Abdullah Kamran

In the quest to address economic challenges, the narrative often swings between austerity measures, including downsizing jobs, and expansive economic policies aimed at growth. While cutting jobs might seem like a quick fix to reduce costs for businesses, it’s increasingly clear that this approach is not only short-sighted but also detrimental to long-term economic health. Instead, the focus should pivot towards creating jobs and fostering economic development as the true solution to our economic woes.

Downsizing, or the reduction of a company’s workforce, is typically justified as a means to streamline operations, cut costs, and improve efficiency. However, this strategy often leads to a vicious cycle. When companies lay off workers, it reduces consumer spending power, which in turn affects other businesses, leading to a broader economic slowdown. This domino effect can spiral into higher unemployment rates, decreased tax revenues, and increased social welfare costs, ultimately stifling economic growth.

Conversely, creating jobs acts as an economic multiplier. When people are employed, they spend money, which circulates through the economy, boosting demand for goods and services. This increased demand can lead companies to expand, invest in new technologies, or enter new markets, thereby creating even more jobs. Here’s how this strategy can be effectively implemented:

• Investment in Infrastructure: Modernizing infrastructure not only improves efficiency and connectivity but also directly creates jobs in construction, engineering, and related fields. Infrastructure projects can be a catalyst for economic activity, providing immediate employment opportunities.
• Support for Small Businesses: Small businesses are often the backbone of job creation. Policies that reduce the bureaucratic burden, provide access to capital, and offer tax incentives can encourage entrepreneurship, leading to new job opportunities.
• Education and Skills Training: Investing in education and vocational training ensures that the workforce is skilled and adaptable, ready to fill new roles created by technological advancements or emerging industries. This approach not only creates jobs but also enhances the quality of employment.
• Innovation and Technology: Encouraging innovation through research and development subsidies, tax breaks for tech startups, or creating innovation hubs can lead to the birth of new industries. Technology sectors, if nurtured, can become significant job creators.
• Green Jobs: The transition to a sustainable economy opens up avenues for employment in renewable energy, conservation, and sustainable agriculture. These sectors not only address environmental concerns but also offer long-term job security.

The Role of Government and Private Sector

Government plays a crucial role in setting the stage for job creation through policy-making, investment in public works, and creating an environment conducive to business growth. However, the private sector’s dynamism is equally vital. Businesses must be incentivized to look beyond short-term profits towards sustainable growth models that include job creation as a core strategy.

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The answer to economic challenges lies not in downsizing but in expanding the economic pie through job creation. This approach not only addresses unemployment but also drives consumer spending, innovation, and overall economic health. By fostering an environment where businesses thrive, governments invest wisely, and individuals are equipped with the right skills, we can build an economy that is robust, inclusive, and forward-looking. It’s time to recognize that the real economic strategy for the future involves not cutting jobs but creating them, thereby developing an economy that benefits all.

The Cabinet Committee on Institutional Reforms has proposed a plan to reduce around 150,000 positions within the federal government, as part of an effort to optimize the public sector. Since these positions are currently unfilled, implementing this proposal would not directly affect existing employees, making it a politically and legally easier decision. However, this move may have disappointed job seekers, as it would reduce the number of available vacancies.

With a predominantly young population and a large workforce of around 80 million, the country needs to generate at least one million new jobs annually. Meanwhile, state-owned enterprises are incurring significant financial losses, costing the government billions each year. This presents a dilemma for the government: should it continue to financially support these enterprises, an unsustainable situation will eventually arise. On the other hand, ceasing financial support would result in thousands of employees losing their salaries, impacting both the economy and the consumer market.

This situation reflects a fundamental economic concept known as the law of diminishing marginal returns, which states that increasing one or more factors of production while keeping others constant will lead to a diminishing increase in output. In simpler terms, there is a limit to how much can be produced without additional resources or changes in approach.

Furthermore, the traditional management style in the public sector focuses on measuring employee performance based on their activities rather than their actual results. This approach can lead to a situation where a lot of work is done, but little of significance is accomplished.

In contrast, a more modern and effective approach to management called Management by Objectives (MBO) involves setting specific, realistic goals and regularly reviewing progress towards achieving them. This approach encourages the active involvement of employees in setting goals and emphasizes the importance of resolving work-related issues to enhance employee satisfaction and performance.

Additionally, the public sector in Pakistan has been criticized for its lack of performance-based rewards and the absence of clear performance standards. While there have been some efforts to implement target-driven management and performance appraisals, it’s essential to also diffuse powers and responsibilities across the organization, set realistic targets, provide necessary training, and address the culture of indifference towards employee issues.

Finally, it is important to minimize political interference in the public sector to ensure that its primary focus remains on serving the people and delivering effective public services rather than catering to political interests. Hence, it is important to restructure the economy and implement the reforms that are inevitable for the development and growth of the state and society.