Can Pakistan Economy Add 2 Million Jobs a Year?
Pakistan's work force is about 68 million, according to the World Bank. Its labor force expansion is the 3rd biggest in the world after India's and Nigeria's, according to UN World Population Prospects 2017. Pakistan's working age population in 15-64 years age bracket is expected to increase by 27.5 million people to 147.1 million in 10 years, according to Bloomberg News' analysis of data reported in UN World Population Prospects 2017. Pakistan's increase of 27.5 million is the third largest after India's 115.9 million and Nigeria's 34.2 million increase in working age population of 15-64 years old. China's working age population in 15-64 years age group will decline by 21 million in the next 10 years.
|Source: World Bank Report "More and Better Jobs in South Asia"|
Pakistan's current savings rate of around 13% will clearly not be sufficient to get to the goals of 28%. This gap will need to be filled by a combination of increased savings rate and substantial increase in foreign direct investment (FDI).
Rising working age population and growing workforce participation of both men and women in developing nations like Pakistan will significantly boost domestic savings and investment. Increased foreign direct investment such as Chinese investment in China-Pakistan Economic Corridor over the next several decades will help fill the gap between the national savings rate and investments required to reach 7% annual GDP growth to create over 2 million jobs a year.
Pakistan needs to create over 2 million jobs over the next decade to absorb new workers entering the labor market. With an employment elasticity of 0.5, it will require 7% annual GDP growth. A combination of increased domestic savings and higher foreign investment flows will be needed for investment of 28% of GDP to achieve the required economic growth for sufficient job creation in the country over the next 10 years.
Here's a discussion on this and other subjects:
Pakistan's Labor Force Expansion on Saving, Investments and GDP Growth
Pakistan's Population Growth: Blessing or Curse?
Pakistan's Expected Demographic Dividend
World Bank Report on Job Growth in Pakistan
Underinvestment Hurting Pakistan's GDP Growth
China-Pakistan Economic Corridor
Musharraf Accelerated Growth of Pakistan's Financial and Human Capital
Working Women Seeding a Silent Revolution in Pakistan