate less hiring rate or zero whichever is greater.

This is happening in industries that cater to domestic needs. We will have to make efforts to stop this trend or be prepared to lose the manufacturing base of the country.