Opportunity Beckons | Ali Tahir

PAKISTAN is ranked sixth amongst the most populous countries of the world. If it continues to add more people at the present growth rate, it will become the fifth largest country after India, China, the US and Indonesia by 2050. The country’s demographic challenge and opportunity are both rooted in the growing concentration of young people (15-30 years) in its population, described as the ‘youth bulge’.

A large and increasing population is generally seen as inimical to individual and collective wellbeing. It squeezes the per capita availability of resources and impedes growth. Malthus predicted in 1798 that the human race would perish because a linear increase in food supplies would be insufficient for an exponentially growing population.

In more recent literature, the focus has shifted to putting the population into different age groups, including the young (0-15 years), those of working age (15-64 years) and the aging (64 years and older), to analyse their impact on economic growth. A higher growth rate in the working age segment is perceived as a ‘window of opportunity’ for speeding up economic development and generating ‘demographic dividends’.

The rationale is straightforward. The young and aging segments consume more and produce less. They depend on society for their sustenance. The working age group (potentially) produces more than it consumes. When it is growing and dependent segments are on the wane, more is added to national income than is required by society. Young and energetic workers and female participation in the labour force provide additional impetus to economic productivity. The logical outcome is enhancement in well-being due to surplus resources.

Almost two-thirds of our population is below the age of 30 years. Since the onset of demographic transition (ie the difference between high fertility and low mortality rates) in the late 1970s, many young people are progressing to the working-age segment. They are augmenting both the youth bulge and the size of the working-age segment in Pakistan’s population vis-à-vis the total population. According to one study, the share of the working-age segment in Pakistan increased from 52pc in the late 1980s to 59pc in 2006. It is expected to peak to 68pc in 2045 before beginning to decline as the bulge graduates to the ageing segment and fertility declines to replacement levels.

Young people are entering Pakistan’s labour force at a time when the number of working-age individuals is declining the world over, particularly in wealthy countries. The youth bulge’s potential for our economy is, therefore, nothing short of amazing.

A capable, skilled workforce is the most effective asset for the generation of wealth. Large-scale export of skilled labour from Pakistan, as distinct from semi-skilled or unskilled labour, can significantly add to foreign remittance inflows. Similarly, trained domestic manpower rendering IT and other specialised services, outsourced by the rich countries, can generate large foreign-exchange earnings. According to one estimate, Pakistan can earn foreign exchange of $20 billion in the IT sector alone. The critical determinants of success in this market are a fit between the skill set of domestic labour and global market needs and quality and competitiveness of the services offered.

Not only do people in the working-age segment provide labour, they are also the most voracious consumer base for local businesses because of their higher income levels and personal needs. Their consumption preferences determine growth patterns of economic sectors individually and of the economy in general. Over the past decade, the impressive growth trajectory in communications, consumer electronics, automobiles, education and retail sectors in an otherwise lacklustre economy is evidence of market expansion driven by the youth bulge. One can argue that some of the economic benefits of the demographic transition have already started accruing to the domestic economy.

While the overall literacy rate is low in Pakistan at around 58 pc, it stands at 67pc in the 15-24 age group which shows that the educational makeup of the youth bulge is improving. Evidence of change is already visible in a large number of young Pakistanis who have made their mark in different fields including the arts, pop music, IT and other professions. The rising number of young women entering educational institutions and the job market is also reorienting traditional notions of family, gender roles and work ethics in our society. This transformation can pave the way for a progressive and liberal society in the years to come.

Pakistan’s demographic window of opportunity opened around the 1990s and is projected to close in 2045. The country has lost two decades but can still optimise the potential dividends of the youth bulge through a set of appropriate policy interventions and by engaging society as a whole.

The writer, a civil servant, has worked as secretary, Planning and Development Department, Punjab.

Opportunity Beckons | Ali Tahir

Published in Dawn, September 7th, 2015