Published On: Wed, Dec 18th, 2013

Unemployment and the PM’s youth programme

Corporate News (Pakistan news) Unemployment

Corporate News (Pakistan news)

Numerous factors contribute to growing ranks of the unemployed: population growth rate compared to the size of economy, low productivity in major sectors of economy like agriculture and energy and a lack of foreign direct investment.

According to the Labour Force Survey 2012, half of the Pakistani workforce is unemployed and the employment to population ratio has risen to 50.4% from 46.8% over the last decade. Jobless rate rose by 6% last year.

According to a report Pakistan had the ninth largest workforce in the world and the figure stood at 57.24 million. Of this, 3.4 million were unemployed.

This massive challenge could develop into a deep-rooted crisis with inflation already slipping into double digits. No concrete measures have been taken to tackle this worsening problem. The Yellow Cab Scheme, Waseela-e-Haq and the Benazir Income Support Programmare few of the actions of governments over the past but none seem to address a long term strategy to root out the problem of unemployment. Secondly targets could not be achieved because of poor implementation and changes in policies with the change of governments.

Democratic governments have a history of launching projects to tackle economic problems without conductng in depth cost and benefit analysis. The PPP-led coalition government launched the BISP in order to tackle poverty and unemployment soon after taking reins of the country in 2008. Nothing significant was achieved after spending billions.

The new government is also following in the footsteps of the previous one and has brought a loan scheme to reduce unemployment. Though it looks like a good initiative when seen in the context of promoting the culture of entrepreneurship, it is a leap in the dark when it comes to implementation.

The PML-N government has unveiled the Youth Business Loan Scheme with an aim to facilitate 100,000 youth by disbursing loans ranging from Rs 0.1-2 million at a mark-up of Kibor plus 500 basis points per annum. Of this, 8% markup will be paid by the borrower and the remaining will be borne by the government.

In the budget for the current fiscal year, Rs100 billion has been earmarked for the scheme, implying that, on an average, applicants can take a loan of Rs1 million each, depending on the strength of their business plan.

A question is being asked how the government will be able to tackle unemployment with loan schemes like the PM youth programme. To implement the scheme, the government will have to shortlist 100,000 applications out of a huge pool of millions. The question here is as to how the relevant authorities amidst the lack of data in the country will determine whether a person is unemployed or not. Also a matter of concern is whether the country really has 100,000 entrepreneurs with the ability to turn an opportunity and capital into profits and prosperity. The risks here are huge especially in a country where loan default and write-offs is a common practice. Maintaining transparency and following a fairly strict criteria while granting these loans will solely determine the level of success for this programme.

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