To take care of the backlog of jobless and those entering the labour market, economists tend to agree that a growth rate of 7-8 per cent is required.
At least in the short- or medium-term, achieving such a high growth seems to be a remote possibility, given the present economic growth strategy while conceding what the energised provincial governments are doing in the wake of eighteenth amendment and the seventh NFC award for nation building. For example, Khyber Pukhtunkhwa and Sindh are subsidising bank interest charges for micro and small enterprises respectively in rural and semi-urban areas.
As production is almost stagnant, both in farms and factories and very little investment is being made because of major constraints, enough jobs are not being created in the private sector after recent huge lays-offs. The cash-strapped federal government has reduced its spending on physical and social development that did provide thousands of temporary jobs. It means less job creation whereas self-employment schemes are operating on the periphery.
Production in farms and factories is stagnant because the two sectors have been neglected by Musharraf-Shaukat Aziz regime and not much has been done by the present government to revive the commodity producing sectors, hit particularly by energy shortage, high interest rates and depressed domestic demand because of high inflation and rising unemployment.
Over the past decade or more, the process of de-industrialisation has remained unchecked. No serious effort has been made to modernise agriculture. The share of farming in the GDP has declined sharply while about 44 per cent of the population remains dependent on agriculture.
The service sector has expanded rapidly because of mercantilism and particularly due to patronage the banking sector received by military-led regime. As a result, the disconnect between money and productive pursuit is widening.
Unemployment is rampant not only among the unskilled labour but also among the educated youth, many of them with professional skills.
It is time for policymakers to think of how high unemployment can be reduced and people can be put on jobs to maximise production of goods and services. For this to happen, it has to be recognised that if agriculture is unsound, the economy cannot prosper. Farming has to be modernised to increase crop productivity. And to provide a stable market for primary produce, processing and manufacturing of agricultural raw materials, both for domestic and foreign markets, has to be vigorously speeded up.
While facing a double dip recession, the US Federal Reserve and the American administration are now shifting their focus to rising joblessness. It would also be worthwhile for the policymakers in Islamabad to see how Americans are going about in this area and if the country can benefit from their experience.
After all, recessions/depressions occur in countries where too much of national wealth is concentrated in few hands while many are impoverished because of the absence of an equitable distribution of income among corporates, households and regions. The remedy lies in putting people to work and in ensuring full employment. It means a more prosperous consumer market for domestic goods and services.
The credit-driven consumption-led growth failed because incomes of borrowers did not keep pace with the debt servicing costs.
The elitist policies should give away to a dispensation that works for common good. It would help do away with the cycle of boom and bust and achieve a sustainable economic growth.
More and more economists now tend to agree that GDP is not a good measurement for gauging the prosperity level of the common citizens.
This requires a paradigm shift in policies towards people-centred economic development.
Courtesy by Dawn.com