There can be no argument that employment generation is critical for initiating the chain reaction of increased consumer spending, investment and ultimately growth. But for it to be meaningful, the exercise must be undertaken in a dynamic and targeted manner. Employment opportunities should be carefully generated in sectors like agriculture and manufacturing; where we have traditional advantage as well as those that need upgrading to boost productivity and export earnings.
The initiative’s success will depend on creating conditions necessary for expansion and value addition. The present economic situation, strained though it is, does present the government with interesting opportunities that can unlock near and medium term job growth. Targeted investments in infrastructure development, for example, will not only lay the foundations for future growth, but also provide immediate employment opportunities.
Again, the exercise requires several inputs, and the need for careful coordination and monitoring cannot be stressed enough. Infrastructural upgradation should begin with the power sector, which continues to hold down industry growth, exacerbating an already fragile unemployment scenario. Ensuring energy provision will immediately boost productivity, not only improving revenue generation but also engineering second round job growth.
Another important feature that needs much more government attention is poverty, which is forever interlinked with the unemployment phenomenon. While employment generation tends to take its sweet time materialising, subsistence requirements are immediate and real-time. Especially in times of high food inflation and low job-growth, when the middle class is prone to shrinking, the government must immediately setup a system for subsidising essential food items for at least the bottom 20-30 per cent of the population.
Last year’s floods played havoc with the country’s socio-economic fabric. And with more floods forecast, the prospect of yet more disruptions, unemployment, inflation and increased poverty confronts us. The government must take proactive steps to bolster the working class and ensure poverty is kept in check.
Significantly, an important aspect of poverty alleviation that is often overlooked or ignored is improvement of the public transport system. Lower income groups depend on this network as their prime means of transportation. Improving it is an essential poverty combating measure. In Sindh, we have already begun public works programs concentrating on infrastructure, road networks, farm-to-marketplace and rural-to-urban area linkages and food subsidies. As explained, such expenditure brings dual benefits of ensuring long-term productivity while creating immediate work opportunities. However, other provinces have yet to initiate such programs, and should do so sooner rather than later.
The provinces can no longer procrastinate on raising funds and must assume a much more aggressive posture in terms of revenue generation. Increased resources that have come their way through the 18th amendment must also reflect a proportionate realisation of responsibility. Chief among them is ensuring tax revenues. Needless to say, programs outlined above require substantial resources to make initial investments that set off growth prospects.
Interestingly, the debate regarding agriculture taxation has become very prominent, with all eyes looking to the provinces to finally extract increased revenues from this head. It is not mentioned nearly enough that an agriculture tax is already in place. If it is revision of this particular tax that is needed, then the debate should revolve around increase rather than adoption, instead of confusing the issue.
Real revenue lies in taxing services. The Sindh government’s efforts at empowerment to collect sales tax on services from the new financial year have finally borne fruit. Initial bottlenecks notwithstanding, when revenues start rolling, the GST will prove itself to be the better form of taxation and signify progress. The 18th amendment is the vehicle of change that the provinces must now leverage to ensure higher returns, without which employment will not be stimulated.
On the federal level, the first order of business must be curtailing non-development expenditure. At present, it is not even equitable between sectors, with the burden of excesses borne by industry. Our budgetary situation is like spending bulk of the revenue on the head office and security, leaving no space for raw material and spare parts. With government expenditure amounting to 120 per cent of tax revenues, the situation is simply unsustainable.
Time is of the essence. In order to raise and free funds enough for essential initiatives, the government will have to be swift in formulating an effective plan of action. If unemployment spikes now, when growth is locked in a low cycle and inflation is unbearable, rebuilding will be infinitely more difficult.
The writer is adviser to Chief Minister, Sindh, on Planning and Development
