Jobs Creation Strategy:

Linking the Dots

Dr Nasir Javed

The Government had announced creating 10m jobs for the unemployed. Almost a year down the road, we hardly have any strategy or a plan, at least nothing has been stated. A few announcements here and there like Insaaf Rozegaar scheme, some run-of-the-mill loaning program in KP, BISP program, Skill development etc are there, but as they say, ‘business as usual shall lead to results as usual’. What we need is a well thought out comprehensive national level strategy and a well coordinated integrated program that makes a real dent in the unemployment and underemployment at the national level. A full scale game changer and not an NGO led pilot.

What we need is an innovative approach, using all the competencies and positives that we have, woven smartly into a comprehensive plan through a Strategy. What I call Linking the Dots. Dots that we already have and can compete globally and require minimum of government funds and encourage private investment.

Dot 1:         Data;  As is more often than not the case in Pakistan, we jump to the solution, without adequately defining the problem. So let’s first define the problem of unemployment / underemployment, before we suggest the solution. And here by defining the issue, I mean Data… i.e. numbers and geography. Who is unemployed and where is he/she. There are at least 3 sets of data needed to define the issue.

We need to who is unemployed, know what is their education, what is their skill set, where do they live, and what are they doing now and what are their aspirations.  How can we plan to create the jobs, in the absence of this data?

How do we get this data? The answer is let the people tell, and they would, as it’s their need. No traditional route of census, survey or consultancies.  Let’s use IT & Web. We need to create a National Database of Unemployed and underemployed population. This requires good software and a Form uploaded on a website, where everyone can enter his/her data. The unique key would be the CNIC number to avoid duplication. Entry Forms should be in English as well as in Urdu and even in Sindhi & other regional languages. For illiterate people, some one can enter data on their behalf, provided CNIC of the verifying person is also entered to ensure correctness of data.

We can complete the database, in less than 3 months, using aggressive marketing through electronic & social media. Government only needs to develop the software and maintain a team for data maintenance.  

We can develop all kind of analytics based on this data, to see how many unemployed we have, along with statistics on education, skills, age, sex, & geographical location up to Tehsil  level. Looks strange in this era of communications, but the fact is NO Government agency has this kind of figures…. Only guess work.

Once these analytics are available, we can have geographically and thematically targeted job creation strategies.

2nd Dot:     Vacancies available, both in the public as well as private sector. The second portal we need is the Vacancies Portal. ALL government jobs must be advertised on this portal, and this would ensure widest publicity and the unemployed won’t miss a chance, as currently the employer may advertise in any of the newspapers, making  it difficult to keep a track of the opportunities. Similarly all registered private companies, firms, industries be bound to advertise on the portal, though they would be free to hire and select as per their liking. But the portal would help us develop accurate data about supply & demand.

3rd Dot:           Supply side data:             We all know that one of the reasons for unemployment is the very serious and significant mis-match between the graduates being produced and the jobs available.

So, another portal should require that all educational and skill development institutions, both in the public as well as in the private sector offering, degree, diploma and certificate level programs and their yearly enrollment data should be entered yearly.  This shall help us coordinate the future jobs and the expected new entrants into the job market and for making evidence based policies & strategies.  

4th Dot:      Identify Niche Market:  Let’s focus on one of the sectors. Our Handcrafts potential in the country. This is our competitive advantage, as we have a large rural population and there are hundreds of skills in handcrafts, many of which are unique to us. Starting in the south from Tharparker to the Northern FATA, every district has a unique product. Some examples being Brass work, leather products, wood carving, bamboo baskets, carpets, embroidery, jewelry, salt lamps, truck art decorations etc. This potential has never been utilized to the full rather many of these arts are dying because of lower returns. Let’s develop this sector through an integrated, innovative & aggressive approach.

 Yes, we know that even now, many of the websites, NGOs, and even government programs are supporting these handicrafts, but the scale is very limited and not likely to create a national level impact.  What we need is innovation in approach. This is the area, where are already have a critical mass of skilled workforce with limited competition, even globally. Here is a portfolio of products that have reasonably high rates of return, even now. With added quality assurance and better designing, packaging & marketing  we can take these returns to a still higher rate.

5th Dot:      Pak Handcraft Marketplace       What the government needs to do is to provide a platform, where the products are marketed and sold across the world. The internet provides an ideal platform. Let the Government sponsor the establishment of a platform like Amazon Marketplace. This is one of the many components of Amazon and here private entrepreneurs sell directly to customers while Amazon is just a connecting platform, providing services.  Another example is the Uber & Careem, where all investment in cars is private and they provide a connecting platform. So the handcraft marketplace (www.PakHandicraft Market.com) would provide a similar platform. The artisans would be producing the products and selling on the Marketplace by themselves or through a large number of entrepreneurs, kind of SMEs.

6th Dot:      Skill Improvement of Artisans  We also need to improve the design and quality of our handicrafts to compete with other countries, like India, Thailand, Vietnam and others. This would require a team of designers and master trainers. We need to use both physical training at skill development centers and TV for lessons. Professionally made training videos in Urdu & regional languages and played extensively on TV would certainly be helpful. Since there would be a demand & competition for quality, these trainings could be provided by the private sector, with some facilitation by Govt.

7th Dot:      Entrepreneurs:                  At universities, we are just producing ‘employees’. Let’s produce entrepreneurs. We need a whole new generation of young entrepreneurs, trained in e-commerce and facilitated through loans and incentives and connected on the PakHandicraftMarketplace. This training program needs innovation. In addition making it as a part of university / college curricula, the  lessons developed be placed on the net, as well as on a special TV channel that should just be teaching people, how to use the marketplace and how to sell the products. This TV channel /s should be telecasting these lessons in all languages.  TV is such a powerful medium of education and we are not using it.

8th Dot:      Marketing Network:      We also need to develop a team of professional marketing agents, working for the entrepreneurs & artisans, trained in e-marketing, producing high quality marketing tools and products for the World. This would create numerous jobs / businesses for young graduates.

9th Dot:          Supply chains.  Once we launch this program, we need to ensure that raw materials & allied products and services are available in abundance. Once a comprehensive & integrated supply chain, from the production of the raw materials, to manufacturing, packing, shipping, marketing etc is developed, there would certainly be many allied jobs giving the program a multiplier effect.

10th Dot:       Safeguards:       We would need to develop a feedback mechanism from customers, to ensure that our exporters don’t cheat and quality is maintained. This is easy to do on an e-commerce platform, where customers post their feedback.

Handicraft sector be made tax free for at least five years. No GST & no Income Tax.

The beauty of this program is that almost all the investment would be made by the private sector and by small investors. We really don’t need billionaires to invest, rather a very large number of small SMEs spread across the country, would sum up to billions of dollars. These entrepreneurs and network once created and trained, would be able to diversify into other products.

Japan, Thailand, China and Vietnam all had developed One Village One Product type programs and are earning billions of dollars in exports. Why can’t we? Yes, we also started a program by the name of AHAN (Aik Huner, Aik Nagar), a few years ago. But it is just another typical government project, and has made hardly any impact. In fact the website is one of the most pathetic ones and the company is close to bankruptcy, as per latest audit reports. (www.ahan.gov.pk).

We can develop similar programs for other sectors also, provided we have the data and of course the will.

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Public Transport in Karachi, The Promises of Bus system

Dr Nasir Javed

A few days ago, there has been a yet another announcement for brining in thousands of buses on the Karachi roads. In the last five years or so, we have seen at least half a dozen public statements, by the provincial ministers and at times by the federal government. In fact, as way back as 2012 perhaps, the Federal PSDP had an allocation of around 8bn for brining in 8000 CNG buses for Karachi, which never arrived. In each case, the Government allocates funds for the purchase of buses, and operations in the public sector. In a few instances, the project did not take off, as the price negotiations failed, for reasons not difficult to guess.

Now, the issue is how to solve this riddle. In my opinion, the Government should not ‘purchase’ buses, rather should leave this to the private sector. One thing that always baffles me is the direct role of ‘operator’ that the Government assumes, and starts running services. Whereas in almost all trading services, where consumers are supposed to pay, the operations should be left to the private sector and the government should regulate the service and may subsidize, if needed.

In case of public transport, if the private sector can provide thousands and thousands of trucks and trailers for transport of goods across the country and even beyond, freely available to the citizens, why is it impossible for it to invest in public transport? The reason is that government tries to regulate the routes and fairs and this leads to chaos, as we see in Karachi. The issue is one of public policy.  

The Solution: The Government should strengthen the department of public transport, with the right kind of professionals, data and IT tools. The department should carry out a comprehensive survey of potential bus routes in the city. With the use of mobile apps and social media, it should not take more than a couple of weeks to come up with a reasonable good quality of data that can help us map the routes. Just for clarity, in most of the cities of this kind, there are usually hundreds of routes and thousands of buses. For example, Shenzhen in China has around 19 Metro Light Rail lines, and around 20,000 buses on 1100 routes. The thumb rule is to have one bus for every 2000 of population. By this formula Karachi needs around 8-10,000 buses.

Once the routes are mapped and numbered, the private sector be invited to run the buses on these, after conducting auction of the routes. Every route would have different financial feasibility, depending upon the area and passenger load. The government should fix the fare for all routes, on a per km formula.  Since the objective is to provide high quality AC buses across the city, and to keep the fare affordable, there would obviously be need for a subsidy. The basis of auction of the routes would be the amount and level of subsidy asked for each route.  The operator asking for the least subsidy gets the route. This of course would be subject to some feasibility study and a benchmark figure.

The department should have a Video wall and IT based monitoring system of every bus movement, using commercially available trackers. This shall ensure that the operator runs the buses as per schedule and covers the full route. Mobile Apps and technology be used for public facilitation and information.

As a rough estimate, operating an AC bus within city costs around 150PKR /KM and an average bus covers around 200km / day. Now assuming that we start with 2000 single Deck AC buses in Karachi, the per day running cost is Rs 30,000/ bus. This includes all operational expenditure, and cost of capital and return on equity and operator s profit etc. This makes almost Rs 10m / bus per year, assuming a slightly reduced operation on holidays. A total of 2000 buses would cost us 20bn rupees per year, providing high quality affordable transport to millions of passengers.  Now assuming that the fare can recover at least half of it, the government needs a subsidy of just around Rs 10 bn / year; actual to be decided on the basis of auction.  Is this too much for 2000 AC buses?

As a policy, we should encourage the local manufacturers to upgrade their facilities and provide us with high quality buses, comparable to imported ones. This would further boost our industry and employment. If can imagine the public benefit of these 2000 buses in Karachi, which later on can be increased to 8,000 in over say a period of five years, so that we can significantly reduce the traffic load and pollution. And all investment would be private, with of course loans from the banks, which should discourage car loans and prefer public transport.

What we need is right kind of public policies and private sector investments and operations, and empower the Government to act as regulator and not operator, that takes ages to just purchase buses.

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5 Million Houses

The first 100 days plan of the PTI Govt says ‘Launch the Prime Minister’s Housing program, to build 5 million housing units for the middle and lower income segments in 5 years through the private sector. This will boost industry, create jobs and provide shelter. 

Very good intentions. The challenge is how to do it?

First, let’s define and analyze the Problem / Issue that we need to solve. More often than not, we start discussing and even implementing the “solution’ before stating the problem.  The State bank (2015) and other agencies estimate a ‘shortage’ of around 9 m houses in the country, with an additional yearly unmet demand of 300,000. My question is, ‘Where are these people living at the moment? On the street. Perhaps NO. This is actually a latent demand, people living in slums, low quality housing, overcrowding, make shift tin sheet roofs in lower income areas, men working in cities and families in village etc etc. The point is that whatever housing we develop should be of at least a reasonable quality / standard and yet affordable. Creating poor quality and crowded houses in the shape of 2 marla units, incremental housing & such like make shift schemes are more likely to end up in slums, as have many initiatives in the past.

2^nd; the Housing Market;  most of the housing in Pakistan is provided by the private sector through a semi regulated (I would say, wrongly regulated ) market mechanism. The market however, caters mostly to the upper middle and upper segments of society, where there is abundance of developed plots / houses available, while for middle and lower income families, there is a dearth of affordable units. It makes more sense to analyze and initiate policy & Regulatory reforms in the Housing & Land market that should tilt the balance in favour of middle and lower income segments. This could be supported by a program of providing housing units in the lower range, using some targeted subsidies, either in land development or financing. My suggestion is that both Policy & Regulatory reforms and housing projects need to be implemented simultaneously, with a time horizon of five years, to achieve the objective.

3^rd; we have promised Providing Houses which should be differentiated from ‘plots’’. A house could be a standalone unit, or a rented apartment in a multistory building. Since cost and availability of developed land at suitable places are key challenges, I would strongly advise to build apartments, on state land, which s lent on 50 years lease. Providing affordable shelter should be the objective, including rental apartments; against the erstwhile dream of a plot and owned house, that has created the shortage. In most of the developed world, upto 50% families live on rental housing, while we have around 10%. We need to facilitate & encourage rental housing.

4^th; we should be clear, houses for whom? As per the 100 days plan, it’s for middle and lower income segments. Very well targeted, as this is the segment with the highest gap between the supply and demand, while there is abundance of housing options for the higher income families which being the most profitable segment, is the darling of formal private sector. So we need to build houses of a range of income from lower to middle and hence careful market segmentation is needed.

5^th; point is where to build these houses. Two step analysis; which cities and where within the city? My suggestion is to carry out a brief study on assessment of the need, as probably it’s more acute in large cities, compared to smaller ones and rural areas, so focus these cities rather than spreading across the country. Within the Cities, there is less likelihood of finding state land for housing, and whatever is available is at the peripheries or away from jobs. This location would be less attractive and would lead to further sprawl and hence counterproductive. Much better option is to use already developed land  that should be within the city boundaries and closer to jobs and markets.

6^th; point is to opt for Urban Redevelopment rather than green field projects. Wahdat Colony Lahore is a prime example, where 2000 kanals of state land is occupied by just 1800 very low quality 70 years old quarters. This should be redeveloped, into medium and hi rise apartments and commercial properties. This would not only provide thousands of houses, including the current occupants, but significant economic activity and would pay for itself. This kind of derelict housing and underutilized lands are available in almost all the cities. Target families like Government officers of BPS 1-14, in Education, Railways, Health etc could be preferred, especially on departmental lands. This would also help to target lower income families. Dozens of Kachi abadies on state land also exist, which could be redeveloped in the second phase, once the occupants get a confidence that if they vacate, they would get a house.

7^th; point is the kind of housing. Suggested that instead of single story houses, it should be apartments, ranging from 1000 to 2000 feet, as any housing below this would not be quality housing. If the land is state land, and is not charged to cost of housing, the average cost would be from 2m to 4m @ 2000 /ft. An apartment building of G+4 is possible without lift, while a 2000 ft apartment can be managed even in G+8 buildings, as maintaining lifts and amenities could be affordable for this segment. Most of these buildings could be multi use, with shops at ground floor and offices at 1^st & 2^nd floors & apartments on 3^rd, 4^th & 5th. Good design is needed to ensure quality of social life. Even some manufacturing activities could be allowed in some buildings, like garment stitching, software houses, call centers, computer assembly etc; largely non polluting, non noise producing units, where females can commute and work in safety. This  mix use would not only add to economic activity, but would also reduce load on commercial activity in residential areas. Jobs and shopping at walking distance would reduce burden on traffic and congestion. For complexes of more than a 1000 apartments, all associated amenities like Mosque, schools, Marriage halls, Gym, and playing grounds etc would be ideal and would generate revenue. All commercial development within the Project would be subsidizing the redevelopment cost, if done smartly.

To make sure that the smaller units remain with the lower income people, a 3 bedroom flat should have just one or maximum 2 Washrooms, and absolutely no facility for car parking, just for cycles and motor cycles. Exposed wiring and pipes also reduce the cost of maintenance, and can look quite decent, if properly done.

8^th; issue is the financing of these houses. In my opinion, this should be from prospective owners, some down payment, and installments after Bank financing. Considering the current land & housing markets, a decent house in PKR 2-4m @ Rs 2000 / sq ft; and that too with financing is quite affordable, especially if within city limits. However to make it more affordable, Government may just subsidize the cost of financing, bringing it to the range of 5-7 %. In case of Government employees, their Pension / Gratuity etc could add to the financing.

9^th; point is the Institutional Reforms; Instead of jumping to making a new authority (Pakistan Housing Authority etc), we should carefully assess the existing institutions, which are numerous, with overlapping functions and idle capacities. Let’s try to refurbish / use existing ones, after suitable reforms and capacity enhancement.

For maintaining multistory apartments, an absolute must is the Condominium law, that protects their ownership rights and makes Owners’ associations mandatory, regulated by a Divisional level registration authority.  This will prevent these units from becoming derelict and dirty, as usually happens.

10^th; is the Policy reforms that would not only facilitate this project, but would expand the Housing & land market in general and make it affordable for majority, ushering in a large scale construction boom, which in the medium to long term should minimize the shortage. Reforms include; Computerized Urban Land records to improve the quality of titles and make them bankable. Making the property tax rate same for self occupied and rental properties, which is currently five times higher. Incentivizing house building and renting and discouraging / taxing open land and plot hoarding for speculation. Reforming the building regulations in the large cities to allow medium and high rise development, unlike the current 38 ft restriction. Declaring special development zones within a radius of 400m around all mass transit stations in major cities.  Master planning of all cities above 100,000 population, and promulgating provincial Planning Act.  Reforming and updating the National Reference  Manual & National Building Codes which are outdated. Reforming the Building Control & Zoning Regime, using private sector Licensed Building Control officers for meaningful implementation. Making Fire Insurance mandatory for all commercial and high rise buildings, to ensure that standards are implemented. A kind of comprehensive Urban Land & Housing Reforms is need of the hour.

Dear Friends,

I have created this blog "DIAGONAL VIEW" to share my thoughts and ideas on some of the most serious issues that our country faces today. In my experience of over 30 years practical life, mostly in the Development sector, what I have observed is that in general, the Political, Bureaucratic and even professional decision makers take a straight line view of the world and try to follow the path of least resistance in decision making. The result is that 'business as usual' would of course lead to result as usual. There is a need to look at our problems, and issues in a non traditional manner and hence the title, Diagonal View.

I plan to post a daily blog on a different development issue.