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December 16, 2021

Even at a cursory glance, it is evident that nations with greater gender parity have more prosperous economies. Consider any western economy where women’s full participation has been on the rise for decades and hence driven better performing and more resilient businesses; consider how South Korea has undergone significant improvements for women’s social standing and subsequently the nation’s economy, and where more than half of Korean women are employed and more than 25% of married women are employed as full-time workers. If we compare the context of Bangladesh, from which it would appear we are not that detached, we still see them gaining traction and moving forward, well on their way to be considered a developed country within the next 20 years, while we lag behind with our gender-normative biases. Bangladesh has managed to increase female employment in the last decade while also cutting the wage gap between men and women significantly. (World Bank Report, 2019). Like Pakistan, Bangladesh’s exports are majorly supported by its textile sector, but the policies employed in its development have been much more effective at keeping up with market needs. The significance of innovation and fashion trends in the textile sector is a key factor that Bangladesh had managed to keep up with. As a result, importers of textiles favor Bangladesh’s products and their economy continues to grow, creating a number of jobs at each skill level and harnessing the efforts of the population efficiently. Furthermore, despite producing no cotton and relying completely on cotton imports, Bangladesh has managed to profit immensely from processing and exporting high quality cotton ready-made products while Pakistan, the 3rd largest producer of cotton in the world, has failed to capitalize on it.

Malaysia, Indonesia and Vietnam present us with ideal cases, where economic growth was achieved in spite of non-liberal cultures. The religious interpretations that are commonly held in these countries do not serve to be restrictive to a woman’s freedoms, and this factor has allowed for much less stigma on women in the workplace, thus taking each respective economy forward much more rapidly.

This system fosters a trend that is detrimental to the country’s economy. A substantial level of opportunities is present for workers at each skill level, but the availability of these opportunities tends to remain skewed in favor of men, essentially neglecting half of the country’s population. The degree of skew increases along with the level of skill involved. For instance, the task of cotton picking employs factions of society that have the least skills, particularly women who are overlooked in other areas of industrial workforce development in Pakistan. At most, their job is as complex as ensuring that the picked cotton is clean. But when it comes to women whose capabilities extend far beyond menial labour’s, Pakistan fails to capitalize on these skills. As more skills are acquired, the top employment positions continue to go to men, while women are favored for lower skilled labour and face unfair competition with men for the more advanced roles.

The dichotomy that exists between opportunities available to male and female job-seekers is further aggravated by conditions such as rural settings. The graph below shows a more marked increase in unemployment for women in rural settings with an increase in education level, as opposed to urban. Although this has more to do with the availability of higher level jobs being restricted to more developed regions, this has a spillover effect. That these women will likely have poor luck finding employment even in an urban setting, as jobs are already scarce for the existing unemployed women in those areas.

Although the disparity between male and female employment levels is the most striking thing about these graphs, we must also acknowledge that overall employment in Pakistan is far less than what it should be. A key reason for Pakistan’s lagging behind is the quality of education and the skills being imparted, regardless of the degree level. A push for improved quality and standards in these educational institutes is required, as research shows that trends in the developed world are shifting in favor of competencies over degrees. 74% of respondents to a survey in the US agreed that there is a lack of skilled talent and updated technical-knowhow among the available workforce in recent years, so one can imagine the state of affairs in Pakistan.

An inability to keep up with technological development impedes economic development. 40% of Pakistan’s labour force finds employment in the textile sector, and while technology moves forward, graduates whose degrees have failed to keep up to date miss out on these opportunities. This is why trainings for skill and capacity development must be designed and must give gender-balanced opportunities. Each area of training can have an exponential impact on productivity and sustainability, while a more inclusive workforce can ensure a greater pace of development. Though advances in technology are rapidly changing the skills needs of the business community, developed countries exhibit how automation is an opportunity that can potentially create as many jobs as it eliminates. However, this goes hand in hand with the need for a consistently updated curriculum that can keep pace with technology and can be accessible to a majority of the population.

These technical factors can be viewed in every career environment in Pakistan, but the needs of each remain the same – equal opportunity capacity-development needs to be institutionalized so that employment can increase along with gender parity. And the change begins with increased awareness, which we have seen a wave of in recent years. The Aurat March protests that began in 2018 on the International Women’s Day called for that same awareness, with protesters holding up banners that condemned traditional expectations of a woman’s role. A revolutionary movement for Pakistan, it remains as essential as ever as proven by the recent petitions against the march due to its being “anti-state” and “un-Islamic”.

At this stage, we are largely cognizant of Pakistan’s economy falling behind its South Asian brethren. However, chief among the reasons is that Pakistan ranks as the third worst country in global rankings for gender equality. There is a need for significant progress in the area of female empowerment before we can achieve economic growth, by following a results based approach where women empowerment can be measured and seen by a greater number of women in the workforce.



December 15, 2021

Pakistan falls short of its growth objectives time and again, despite setting well-calculated goals, showing that the problem lies somewhere in implementation. Two crucial indicators for development in third world countries are technological advancement and investment in human capital. We can attribute the contrast between Bangladesh’s and Pakistan’s economic growth to how they adapted to these needs of the hour.

Bangladesh aptly prioritized export growth, with a particular focus on streamlining its textile sector, and thus ensured that it remained adaptive to global trends. Technology upgradation remained frequent, health and education gained importance, and employment was increased through greater women inclusion. This is an essential aspect of human capital development – empowering women who have just as much, if not more, to contribute to uplifting an economy. The same approach could have produced better results in Pakistan, but the unfortunate fact that human development has not been given priority has cost Pakistan immensely.

The graph below shows a very significant difference in male and female employment trends in Pakistan. Despite having the same education, background and skills, a woman in Pakistan is consistently less likely to land a job than a man. What is more unusual about these figures is that they show an exponential increase in female unemployment past a certain degree of education, during which period a man’s unemployment decreases, as it logically should. Women with a college degree, it can be concluded, are more likely to find employment in areas which require fewer skills than they possess, thus depicting a disturbing dichotomy between the way male and female skills are valued.

The reasons for this difference are even more unsettling. An extremely common point of view in Pakistan is that jobs requiring regular interaction with non-family men and frequent travel are not appropriate for women.

Asking a person with this viewpoint to justify it would likely spur a futile debate. However, psychologically analyzing how these conclusions are reached depicts a bias toward traditional gender roles, as well as the threat working women present to the social status quo (World Bank Blog, 2019). Working women are something of an anomaly to most people in Pakistan, who have grown accustomed to a woman’s role as a caregiver. Even more unfortunately, several women also uphold these same views that are blatantly restrictive of their own freedoms.

“Another generation of women will have to wait for gender parity,” according to the World Economic Forum’s Global Gender Gap Report 2021. As the impact of the COVID-19 pandemic continues to be felt, closing the global gender gap has increased by a generation from 99.5 years to 135.6 years. This dismal finding has even further implications for developing countries, where a slow pace of progression translates into weak policy implementation, prevalence of societal norms, and a lack of awareness on the importance of equal rights.

It is astonishing to see that despite factors like rising female literacy, awareness of women’s rights and the introduction of laws and policies emphasizing gender equality, the already high level of female unemployment has been rising further since 2019. With social media and news stories reporting cases of gender-based discrimination every single day, we must strive to identify the underlying factors that allow these problems to prevail. It’s high time we identify the persisting gaps in policy implementation and develop a results-oriented approach, so that women can claim their role as valuable members of the workforce.

Further, there are still countries where the rate of women’s literacy is significantly lower than that of men. For instance, in Chad only 14% of women are literate relative to 31.3% of men, while in Guinea 22% of women and 43.6% of men are literate. Similarly, in Liberia, Yemen, Mali, Pakistan, Benin, Senegal, Burkina Faso, Togo and Angola, less than 67% of the literacy gender gap has been bridged to date.

One of the most pressing areas for advancement for South Asia is the gender gap on the Economic Participation and Opportunity sub index, where only 33.8% of the gender gap is closed, the lowest globally. Within the region, there are countries where economic gaps are even wider: Afghanistan has only closed 18% of this gender gap, which is over 45 percentage points lower than the regional champion, Nepal (63%).

The three other largest countries in the region are not much further ahead: India and Pakistan have only closed 31.6% and 32.6% of its Economic Participation and Opportunity gap, respectively, while Bangladesh has closed 41.8%. Notably, economic gaps in these two countries are even wider than they were one year ago. India’s score declined by 3 percentage points and Bangladesh’s by 2 percentage points.

Gender discrimination in Pakistan takes many forms. Misogyny rears its ugly head at all levels of society, and gains strength from the traditional views on a woman’s role. The most disappointing trends are seen surrounding working women, who possess the requisite skills and education but are constantly sidelined in favor of men.


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December 13, 2021

Pakistan falls short of its growth objectives time and again, despite setting well-calculated goals, showing that the problem lies somewhere in implementation. Two crucial indicators for development in third world countries are technological advancement and investment in human capital. We can attribute the contrast between Bangladesh and Pakistan’s economic growth to how they adapted to these needs of the hour. Bangladesh aptly prioritized export growth, with a particular focus on streamlining its textile sector, and thus ensured that it remained adaptive to global trends.

Technology up-gradation remained frequent, health and education gained importance, and employment was increased through greater women inclusion. This is an essential aspect of human capital development – empowering women who have just as much, if not more, to contribute to uplifting an economy. The same approach could have produced better results in Pakistan, but the unfortunate fact that human development has not been given priority has cost Pakistan immensely.

The difference in male and female employment trends in Pakistan

Despite having the same education, background and skills, a woman in Pakistan is consistently less likely to land a job than a man. What is more unusual about these figures is that they show an exponential increase in female unemployment past a certain degree of education, during which period a man’s unemployment decreases, as it logically should. Women with a college degree, it can be concluded, are more likely to find employment in areas that require fewer skills than they possess, thus depicting a disturbing dichotomy between the way male and female skills are valued.

The reasons for this difference are even more unsettling. An extremely common point of view in Pakistan is that jobs requiring regular interaction with non-family men and frequent travel are not appropriate for women. Asking a person with this viewpoint to justify it would likely spur a futile debate. However, psychologically analyzing how these conclusions are reached depicts a bias toward traditional gender roles, as well as the threat working women present to the social status quo (World Bank Blog, 2019). Working women are something of an anomaly to most people in Pakistan, who have grown accustomed to a woman’s role as a caregiver. Even more, unfortunately, several women also uphold these same views that are blatantly restrictive of their own freedoms.

“Another generation of women will have to wait for gender parity”, according to the World Economic Forum’s Global Gender Gap Report 2021. As the impact of the COVID-19 pandemic continues to be felt, closing the global gender gap has increased by a generation from 99.5 years to 135.6 years. This dismal finding has even further implications for developing countries, where a slow pace of progression translates into weak policy implementation, the prevalence of societal norms, and a lack of awareness on the importance of equal rights.

The significant rise of gender-based discrimination in the country

It is astonishing to see that despite factors like rising female literacy, awareness of women’s rights and the introduction of laws and policies emphasizing gender equality, the already high level of female unemployment has been rising further since 2019. With social media and news stories reporting cases of gender-based discrimination every single day, we must strive to identify the underlying factors that allow these problems to prevail. It’s high time we identify the persisting gaps in policy implementation and develop a results-oriented approach so that women can claim their role as valuable members of the workforce.

Further, there are still countries where the rate of women’s literacy is significantly lower than that of men. For instance, in Chad only 14% of women are literate relative to 31.3% of men, while in Guinea 22% of women and 43.6% of men are literate. Similarly, in Liberia, Yemen, Mali, Pakistan, Benin, Senegal, Burkina Faso, Togo and Angola, less than 67% of the literacy gender gap has been bridged to date.

One of the most pressing areas for advancement for South Asia is the gender gap on the Economic Participation and Opportunity sub-index, where only 33.8% of the gender gap is closed, the lowest globally. Within the region, there are countries where economic gaps are even wider: Afghanistan has only closed 18% of this gender gap, which is over 45 percentage points lower than the regional champion, Nepal (63%).

The three other largest countries in the region are not much further ahead: India and Pakistan have only closed 31.6% and 32.6% of its Economic Participation and Opportunity gap while Bangladesh has closed 41.8%. Notably, economic gaps in these two countries are even wider than they were one year ago. India’s score declined by 3 percentage points and Bangladesh’s by 2 percentage points.

Gender discrimination in Pakistan takes many forms

Misogyny rears its ugly head at all levels of society and gains strength from the traditional views on a woman’s role. The most disappointing trends are seen surrounding working women, who possess the requisite skills and education but are constantly sidelined in favor of men.

Even at a cursory glance, it is evident that nations with greater gender parity have more prosperous economies. Consider any western economy where women’s full participation has been on the rise for decades and hence driven better performing and more resilient businesses; consider how South Korea has undergone significant improvements for women’s social standing and subsequently the nation’s economy, and where more than half of Korean women are employed and more than 25% of married women are employed as full-time workers.

If we compare the context of Bangladesh, from which it would appear we are not that detached, we still see them gaining traction and moving forward, well on their way to being considered a developed country within the next 20 years, while we lag behind with our gender-normative biases. Bangladesh has managed to increase female employment in the last decade while also cutting the wage gap between men and women significantly. (World Bank Report, 2019).

Bangladesh’s exports are majorly supported by its textile sector

The policies employed in its development have been much more effective at keeping up with market needs. The significance of innovation and fashion trends in the textile sector is a key factor that Bangladesh had managed to keep up with. As a result, importers of textiles favor Bangladesh’s products and their economy continues to grow, creating a number of jobs at each skill level and harnessing the efforts of the population efficiently. Furthermore, despite producing no cotton and relying completely on cotton imports, Bangladesh has managed to profit immensely from processing and exporting high-quality cotton ready-made products while Pakistan, the 3rd largest producer of cotton in the world, has failed to capitalize on it.

Malaysia, Indonesia and Vietnam present us with ideal cases, where economic growth was achieved in spite of non-liberal cultures. The religious interpretations that are commonly held in these countries do not serve to be restrictive to a woman’s freedoms, and this factor has allowed for much less stigma on women in the workplace, thus taking each respective economy forward much more rapidly.

A substantial level of opportunities is present for workers at each skill level, but the availability of these opportunities tends to remain skewed in favor of men, essentially neglecting half of the country’s population. The degree of skew increases along with the level of skill involved. For instance, the task of cotton picking employs factions of society that have the least skills, particularly women who are overlooked in other areas of industrial workforce development in Pakistan.

At most, their job is as complex as ensuring that the picked cotton is clean. But when it comes to women whose capabilities extend far beyond menial labor, Pakistan fails to capitalize on these skills. As more skills are acquired, the top employment positions continue to go to men, while women are favored for lower-skilled labor and face unfair competition with men for the more advanced roles.

The dichotomy that exists between opportunities available to male and female job-seekers is further aggravated by conditions such as rural settings. The graph below shows a more marked increase in unemployment for women in rural settings with an increase in education level, as opposed to urban. Although this has more to do with the availability of higher-level jobs being restricted to more developed regions, this has a spillover effect. That these women will likely have poor luck finding employment even in an urban setting, as jobs are already scarce for the existing unemployed women in those areas.

Although the disparity between male and female employment levels is the most striking thing about these graphs, we must also acknowledge that overall employment in Pakistan is far less than what it should be. A key reason for Pakistan’s lagging behind is the quality of education and the skills being imparted, regardless of the degree level. A push for improved quality and standards in these educational institutes is required, as research shows that trends in the developed world are shifting in favor of competencies over degrees. 74% of respondents to a survey in the US agreed that there is a lack of skilled talent and updated technical-knowhow among the available workforce in recent years, so one can imagine the state of affairs in Pakistan.

An inability to keep up with technological development impedes economic development. 40% of Pakistan’s labor force finds employment in the textile sector, and while technology moves forward, graduates whose degrees have failed to keep up to date miss out on these opportunities. This is why training for skill and capacity development must be designed and must give gender-balanced opportunities.

Training can have an exponential impact on productivity and sustainability

while a more inclusive workforce can ensure a greater pace of development. Though advances in technology are rapidly changing the skills needs of the business community, developed countries exhibit how automation is an opportunity that can potentially create as many jobs as it eliminates. However, this goes hand in hand with the need for a consistently updated curriculum that can keep pace with technology and can be accessible to a majority of the population. These technical factors can be viewed in every career environment in Pakistan.

But the needs of each remain the same – equal opportunity capacity-development needs to be institutionalized so that employment can increase along with gender parity. And the change begins with increased awareness, which we have seen a wave of in recent years. The Aurat March protests that began in 2018 on International Women’s Day called for that same awareness, with protesters holding up banners that condemned traditional expectations of a woman’s role. A revolutionary movement for Pakistan, it remains as essential as ever as proven by the recent petitions against the march due to its being “anti-state” and “un-Islamic” (The News).

At this stage, we are largely cognizant of Pakistan’s economy falling behind its South Asian brethren. However, the chief among the reasons is that Pakistan ranks as the third-worst country in global rankings for gender equality. There is a need for significant progress in the area of female empowerment before we can achieve economic growth, by following a results-based approach where women empowerment can be measured and seen by a greater number of women in the workforce.


Captureg.jpg

November 17, 2021

 | 

Pakistan’s trade imbalance is largely attributed to declining export competitiveness, a point which has been re-emphasized in last week’s Pakistan Development Update by the World Bank. This report has laid out the causes of Pakistan’s falling export share:

  • high effective import tariff rates;
  • limited export market access which discourages exports;
  • inadequate supporting services for exporters, e.g., long-term financing of capacity expansions and market intelligence services to secure new export contracts; and
  • low productivity of Pakistani firms hindering competition in global markets.

Furthermore, the inconsistency of policies and frequent policy changes create an unsuitable environment for investments in the export industry. Our economy is largely inward-oriented, with a declining share of exports in GDP. As a result, the country’s foreign exchange, employment levels and productivity have taken a hit. There is a lack of value-addition, sophistication and diversification in the export basket due to constrictive policies, leading to an anti-export bias and making the industry uncompetitive. As per the latest World Bank assessment, the export market share of Pakistani firms has declined since 2000 – particularly over the last decade. The share of textile and apparel, Pakistan’s flagship export sector, has shrunk from 2.3 percent in the early 2000s to 1.8 percent in 2020. Overall, Pakistan’s presence in global markets has shrunk substantially in the last two decades, while global trade almost tripled.

Energy security is perhaps the most critical component of industrial competitiveness – a case in point being the 27% growth in textile exports in the first four months of FY22 while consistent policy and regionally competitive energy was being provided by the government. Moreover, consistent policies over the past 3 years have enabled the industry to expand its capacity, attract investment and upgrade its technology leading to over 100 new textile units and creating millions of jobs.

The textile sector requires unwavering support to maintain this growth, so the sustained provision of a supportive energy package will have long-term benefits for the entire economy. The government’s plan to end the supply of competitively priced gas to exporters is illogical as it is a critical input that should ideally be priced at the regionally competitive rate. With overpriced energy, particularly gas, the output price will be uncompetitive as any downstream unit in the value chain will prefer imported inputs instead of expensive domestic inputs. In this situation, local units at the high end of the value chain are at risk of closing down, leading to the loss of countless jobs. There remains a dire need for a long-term energy security plan which meets the requirements of the industry.

The cross-country comparison in the cost of conversion in the table below shows that the textile units in Pakistan are incurring power and energy costs 2.4 percentage points more than India and 7.8 percentage points higher than Bangladesh. This demonstrates that the ideal, regionally competitive electricity tariff would be around 7.4 cents/kWh.

=============================================================================
Cross-Country Comparison of Conversion Cost
=============================================================================
                Pakistan                 India                  Bangladesh
=============================================================================
Power   Wages&   Depreci   Power &   Wages & Depreci   Power& Wages&  Depreci
& Fuel  Salaries   ation    Fuel     Salaries   Ation   Fuel   Salaries ation
-----------------------------------------------------------------------------
Average
-----------------------------------------------------------------------------
(2017-20)34.6    29.3    10.3    29.8    28.0    16.0    25.5    33.8    18.0
2017     36.1    29.9    10.0    26.9    26.6    16.5    26.9    33.0    17.5
2018     36.4    29.3    10.1    30.6    27.1    14.8    24.4    29.8    15.8
2019     33.6    29.4     9.6    31.2    30.8    16.4    26.0    35.8    18.4
2020     32.8    28.7    11.8    30.4    27.6    16.3    25.0    37.1    20.9
=============================================================================
Source: PIDE
=============================================================================

Pakistan cannot afford to have an uncompetitive export-oriented sector. The industry is presently demanding that the power tariff must revert from 9 cents/kWh to 7.5 cents/kWh, as anything higher renders exports uncompetitive. It is not possible for the industry in Punjab to remain competitive while getting 9 cents electricity and 9 dollars’ gas when other provinces are being provided gas at 4.5 dollars. The irony is that 70% of the industry is located in Punjab.

Further constrictive policies are in the form of substantial barriers to trade and to new firms that should be able to enter exporting. Our tariffs are among the highest in the world, and countless non-tariff measures (NTMs) create further hindrances. These need to be rationalized or completely done away with in order to enable sustained export growth. The weighted average tariff for Pakistan stands at 12.1%. In contrast, our regional trade competitors China, Indonesia, Malaysia and even Sri Lanka have far more reasonable weighted averages of 7.5%, 8.1%, 5.7% and 9.3%, respectively. If we take into account the additional customs duties and regulatory duties, Pakistan’s costs rise exponentially. Meanwhile, the National Tariff Policy has not been implemented in letter and spirit. NTP was formulated with an eye to reducing complexity in the entire tariff system, but due to poor management it has been counterproductive as the entire system has become even more intricate.

===========================================================
Country                   Shares of Import Tariffs in Total
                                  Tax Revenues (%)
===========================================================
Pakistan                                                 48
Malaysia                                                1.6
Turkey                                                  2.4
Indonesia                                               2.6
South Korea                                             3.2
Thailand                                                3.9
China                                                   3.9
India                                                  12.8
===========================================================
Source: World Bank
===========================================================

Furthermore, SBP is likely to raise the policy rate with time, thereby increasing the differential between the policy rate and the export refinance rate. Subsequently, every incremental dollar earned will cost more, creating issues for the exporting sectors. It will be very difficult to maintain export growth momentum if EFS enhancement is constrained.

Most textile economies in our region benefit from the duty-free input of machinery and raw materials, particularly for the production of export commodities. Additionally, subsidized utility rates are available in Bangladesh, Cambodia and Ethiopia. Bangladesh also benefits from an exemption from value-added tax on utility services related to the production of goods. These policies have substantially assisted these countries in achieving high export volumes and economic growth rates.

In Pakistan, while customs duty on raw material has been removed, duties on intermediate and final goods remain unchanged while additional customs duty and regulatory duties have been increased, thus rendering the overall effect negligible. The reasoning given for these irrational duties is that they provide protection for domestic industries from international competition and generate revenue to manage budgetary requirements. It is unfortunate that short-term revenue generation has taken precedence over long-term sustainability and industrial competitiveness, while industries’ efforts to become internationally competitive are undermined.

Numerous schemes have been made available over the years to streamline access to imported inputs at world prices, but these are largely ineffective. Only about 2% of textile and apparel exporters in Pakistan can access duty suspension schemes such as the Duty and Tax Remission for Exports Scheme (DTRE) and Manufacturing Under Bond (MUB) for their imported intermediates, in contrast to 90% in competitor countries such as Bangladesh, so their relative growth rate comes as no surprise. Furthermore, DTRE in Pakistan is highly inefficient, as it can take two to four months to import synthetic fibers, leading to delays and interruptions in production that are not acceptable to global buyers.

A reliable and supportive energy environment paired with a more efficient use of customs tariffs in Pakistan can largely improve industrial competitiveness and mitigate the very pressing risk of premature deindustrialization. If customs cannot be employed in an efficient manner, they should simply be removed altogether as they are stifling innovation, efficiency and export growth. The country must stop following an outdated import-substitution policy which relies on levying protectionist duties as it has contributed to stagnancy in technological innovation and an anti-export bias. Meanwhile, as TERF has come to a close and there are higher commodity prices, there is resultantly higher pressure on the working capital requirement of manufacturing sectors. Exporting sectors need increased support in this situation so that they can continue to bring in much needed foreign exchange and steer economic growth. Consistency and continuity of policy constitute the key to attaining export led growth and brings us a step closer to economic and political independence.


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