Creating new jobs in Pakistan
When pilots sometimes mistakenly fly a plane into the ground, the jargon of air accident investigators describes their action as “controlled flight into terrain.” Something of the sort may be happening with Pakistan. It’s just that our “pilots” — the country’s politicians — are making no mistake. They are aiming for the ground. Assuming we can miraculously replace the present lot with a new flight crew who are able to return us to level flight then there are some less exciting problems that need attention.
One of these is unemployment. There are millions of people out of work. And as gas and power shortages shut down more and more factories across the country, the problem is getting worse. How do we find jobs for these millions of Pakistanis.
Assuming that gas and power shortages can be overcome, a job creation strategy needs to be devised. There are two central elements to any job creation strategy. The first is to create a market for new jobs. And the second is to match the skills of the available work force to the demands of the market.
The surest way to create new jobs is to set up new factories. And setting up new factories requires putting in place incentives for investors to put their money in manufacturing.
These include security, political stability and protected markets. Once we have “level flight” hopefully security and political stability can be assured. Protected markets is another matter.
Received “wisdom” views protected markets as anathema. The dominant mantra for economic prosperity is “open markets.” Yet the history of industrial development since the middle of the 20th century seems to suggest the exact opposite. Countries that have become industrial powerhouses have done so behind near impervious barriers to competing imports.
Japan is a case in point. After World War II with its industry in ruins, Japan set up the Ministry of International Trade and Industry (MITI) to handle trade and industrial policy. It is no coincidence that both trade and industrial policy were handed to a single agency. MITI’s strategy was to erect a semi permeable trade barrier around Japan. Only raw materials and vital machinery would be allowed in. All other finished goods would stay out. This barrier allowed Japan’s industrial corporations to develop without any real competition.
The earliest Toyotas were rickety unreliable machines. When the first export consignment reached the US West Coast in the mid fifties almost all the cars had to be recalled because their radiators failed in the Californian heat. Toyota withdrew from the market and tried again a few years later. Last year, Toyota, for the first time, sold more cars in the US than General Motors.
Had the Japanese market not been protected against imports from more experienced and established manufacturers, Toyota would perhaps not even have survived let alone become the world’s leading automobile manufacturer.
The same ‘semi permeable barrier’ strategy was applied to almost every other area of industry from machine tools to electronics to plastic processing machinery. This is what made Japan an industrial powerhouse providing employment to millions of people and lifting them out of poverty.
If Pakistan is ever to develop a viable industrial sector, it will need to offer some sort of trade protection to domestic manufacturers. This is somewhat more difficult to do today because international agencies are committed to the wrong-headed idea — at least for developing countries — of open markets and free trade. But we have no choice. Either we protect our manufacturers from foreign competition and allow them to develop or we remain fundamentally an agrarian economy with very limited new job opportunities for the millions of our young people now coming out of schools and colleges.
The second element to successful job creation is to match skills to market requirements. Sadly, in our current system we direct almost all school leavers to university.
Many of them become engineers and doctors. And many others earn degrees in the sciences and liberal arts. But any economy to function needs more than just engineers, doctors, and science and liberal arts graduates. A whole array of technical skills is needed in industry, something that our system fails to deliver.
Today there are thousands of young doctors who do not have jobs. And perhaps hundreds of thousands of jobless university graduates with science and liberal arts degrees. We must redesign our educational system.
The emphasis needs to shift from university education to technical training. School leavers should be divided into two streams: The high academic achievers would go on to a formal university education and the others to technical colleges. This will allow us to improve the quality of our university education. And also to give to our young people the sort of technical skills that will allow them to be usefully employed.
— Nadeem Mumtaz Qureshi is the chairman of Mustaqbil Pakistan Party.
