The Express Tribune Editorial 26 November 2019

Touting cheap labour

Pakistan has traditionally touted its cheap labour rates to attract foreign investment. In fact, at a recent fashion convention in Lahore, the nation’s entrepreneurs and government officials tried to encourage global textile companies to take advantage of the cheap labour available in the country. But is that the way to go? Are the low-paying jobs produced by such investment the sort of jobs we really want for our people? And can such inexpensive labour help provide long-term employment for the nation?

A look at the global employment picture suggests negative answers to these questions. Firstly, investment based on cheap labour rates cannot be relied upon as a long-term means of creating employment. Twenty years ago, China had been portrayed as an investment magnet due to its low labour prices, but it was soon undercut by countries such as Bangladesh, Indonesia and Vietnam which offered even cheaper labour. And there are other nations that currently offer rates as low, if not lower, than these three. So employment based on inexpensive labour is hardly guaranteed to last. Secondly, such employment simply perpetuates the problem of low salaries and does nothing to raise a country’s living standards.

The solution to the problem is for Pakistan to focus on workers’ training and skills enhancement to bring them on a par with international standards. The low level of technology in Pakistan’s industry today offers little for investors and makes it easy for them to move on to one of the many countries now offering even lower labour rates. It is also essential for our companies, whether they be in textiles or any other industry, to plan for the future. The government must also facilitate domestic industry by taking steps such as establishing connections abroad, introducing exchange programmes between universities, and extending financial support. These measures are vital to generate the kinds of jobs necessary to boost industry and our standard of living.

Bringing lady doctors back

In view of the facts that Pakistan’s population growth rate is close to two per cent, maternal mortality rate is 178 per 1,00,000 live births and female literacy rate is only 48 per cent, the initiative to bring lady doctors back to the profession can only be welcomed. The technology-driven initiative is being spearheaded by the Dow University of Health Sciences in collaboration with Educast that specialises in technology-based remote training. The IT-based programme aims to make 35,000 lady doctors part of the country’s medical workforce. In the past 18 months, 700 female doctors, including 700 of those who have settled abroad, have resumed professional practice. Most lady doctors quit practice due to family or social issues. Through the new initiative they are being facilitated to resume practice. These female doctors are to serve mainly people from the low-income groups, especially those living in far-flung rural areas where healthcare facilities are difficult to access. They will be mostly dealing with gynaecological, obstetrics and other issues affecting women.

Women’s education and availability of appropriate healthcare for them are necessary for protecting their health and for controlling the population growth. In Pakistan as well as in most Third World countries, low female literacy rate is one of the significant causes of the runaway increase in population and the unsatisfactory maternal and infant mortality rates. At preset maternal and infant mortality rates are too high in the country. Also, there is the issue of stunting in children. All this makes a strong case for increasing female literacy rate and for providing women with professional counselling. In countries with low literacy rate women fall victim to fistula. If the condition is not treated well in time, it causes a painful death. In the last stages of the disease even husband and family abandon the victim. The problem is caused when a dead baby is left in the womb for several days. The new initiative will greatly help mitigate female health issues.

Tax system automation

It appears that the Federal Board of Revenue (FBR) is planning to pursue 17,000 large businesses with outlets in shopping malls, retail chains and stores to improve tax documentation. Reports suggest that December will see tax authorities working to ensure that automated point of sale (POS) systems are in use at these outlets. Only around 3,500 outlets are currently registered with the system, which reports sales in real-time so that the FBR can ensure that taxes collected from consumers are actually deposited with the government. The Chainstore Association of Pakistan — which says all of its members are registered — had previously noted that less than 10% of retailers are registered, and they are able to undercut honest businesses with lower ‘tax-free’ prices.

FBR Chairman Shabbar Zaidi has already suggested that large retailers integrate with the system at the earliest. Zaidi is also selling the idea by emphasising how the system would reduce the need for direct interaction with taxmen thanks to automation. FBR officials have claimed that POS systems would document the sales of big retailers who are currently evading billions of rupees in taxes. The FBR expects to raise Rs20 billion from this 17,000-strong list of big retailers. Any outlets on the list that do not voluntarily register shall face penalties. These will reportedly be as harsh as the closing of shops by the time the FY2020-21 budget preparation rolls around.

Incidentally, the FBR hopes to have at least 20,000 businesses registered with the POS system by next June. Among the more interesting things trickling out about the new policy is the admission that some retailers are not just evading taxes by under-invoicing and other means, but are also defrauding their customers by making them pay taxes and then pocketing the amount. On the flip side, in order to encourage customers to get electronic receipts — which make it harder to evade taxes — the FBR is expected to come up with balloting-based sales tax refund schemes. Given that the FBR has already committed to spending over Rs12 billion on the automation of the tax system, we can only hope that this effort yields positive results.