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Pakistan’s Productivity Conundrum

Published in Jul-Aug 2022

The structural issues that hamper Pakistan’s economic future.
Photo: WNYC
Photo: WNYC

The most basic and significant aspect affecting a person's standard of living is their degree of productivity. People can get what they want faster or more by raising it. Productivity increases supply, lowers prices and raises real incomes. We can define physical productivity as the amount of output produced by one unit of input in one unit of time. Productivity increases lead to increases in the value of labour, which leads to wage increases. Aggregate production gains are associated with higher average productivity.

Investment in technology, education, training, infrastructure, communications, the legal system, rule-of-law, housing, healthcare, professionalism, merit and equal opportunities increases people’s productivity and results in higher economic growth. Unfortunately, several structural issues have hampered steps to increase productivity in Pakistan and failure to address this will prevent the country from achieving economic progress.

The Role of the Establishment in Politics: The biggest impediment to Pakistan’s economic growth is the perpetual intervention of the establishment in civilian governance. The country has seen three direct military governments since independence. The logic of little or no economic growth under military influence is simple – there is no democratic accountability There are examples of countries that made enormous economic progress after eliminating military intervention in politics. The period after General Suharto's ouster from power in 1998 in Indonesia and the strengthening of the democratic order is known for impressive economic growth. The same happened in Bangladesh.

Dual Education System: This is expressed in the presence of a two-tiered English medium and Urdu medium school system. Only the people with the means can afford to send their children to English medium schools. The majority of the population studies at Urdu medium schools and only a few can secure admission into professional colleges and universities. This is the reason for the poor quality of our professionals, associated obviously with lower productivity. When they reach positions of authority, they foster cultures of insecurity and non-healthy competition affecting the performance of everyone in the organisation.

Poor Judicial System: Pakistan ranks 130th among 135 countries evaluated by the World Justice Report, Rule of Law Index 2021. About 3,067 judges in Pakistan are hearing 2,159,655 cases that are currently pending in the courts. With 17 judges, the Supreme Court of Pakistan must hear 51,138 ongoing cases. It is not just the lack of capacity of the judicial system to deliver justice, it is also the quality of judgments that deteriorates its ranking.

Non-Professionalism: In Pakistan, non-professionalism mars every institution's performance. High-ranking officials, who may not be able to perform their jobs satisfactorily, think they can easily do everyone else’s. Top institutional positions are given away as rewards for political favours or to adjust competing candidates for the top slot in an institution. The structure of the bureaucracy in Pakistan also discourages professionalism. The establishment division can appoint a secretary of finance as secretary of law and parliamentary affairs, who can then be transferred to the ministry of foreign affairs with a notification. All the above positions require different professional backgrounds. Such practices ruin the rule of merit, promote incompetence, and demoralise deserving employees for promotions resulting in lower productivity levels.

Institutional Independence: None of the institutions in the country is known for its independence from political and bureaucratic influence. Such practices block the career path of deserving candidates, affecting their morals and productivity.

Unnecessary Paperwork: Our institutional operations are replete with unnecessary procedures and paperwork. (For example, almost every country has done away with attested photocopies of documents by G-17 or above officials, filling of disembarkation cards, recommendation of an existing account holder of a bank to open an account, forms attestations). These are trivial tasks, but if you calculate the man-hours wasted annually on such practices, the difference will be humongous.

Final Word: The net effect of the above and other structural imbalances is visible in the international country comparison reports. Pakistan is ranked 110 overall in 2019, with rankings at 107 in institutions, 131 in ICT adoption, 116 in macroeconomic stability, 105 in infrastructure, 115 in health, and 125 in skills among 141 countries on the Global Competitiveness Index report by the World Economic Forum. These are all factors that enhance people’s productivity. What hope do we have with these numbers in sight? If anyone promises to make Pakistan an Asian tiger without fixing the structural flaws in the economy, believe me, he is dreaming.

Khalid Naseem is Head of Strategy, Firebolt63.