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World Bank's Report on Pakistan Reveals Unsettling Concerns for Human Capital

© AP Photo / Muhammad SajjadA worker cleans an area in the historical Sunehri mosque, ahead of the upcoming Muslim fasting month of Ramadan, in Peshawar, Pakistan, Wednesday, March 22, 2023.
A worker cleans an area in the historical Sunehri mosque, ahead of the upcoming Muslim fasting month of Ramadan, in Peshawar, Pakistan, Wednesday, March 22, 2023. - Sputnik India, 1920, 09.05.2023
The Pakistan Human Capital Review published by the World Bank has revealed that the nation needs to significantly boost investment in health and education in order to increase its human capital.
The report documents and quantifies Pakistan’s human capital development through an analysis of new and existing data. It stated that the country can achieve major economic growth and development by investing in its people and their human capital.
Human capital consists of the knowledge, skills, and health that people invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society.
At present, Pakistan's human capital is low and has improved only slightly over the past three decades, the World Bank’s report revealed.

The Future Ahead

The "Pakistan Human Capital Review (HCR), Building Capabilities Throughout Life" report published by the World Bank was revealed at the launch ceremony last week in Karachi. During the event, the World Bank's Vice President for Human Development Mamta Murthi said that strong human capital is vital for sustainable economic growth in the country.
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She said that Pakistan must prepare its workforce for the more highly skilled jobs of the future, and in order to compete productively in the global economy.

"Investing in human capital can also build resilience and adaptive capacity to withstand the effects of climate change, while developing the skills and ingenuity needed for a green and inclusive economy and to reduce inequality," Murthi added.

Although Pakistan has reached middle-income status and made progress in reducing poverty over the past two decades, it still faces serious gaps in education and health sectors, particularly. This results in low human capital outcomes, which limit Pakistan’s further progress, restricting its growth and development possibilities.
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At present, the country’s indicators fall below levels seen in the world's poorest nations. Pakistan's Human Capital Index (HCI) of 0.41 means that a baby born in Pakistan today will only be 41% as productive as they could be if they had complete education and good health. The country’s HCI is lower than the South Asian average of 0.48, Bangladesh’s 0.46 and Nepal’s 0.49.

"Pakistan's human capital outcomes are more comparable to Sub-Saharan Africa's, which has an average HCI of 0.40," the World Bank's report stated. It also pointed to the fact that an estimated 20.3 million of Pakistan’s school-age children are out of school.

Moreover, Pakistan’s learning poverty rate, which is the percentage of children unable to read and understand a short, age-appropriate text by the age of ten, stood at 79%. The COVID-19 pandemic has upended nearly a decade of progress on human capital for both boys and girls.
Furthermore, the devastating floods that hit Pakistan last summer have also worsened the already high learning poverty and malnutrition. Moreover, they lessened the socio-emotional and healthy development of Pakistan’s next generation, the report stated.

Survival of the Richest

There are deep inequalities in human capital outcomes that exist in Pakistan between the rich and poor, men and women, as well as between rural and urban areas and among different provinces. The ongoing economic crisis has further highlighted this divide as inflation hit an all-time high of 36.4 percent year-on-year in April, the highest in more than a decade, with millions of people struggling to make ends meet.
However, this hasn’t stopped scores of Pakistanis from going to expensive cafes, traveling abroad for vacations and splurging on high fashion. Just two months ago, Pakistan made headlines when Tim Hortons, a Canadian coffee house opened its doors in a posh area of Lahore and hundreds of people were seen queuing outside to get a pastry and a cup of coffee amid the economic crisis.
According to its online menu, a small brewed coffee costs 350 rupees ($1.30), while a large flavored coffee is twice as much. By comparison, the average government-mandated minimum wage is 25,000 rupees ($94) a month.
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The opening of Tim Hortons came at a time when Pakistan’s currency had lost more than a quarter of its value against the dollar and fuel prices rose by almost a fifth following fiscal measures implemented by the government which were vital to unlocking funds from an International Monetary Fund bailout. However, all those issues do not directly affect the rich population of the country.

"Higher prices don’t really matter for the class of people going to places like Tim Hortons, Café Aylanto, etc. One can see on social media that almost every week a new restaurant is opening in Lahore. The average dinner bill at Café FRED is around Rs. 20,000 ($75) for a couple, that is almost a month’s salary for millions of low-income Pakistanis," Arsalan Khalid, who until recently lived in Lahore, told Sputnik.

Rich people in Pakistan are either getting richer or staying the same, such as the families of business elite, politicians, nobility, media personalities and celebrities. Meanwhile, the poor are becoming poorer, while the middle sector is struggling.
The World Bank's report pointed out that human capital outcomes are low across the board in Pakistan, with even the most economically advantaged groups in Pakistan having lower human capital outcomes than less economically advantaged groups in peer countries.
In the meantime, research conducted by Oxfam suggests that Pakistan's largest province area-wise, Balochistan, has more than 60% of its population, some 7.4 million people, living below the poverty line. It is struggling with corruption, poverty, unemployment, illiteracy, and food insecurity.

Long Term Commitment

In order to change its current situation, the World Bank has said that Pakistan needs to focus on substantial and sustainable economic growth by bringing its population growth rate under control. It also needs to invest significantly more in the supply and quality of health and education, and bring women to the labor force.
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The Human Capital Review report stressed the need for long-term planning that goes beyond the tenure of any government and political cycle. The top priority is making family planning a mandate across all human development initiatives.
"To enhance its human capital, Pakistan should adopt a life cycle approach to building, protecting, and deploying human capital, starting before birth, continuing through early childhood development, and schooling, culminating in increasingly productive employment," the report read.
The World Bank suggested that the government make eradicating child malnutrition a national priority and introduce measures to reduce out-of-school children and improve learning outcomes.
"Pakistan’s handling of the COVID-19 pandemic has shown that the country can manage complex challenges, despite its institutional constraints," the report stated.