Pakistan’s Labor Productivity Stands Lowest in The Region

Pakistan’s labor productivity showed a growth of 20 percent, which is lowest in the region, during the past two decades, according to a study by State Bank of Pakistan (SBP).

The country lost human capital potential between 1998 and 2018 mainly due to limited access to the education system, substandard quality of education, lack of vocational training and skill-building programs.

In the region, India, Sri Lanka, Bhutan, Vietnam and Bangladesh all experienced labor productivity growth in excess of 100 percent during the same period, the study said.

Out of the total civilian labor force, 40.1 percent of the workers are illiterate, at the same time, 74.5 percent of the literate workers have education up to the matriculation (Class-10) level only.

Furthermore, the Annual State of Education Report (ASER) for 2016, published by Idara-e-Taleem-o-Aagahi (ITA) in association with UK’s Department for International Development (DFID) and Foundation of Open Society Institute (FOSI), reported that on average 10.3 percent of rural Class-10 students enrolled in schools all over the country could not read even a single word in Urdu or other regional languages.

This unsatisfactory performance in schools results in the labor force not being prepared enough for technically demanding jobs. At present, the Pakistani labor market is creating jobs requiring low, medium and high skill-sets in the ratio of 18:71:11, respectively, as per the latest labor force survey (LFS) statistics using International Labor Organization (ILO) skill group classifications. However, ILO projects the ratio to stand at 18:60:22 by 2022, further highlighting the need to train the workforce to be prepared for relatively advanced jobs going forward.

The government needs to devise a framework focusing on skill development of the workforce and adequate provision of associated services in order to stand on an equal footing with the rest of the regional economies, who are focusing on reskilling, digitization and technological advancements to gain a competitive advantage.

Firstly, a significant overhaul of the education system of the country is required to address the dearth of adequately skilled graduates entering the labor force. The effectiveness of primary education needs to be enhanced significantly in order to improve the level of knowledge-absorption and increasing the level of enrollment in schools. Of equal importance is the need for revising the curriculum of academic institutions to better reflect the needs of current and future occupations.

Secondly, focus on vocational and skills training of the workforce is critical in ensuring that the employability levels of the domestic workers remain intact, or ideally increase, during the transitional stage of job transformation and technical advancement, the report added.