Private Sector: Necessary for Bulge Unemployed Youth in Pakistan?

This is a call for developing private sector in Pakistan as a solution for its declining skilled but educated jobless youth. Pakistan has a big problem with youth unemployment, which leads to a brain drain and an economy that stays the same. People lack quality education or skills and do not have enough roles and opportunities to utilize their talents. So even the most qualified people aren’t getting paid enough to get through the current economic crisis.

According to Worldometer, the average age of Pakistanis is 22 years old, and the literacy rate is 58.0%, making it an average educated nation. Pakistan has a large and young population, giving it an age-related advantage over other countries. A third of young Pakistanis are unemployed, and the unemployment rate in the country has increased to 6.40 percent in 2023, according to a recent report from the Pakistan Institute of Development Economics (PIDE).

The Pakistani government hasn’t been able to keep up with the demand for jobs among our young people, and the public sector is already full of workers. This leaves the private sector as the only choice for Pakistan’s educated bulge youth to find work. The fact that there are fewer jobs in the public sector shows how important it is to grow the private sector. It also shows that a good educational background may not be useful anymore if there aren’t any jobs that match their skills, which is one of the things that is driving this trend.  I will give you one example of more demand and less positions available in public sector by a recent event in Islamabad police force department. On December 31, 2022, more than 30,000 men and women from all over Pakistan came to the capital to take a written test for the post of constable (BS-07) in the Islamabad police force, even though there were only 1,667 openings. This event is a scary and an alarming reminder of how few chances there are for young people in Pakistan who have gone to higher education.

Pakistan’s economy faces an overwhelming challenge in meeting the demand for creating approximately 1.5million new jobs for the country’s young population. How can Pakistan achieve success in overcoming this problem in the middle of the current economic crisis?

The Asian Development Bank (ADB) says that Pakistan’s private sector employs 90% of the people in the country and brings in 80% of the country’s GDP. Small and medium-sized companies, as well as large multinational corporations, are all part of the private sector which have the potential to make more jobs in many different fields, including IT, banking, agriculture, textiles, telecommunications, manufacturing, and service industries. This means that the private sector has the potential to give Pakistan’s educated bulge of young people a wider range of job opportunities than the government can.

The private sector is more innovative and adaptable than the government sector because it can come up with new ideas and change with the market which makes it a more attractive place to work for Pakistan’s educated bulge of young people, who want to work in places that are dynamic and difficult. Opportunities for advancement in the private sector are greater than in the public sector. This is not always accessible in the public sector due to the nature of job assignments and the lack of room for progress. Entrepreneurship and innovation have a better chance of succeeding in the private sector, which in turn can boost the economy and create new jobs. Moreover, the pay packages in the private sector are more competitive than those in the public sector. Employers in the private sector are often ready to pay higher wages and give better benefits to get and keep good workers. Young people newly starting out in their careers can have a better standard of living and less financial stress if they make more money.

But the private industry in Pakistan faces many problems, such as lack of rules and laws concerning business, low wages, not giving benefits, and not paying taxes. Additionally, Pakistan’s educated young people don’t have the skills they need to get and keep jobs in a competitive market.

We need to be aware that the private sector utilizes 90% of Pakistan’s workforce and the public sector barely 10%. So, the private sector is both the primary engine of growth and the main source of economic activity and opportunities. Most of the country’s workers are engaged in agriculture, either as renters, as self-employed people, as land owners, or as farm and non-farm workers. 80 percent of people who don’t work in agriculture rely on small and medium businesses. These include small shops, hawkers, thela wallas, hotels and restaurants, social and personal services, construction, and transportation services. So, the rise of the private sector, especially of small businesses and farms, is important for both creating jobs and getting people out of poverty in Pakistan.

Here are some possible strategies that can help the private sector, especially small and medium-sized businesses (SMEs) and agriculture, to grow, invest, and create jobs in Pakistan:

1. Simplify regulatory processes. The complicated regulatory environment in Pakistan is a big problem for small and medium-sized businesses (SMEs). Making it easier to register a business, get permits, and follow rules can encourage more people to start companies and grow them.

2. Give people access to finance. Many small and medium-sized businesses and farms in Pakistan don’t have access to funds, which can be a big problem for growth. Giving these businesses access to low-cost loans, grants, and other financial resources can help them buy new tools, grow their businesses, and create jobs.

3. Improve infrastructure. Poor roadways, limited access to power, and a lack of irrigation facilities can slow the growth of agriculture and small and medium-sized businesses (SMEs). Investing in infrastructure can help businesses move things more efficiently, cut costs, and gain access to new markets.

4. Invest in training and educational opportunities. Education and training workshops can help farmers and business owners get the skills they need to grow their businesses and fight on the global market. This can include training in basic skills, classes on how to successfully operate a business, and help with research and development.

5. Encourage innovation and entrepreneurship. Promoting innovation and entrepreneurship can help the economy expand while creating jobs. This can be done with the help of tax breaks, money for research and development, and help for new businesses and startups.

6. Encourage exports. More exports can help small and medium-sized businesses (SMBs) and farms grow their markets and make more money. To help with this, the government can offer incentives for exports, make trade deals with other countries, and help with marketing and delivery.

Through this open sharing of information and efficient methods for doing business in developing economies, both the public and private sectors can better understand how they can help each other. Even though the private sector can be a driver of growth, creativity, and job creation, it is very important that the government works to create stable and supportive environments. With this kind of cooperation, Pakistan will get closer to achieve economic stability.

Arwa Rehman
Arwa Rehman
I am currently a second-semester student pursuing a bachelor’s degree in Economics at the National Defence University, Islamabad.