THE ISSUES OF LABOR MARKET IN PAKISTAN

The evolution of economies is viewed by observing the changes in assorted markets. Hence markets serve as indexes where the related variables interact to alter the over all scenario. And whilst dealing with issues of any specific market be it goods, money or labor market, the exogenous factors on which the market is dependant upon must be properly registered and accounted for.

Labor is a wage earning agent who provides his services (physical or mental) by utilizing time to produce work while market is the place where exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions. When we talk about labor market, we are talking about the human market or putting more appropriately in economical terms as the human capital. Unlike pre industrial times the advancements in technology have resulted in growth in trade and manufactures globally. To administer and serve the current phase of activities it requires centralized sites of production, distribution, management, exchange and credit. And all this calls for efficiently grouped and directed human capital in terms of skills, aptitudes, techniques and focus.

Consequently, as a result of dealing with the essential features of labor market one is faced with issues that vary on the basis of national economies because of socio-economic differences e.g. geography, culture, local trends, and gender bias of a particular region. The economy of Pakistan in the present state of affairs is concerned with the following issues in the active labor market as well as at macro and micro level.

EDUCATION

Vocational training Focused learning

Career guidance and counseling

Scholarly aptitudes

ORGANIZATION OF HUMAN CAPITAL

Balance of inputs (work efforts and skills) and outputs (privileges and facilities)

Wage structures should be based on performing “how well a job” rather than performing “what job”

Relationship of human capital and productivity

EFFECTING LABOR MARKET EFFICIENCY

Improvement in the techniques of labor supply in the market Corresponding individual skills with the market demand

Facilitating labor market entry

Improving labor market information

Facilitating job searches

ESTABLISHING TECHNOLOGICAL SUSTAINABILITY

Need to upgrade the industrial sector Need to inculcate higher technology

Need to advance manufacturing sector

UNEMPLOYMENT AND UNDEREMPLOYMENT TRENDS

Jobless growth parity Working poor

Youth unemployment

With drawl (through increased absenteeism, mental withdrawal or quitting)

MACRO ECONOMIC ISSUES

Trade liberalization

EDUCATION

A large number of unemployment in Pakistan comprises of the educated masses. Although the dilemma of individuals who are highly educated but unemployed can be found around the world, the condition in Pakistan is terrible. In 1994, nearly half of the unemployed in Pakistan were educated. This form of

unemployment proves to be more expensive for the state because it wastes the educational dollars that comprise of 91% subsidy to the higher education from where only 9% is being recovered through tuition fees.

About 323,000 students pass the matriculation exam yearly. Out of these students, it is estimated that over half will choose post-secondary education and only 20 percent will seek vocational training or business education. As for those who enter the job market right after high school, studies indicate that only two-thirds of them are able to find jobs, while the rest continue to be unemployed. In addition, 20,000 to 30,000 intermediate-level students fail to find jobs each year.

Because of the subsidized education students find it easy to enroll for high degree programmers. But by the end of the completion of degree most remain underemployed as the learning acquired and the demands of the actual labor market are completely mismatched. So what one finds mostly is a person doing a job which is far off from the education which he acquired.

The mismatch in skills is due to the lack of vocational and technical training during the education period whereas too much stress is laid on abstract learning. The designing of curriculums is more done in a general sense rather than focusing what challenges these graduates will face in the active market.

Nonetheless, even in case of technical training faculties, the skills taught are very much deficient. One example is in the sciences. Only one-quarter of matriculating students pursue further education in science. Among those who decide to pursue a career in engineering, the only option the Pakistani Universities of Engineering and Technology make available is a Bachelor's of Science in engineering. That means these schools act as engineering colleges rather than universities, by churning out graduates with a bachelor's degree level education and completely ignoring post-graduate training.

To worsen off the state of affairs, there is too much emphasis on archetypal fields like civil, mechanical and electrical, computer and software engineering with less emphasis on the dire need of experts in fields of biotechnology, aerospace and advanced medical research which can offer more opportunities bright and willing students who have the interest and intelligence to succeed in such fields.

When it comes to the field of social sciences, we hold the general misconception that research and quality work is being done in this area. But what actually is being produced is the duplication and repetition of previously done study cases. Most importantly people find no such need of serious research in the area of social sciences because all the degree accounts for is “hunt for a job” or promotion. So, as far as higher education is concerned, only those students

should be prompted to secure higher degree programs which hold scholarly aptitude and are focused in the areas of research.

ORGANIZATION OF HUMAN CAPITAL

A somewhat familiar notion is held about treating every individual equally by treating him differently. We know that every unit of labor differs in efficiency and skill. Hence the way all units of labor are grouped and administered is the key to effective production. Because labor force is an asset which if adequately managed can prove to be an effectual tool in the growth and development of economy, be it at micro or macro level. Following pace might be adopted to administer the work force efficiently:

Aptitude building training Skill specialization Fragmenting work force into divisions and providing opportunities of

specialization to each division Development of learning centers Frequent workshops to keep work force acquainted with recent trends Area profile development Public Debates Dialogues and courses

EFFECTING LABOR MARKET EFFICIENCY

Rapid globalization and liberalization, and the resulting need to enhance international competitiveness, have led to increasing emphasis on human resource development (HRD) throughout the Asian region. Knowledge-based investment has become a priority equal to that of creating physical capital. Increasing investment in HRD seeks to ensure a greater stake for the labor force in the process of development by enhancing its capacity for productive work. Thus, a synergetic process is involved whereby a better fed, educated and trained and more productive workforce contributes to greater growth and receives commensurate returns from growth.

In most cases there is a breach between labor supply and labor demand in the market. Most of the job openings fail to recruit literal employs because of inefficient communiqué with the people seeking jobs

ESTABLISHING TECHNOLOGICAL SUSTAINABILITY

The technological advancement in every arena of today’s age has taken the global market through sudden boom. But in order to catch up with the shift in production and distribution methods, all markets need to draw level with changing trends so as to meet the requirements of comparative advantage. In

this mater, Pakistan is an economy passing through a transient phase. In order to industrialize further it needs to alternate its labor intensive and were technological strategy.

UNEMPLOYMENT AND UNDEREMPLOYMENT TRENDS

Most of the labor employed in Pakistan is underemployed or unemployed

MACRO ECONOMIC ISSUES

Increasing globalization and cross-border production has been essential in enhancing international competitiveness. In case of East and South-East Asian economies a trade and industry drive is created because of increasing investment patterns of multi-nationals and huge numbers of Asian companies resulting in production and development across borders. Economic restructuring in terms of trade liberalization, has led to higher investment and trade flows. The economies in transition are advancing from a controlled to a market-driven system by opening up to foreign investment and introducing measures to control and privatize major sectors of the economy in an attempt to build on their comparative advantage. It is generally accepted that in order to achieve international competitiveness high rate of investment, macroeconomic stability and an export-oriented policy regime is required. Ensuring a high rate of investment requires political and social stability, policies that encourage high savings, and confidence in the economy. At the same time, responsible macroeconomic management, mostly achieving low inflation and an appropriate exchange rate will push long-term planning and investment.

In Pakistan’s case the constitutional and political scenario is the biggest hurdle in promoting growth and investment by keeping at bay the foreign investors. The lack of proper law enforcement and uncertainty with patent and rights securities is major problem as well.

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Letter to the Editor (July 14, 2007-DAWN)http://www.dawn.com/2007/07/14/letted.htm#4

Blog posthttp://00amna.blogspot.com/

Islamic banking

IN his letter, Islamic banking (July 1), SBP chief spokesman Syed Wasimuddin � �mentioned: Under Islamic banking, profits earned on financing and investments are �shared with investment account holders. Islamic banks often at their own discretion pass on their own share of profit to the depositors in case a particular pool of investment could not yield expected profits .�

The question arises that what exactly is the nature of these financings and � �investments?

Under Islamic economics, we focus on the transaction of goods, service or time-held usage of a property, asset against money. What is prohibited is interest.

Second, Islamic investment in practice is on the whole modarba-based meaning one can only contribute or define when to trade or not to trade. But while a person invests in a bank, he never knows about the operations of that bank, where they are investing and such like.

The earning of an Islamic bank is supposedly through participation in real economic activities and businesses. For the sake of clarity, the bank should provide the customer with a clear idea of what the business is about and in which direction his funds are going to be invested. The fluctuation in profits received by investors does not validate the process as Islamic banking. The ventures generating these profits shall be deliberated over.

Now back to the original question, whether what is being offered as an implementation of Islamic banking meets the obligation of the concept itself or not? As stated by Mr

Wasimuddin, the profits are earned on the basis of finances and investments. Since the majority of investments and financings existing in Pakistan are in the form of fixed income bonds, mutual funds and bank assurance products, etc., these generate profits in the form of interest in one way or other. Hence, how close our Islamic banking is in compliance with Shariah is still a probable issue.

AMNA MASOODIslamabad