Poverty, unemployment, some other grim realities

Poverty, unemployment, some other grim realities

With the advent of Naya Pakistan came a promise to create 10 million new jobs within a 5-year term. This was not an unreasonable target. According to a 2018 Human Development Report for Pakistan by the United Nations Development Program (UNDP), 1.5 million new jobs per year were described as "minimal." But for these targets to translate into actual results, the strategy to create more jobs must be tailored to accommodate certain factors  unique to the context of Pakistan.

In terms of market dynamics, a tailored policy entails targeting products to the appropriate buyers, whether local or international. In terms of the labor force, this implies utilizing the demographic momentum of the country's youth bulge, facilitating the underprivileged in finding suitable employment options, and retaining skilled graduates. The country has consecutively lost its top graduates to foreign jobs year after year, and this has had a tangible impact on the skills of the remaining labour force. These factors can be catered to simultaneously, given the wide array of outputs produced in the textile industry chain. There is a demand for a different skill set at each stage, be it cotton picking, ginning, stitching, designing or innovating.

While it creates a number of jobs, the demand for the diverse range of products of the textile sector is rather skewed in Pakistan, and this is also an outcome of the substantial proportion of underprivileged citizens. Figures reveal that 24% of Pakistan's population lives below the national poverty line; which includes 31% in rural areas and 13% in urban areas. This translates into limitations for the domestic market in terms of demand for goods. These individuals have limited access to basic necessities, such as food, water and sanitation. Further out of reach are crucial factors such as access to education and healthcare. Almost half of the population lives at a wage below $2/day, rendering the purchase of finished garments and apparel infrequent. It can be concluded that around two-three articles of finished apparel would be purchased by these individuals throughout the course of a year.

Adapting to the needs of the market entails shifting the focus towards the export of these products to places where demand for them is high. This is perhaps the only way to sustainably support the economy and increase the pace of industrialization. A tailored approach thus presents a long-term solution to the poverty crisis via a simple formula: employing a larger segment of the population towards the task of textile sector productivity and using it to bolster exports. As a mutually beneficial mechanism, this will allow employment and exports to increase side by side.

Unemployment is dangerous for a country's economic wellbeing, but it does not evoke empathy in the same way that its counterpart, poverty does. Efforts to assist the poor in getting in their feet should have been institutionalized by now but instead, these efforts are directed towards pressurizing them with unjust taxation. The shift in focus towards indirect taxes allows money from the poor to end up in the pockets of the rich. Pakistan's case is riddled with the high pressure on indirect taxes, which have consistently been higher than direct taxes. This tends to skew the economy to the disadvantage of the less privileged class and make the country tax-uncompetitive in the global market. A large proportion of well-to-do businessmen operate without having to pay their due share of taxes, owing to power and political clout. Meanwhile the small shop owner, the young widow struggling to make ends meet and the honest, hardworking laborer continue to pay high levels of tax via bureaucratic procedures, after being presented with complicated forms that   the layman cannot fill without hired help. The state has failed to widen the tax net, targeting salaried and lower-income groups relentlessly.

In addition to an imbalanced tax distribution burdening the poor, there has been the abhorrent revelation that government officers have been looting the Benazir Income Support Program (BISP) for personal gain, shamelessly infiltrating a mechanism designed to aid the poor. According to details, 2,543 senior officers were removed from the BISP list and officials from Baluchistan and Sindh had received the highest amounts through the program, while poverty continues to plague the country.

Programs such as BISP are thus unsustainable, not only in their vulnerability to exploitation, but also in terms of their failure to address the poverty factor at its root. Without education and training, individuals find themselves and their families trapped in a cycle of poverty. They are unable to acquire the capabilities needed to pull them out of their misery, generation after generation. To address this conundrum, training and capacity building must be adapted to the context of the required task, whereby it can produce a high level of returns even at the lowest tiers of production. For instance, cotton crop has great potential in terms of poverty eradication, as it requires minimal skills. The task of cotton picking employs the poorest factions of society, particularly women who are overlooked in other areas of industrial workforce development in Pakistan. Worker earnings correspond to the volume of cotton picked, so it can be seen as a rewarding occupation where even the slightest amount of training can go a long way in ensuring a good crop. It is as simple as ensuring that the picked cotton is clean.

A substantial level of opportunities is present for workers at each skill level, provided that the skills in question are effectively developed. However, the textile sector must step forward, in collaboration with the government, to set up viable trainings for skill and capacity development. Each training can have an exponential impact on productivity and sustainability, while a more employable workforce ensures higher wages and a better standard of living.

A World Bank study on apparel and exports, titled "Employment, Wages and Poverty following the End of the Multi-Fibre Arrangement" makes pertinent points that are relevant for Pakistan's case. It also reveals a number of caveats to the formula of export growth corresponding with job creation.

The first caveat relates to an oft-emphasized goal of upgradation in textile sector products to increase exports. The report shows that in Sri Lanka, apparel sector upgradation coincided with an employment decline, particularly for women. When contextualized for Pakistan, it can be predicted that upgradation would render a major chunk of workers obsolete. To address this, evolution in the textile and apparel sector must go hand in hand with workforce development.

The report emphasizes facilitating the movement of the industry into higher-value economic areas in the face of rising global competition. Here market demand comes into play, and these products are not met with sufficient demand locally. Therefore, movement into higher value production is only viable for Pakistan if export growth is simultaneously achieved.

Even so, a growth in exports alone does not guarantee economic assistance for the poor. A cross- analysis shows that rising apparel exports may have corresponded to rising wages and employment in the large Asian countries, but have resulted in falling employment in the case of Sri Lanka. Furthermore, global apparel trends also have a noticeable bearing on a textile worker's earnings. Wages have predictably risen in countries that adapted to market changes, and fallen in those that failed to adapt. Thus, efforts must first be aligned with developing the skills of workers in line with the ever-changing product value, as well as with technical upgradation, before the overarching two- pronged objective of more jobs accompanying higher exports can be sustainable.

While extensive literature exists on poverty alleviation, and there have been numerous recommendations on how to achieve it, the factor of sustained economic growth remains an essential condition underlying all analyses. What is often lacking is an assessment of the composition of growth. As emphasized above, labor intensive sectors such as the initial stages of the textile value chain not only provide employment, but also hire workers from the lower end of the wage distribution. When employment or wages increase for the people at the lowest tier, poverty is tackled head-on, and cotton picking is a key practice that allows this to happen

The impending recession implies that more job losses are underway for Pakistan. This reveals a singular lack of economic progress. Whether it is poverty, unemployment or economic stagnation, each of these troubling factors come with a set of preconditions that surface level solutions cannot cater to. So before it can ensure new jobs, roll out premature income support or enhance its global competitiveness, Pakistan needs to address these preconditions via sustainable policies. A few of the highlighted requirements are thus skill development programs, efficient worker allocation, catering to Pakistan's unique market demands and adapting to the ever-changing global dynamics. These will not only tackle the aforementioned problems at the grassroots level, but will address the country's unique context in order to develop a viable business environment that attracts investments.  

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