Investments in education and entrepreneurship can capitalise on youth, contrasted with the risks of neglect and poor job placements
Pakistan is blessed with many riches, but having over 60 percent of its population, forming a youth bulge in itself is an opulence, provided it’s judiciously used.
Unfortunately, Pakistan finds itself ensnared in a political and economic labyrinth over and over again. The country’s political leadership is immersed in its short-sighted power struggles, which has compromised utilising Pakistan’s best asset — the youth in its right place.
Pakistan’s demographic landscape is characterised by a youthful population, with over 67 percent of its citizens under the age of 30, and a median age of 23.4 years (World Bank, 2023). This demographic bulge is a result of a high total fertility rate (TFR) of 3.4 children per woman (World Bank, 2023), and a rapid population growth rate of 1.9 percent per annum (UN, 2023).
Applying the demographic transition theory, Pakistan is currently in the second phase, experiencing a decline in mortality rates while fertility rates remain high. According to the youth bulge theory, this demographic scenario can lead to increased economic growth, innovation, and entrepreneurship, but also poses challenges such as unemployment, social unrest, and strain on resources.
With a population projected to reach 272 million by 2030 (UN, 2023), and 335 million by 2050 (UN, 2023), Pakistan’s demographic dividend can only be harnessed through strategic investments in education, healthcare, and job creation. The country’s working-age population (15-64 years) is expected to increase by 27 percent by 2030, presenting a significant opportunity for economic growth (ILO, 2023).
Thus, as the figures show, Pakistan stands at a crossroads, where important decisions need to be made regarding this youth. One way would be to use this demographic asset as a strategic investment. Pakistan’s youth unemployment ratio stands at 9.5 percent (World Bank, 2022). Pakistan needs to create 1.3 million jobs annually to absorb new entrants into the workforce (ILO, 2022).
An American social entrepreneur, Marc Freedman had proposed what is now called the ‘Youthquake’ theory, which postulated that the path to progress lay in harnessing the talent of youth, which would mean creativity and renewed vigour, with the potential to drive positive changes in the economic vista.
This can be attained through investment in the education sector, which can streamline this talent for maximum economic output. Two vital remedies needing urgent attendance would be to increase development expenditure by at least 10 percent, thus creating an opportunity to add about 1 percent to GDP growth rate,and another would be to invest in technical and vocational education (TVET) to bolster work productivity gains by about 7 percent.
To develop human capital on a long-term basis, Pakistan has no option but to exclusively invest in the health and education of this youth to make it doubly productive for sustainable and long-term growth.
The presence of youth bulges could be a strategic asset, as well as a daunting challenge if it is squandered or inappropriately used. Countries that put this youth bulge effectively in areas where it ought to be have become success stories worth emulating.
For instance, South Korea in the 1960s had 50 percent of its population under the age of 25. Sensing the opportunity to employ it in sectors where it needed those young hands brought about colossal dividends that made South Korea develop rapidly, and gallop towards an immense economic turnaround.
Ireland’s youth bulge in the 1980s and 1990s was uplifted through an intensive investment in education and skill development, which fostered a thriving force that contributed to making it a haven of progress and peace.
While countries that failed at engaging this overwhelming young population have faced severe socioeconomic shocks, and continue to play breeding grounds for chaos at home.
Egypt and Nigeria are two examples, which have not been able to put this youth bulge to where it should be, leading to broad-based social unrest and poverty, making these countries volatile on their own turf.
If Pakistan is to rid itself of this quagmire of nothingness, it will have to step up to challenges, thrown its way by its policy shortcomings.
From here on, Pakistan could experiment with four possible scenarios to lift itself out of economic and political desperation or remain frozen in a critical situation in which it finds itself constantly.
Scenario 1: Investing in education and development
Policymakers decide to go for a generous investment in making youth productive by investing in education.
With this, Pakistan is able to procure about a 2 percent increase in GDP in the next five years. The incidence of unemployment drops to about 5 percent. Though it would take a lot of gall to heavily invest in education upfront and wait for about 5 years before the harvest of this policy manifests itself in terms of GDP, and a youth teeming in with a sense of fulfillment and relevance.
Scenario 2: Encouraging entrepreneurship and innovation
In order to take a long stride in the direction of increasing youth productivity, these policy recommendations can have a revitalising impact on the future of Pakistan’s economy:
— Provide easy access to funding through low-interest loans (e.g. Rs100,000 to Rs500,000)
— Offer tax breaks and subsidies for youth-led startups (e.g. 2-year tax exemption)
— Establish mentorship programmes connecting young entrepreneurs with industry experts
— Introduce entrepreneurship education in schools and universities (e.g. 1-hour weekly classes)
— Create online platforms for youth to showcase their ideas and projects.
These policy recommendations can bring about:
— 20% increase in youth-led startups
— 15% reduction in youth unemployment
— 10% increase in GDP growth driven by youth innovation
— 50% increase in youth participation in the entrepreneurship ecosystem
Scenario 3: Neglecting the youth bulge
In this scenario, things go on as usual without much change. The government continues to neglect the Youth Bulge and the possible consequences it could incur. But there comes a point of socio economic big bang_ if we are not there yet_ where the worst is more imminent in the shape of:
- Increased crime and lawlessness
- Reduced economic productivity
- Decreased investment in human capital
- Weakened national security
- Lost opportunities for innovation and progress
Scenario 4: Utilising the youth for low-skilled labour
In this scenario, the policymakers finally decide to trap their youth using the lure of employment, which as a policy, has only political motivations behind it. In the name of employment, highly skilled youth are tempted to apply for low-skilled jobs, which would silence them and their talent.
The cycle of poverty in this case becomes a permanent feature for them, as they would never be able to mine their true talent and work on it, feeling contented that they have finally ensconced themselves in the job market.
What it would do is to prove the following contentions right:
- Perpetuating poverty: 70% of youth in low-skilled jobs earn less than $2/day, trapping them in poverty (World Bank)
- Limited social mobility: Youth in low-skilled jobs have limited opportunities for career advancement, hindering social mobility (ILO).
- Brain drain: Pakistan loses 50 percent of its skilled youth to migration while utilizing unskilled youth domestically (UNESCO).
- Reduced productivity: Low-skilled labor leads to 30 percent lower productivity compared to developed economies (World Economic Forum)
- Economic stagnation: Relying on low-skilled labor can hinder economic growth, with Pakistan’s GDP growth rate (3.5%) lagging behind developed economies (5-7%).
Based on the aforementioned scenarios, Pakistan’s youth bulge presents both opportunities and challenges. Investing in education and skills development (Scenario 1) and encouraging entrepreneurship and innovation (Scenario 2) offer long-term benefits, including increased productivity, economic growth, and reduced unemployment and poverty. However, these scenarios require significant upfront investments and supportive policymaking and dare.
Neglecting the youth bulge (Scenario 3) or utilising them for low-skilled labour (Scenario 4) can have severe consequences, including increased unemployment, poverty, social unrest, and brain drain. Plus, it would seal the fate of Pakistan for the worst.
The writer is a freelance columnist.