Finding the right mix between land, labour and organisation
Economic growth is the increase in the level of production of goods and services during a certain period of time and is measured as the per cent rate of increase in real gross domestic product (GDP), which is adjusted for inflation.
GDP trends are affected by different socio-economic and political factors in different countries including interest rates, population growth trends, exchange rate system, size of public debt, pattern of rainfall, overall environment for investment, incidence of earthquake and tsunami, etc.
Among others, human resource, if managed and utilised efficiently, is an important factor for sustainable economic growth. On the supply side, human resource occupies a pivotal position as an important factor of production after land and capital. However, more workers in a firm do not necessarily mean that the particular firm has gained economic and productivity efficiency. Likewise, shortage of workers could also adversely affect productivity of a firm or organisation. Therefore, management of human resource is important for correcting inefficiencies at a firm or organisation or country level.
In the modern era, there are many developed countries in the world wherein ageing population is a serious problem. For example, average population growth rate of Japan for the period 1995 to 2011 was 0.14 per cent with a peak of 0.4 per cent in 1995 and a minimum of negative 0.1 per cent in 2008. Japan’s population was around 128 million in 2004. With the same growth rate, it is estimated that population would decline to 95 million in 2050 and further to 48 million in 2100. It is worth mentioning that ratio between people with age 20-64 years and 65 years or older was 7.7:1 in 1975, which reduced to 3.6:1 in 2000 and with the steady state; the ratio will decline to 1.8:1 in 2025.
Average population growth rate of Japan for the period 1995 to 2011 was 0.14 per cent with a peak of 0.4 per cent in 1995 and a minimum of negative 0.1 per cent in 2008
Reduction in work force due to extremely low or negative growth rates in these countries has been exerting pressure on labour markets, resulting in disequilibrium between demand and supply of labour. With reduced supply, higher wages are demanded in these markets. As a result, cost of production of businesses increases; an important cause for reduction in competitiveness in the international market. That is why many big firms have either completely shifted capital to labour-abundant countries or partly shifted by opening branches or subsidiaries.
Secondly, with increase in ageing population, the small working population has to work hard and for longer hours to finance government budgets. Also, with higher health expenditures and payments of retirement benefits, the governments have to run fiscal deficits and ultimately deficits shift to next generations due to the common pool problem.
Pakistan has abundant human resource with plenty of young work force. Over the years there is a significant increase in population. With positive and somewhat higher population growth rate, young people continue to be part of the work force. The country experienced increase in population from about 112 million in 1990-91 to around 180 million in 2011-12. The population annual growth rate during 1990 to 2011 was two per cent. Pakistan ranks 10th largest country in the world according to the size of the labour force. The total labour force increased from 50 million in 2005-06 to 59.7 million in 2012-13.
Though the country has abundant human resource it is poorly managed. This poor management is reflected from more than one perspective. Unemployment is quite large, and increasing. The number of unemployed people increased from 3.10 million to 3.73 million from 2005-06 to 2012-13. Needless to mention that agriculture sector alone employs more than 43 per cent of the work force. In this sector there is plenty of disguised labour force. In the manufacturing sector, less than 15 per cent people are employed. Higher level of unemployment also provides evidence that real economic activity is low in the country. That is why inflation is very high in the consumption-led growth economy.
Second, there is low demand of poorly managed/unskilled people in the international market. Though there are millions of Pakistani workers around the world, particularly in the Middle East, majority are engaged in low-paid jobs. There is an increasing demand of workers in developed countries such as Japan, which face acute shortage of labour. By managing human resource, more workers can be supplied to these countries. Sending workers abroad would reduce the burden on local labour market on the one hand and would also be a source of remittances on the other.
Pakistan ranks 10th largest country in the world according to the size of the labour force. The total labour force increased from 50 million in 2005-06 to 59.7 million in 2012-13
Third, poor law and order situation in the country also reflects the status of human resource management. Had human resources been managed to contribute to social and economic development, people might not be engaged in anti-state activities. Conspiracies are hatched in places where majority of people are idle. Without having earning means, young people could be used against the state by unscrupulous elements.
Managing human resource is essential. Besides the above, productively and output of trained and skilled workers is much greater than ill trained and raw workers. Overall economic growth and productivity could be improved by achieving economies of scale through effective and efficient management of human resource, among other things. At present, the country is under-producing goods and services considering potential; resources of land, labour, capital and entrepreneurship.
There is more than one way to manage human resource. It is a matter of priority. Generally speaking, education should be made compulsory for every youth. It is because education enhances overall understanding. Then through professional trainings, the employees are trained and skilled to get expertise in a particular profession. Education is also important for workers who are interested in working abroad.
Facilitating the youth to get scholarship for pursuing higher studies or professional trainings could be helpful also. First, the youth would be well-educated as well as well trained at the expense of foreign countries offering education and training programs. Second, such well-educated and well-trained work force could further provide education and training to the youth. Third, youth going abroad would remit some money from savings or part-time work. In government departments, there is a need for refining the rules on pursuing higher studies or professional trainings.
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