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10 Policy Regimes Crushing Pakistan's Job Creation and Productivity

A report by Business Recorder argues Pakistan's economic stagnation stems from ten policy regimes that protect powerful elites at the expense of broad-based job creation and investment. Key issues include punishingly high interest rates that stifle small businesses and a turnover-based tax system that discourages formal enterprise. The analysis also highlights long-standing protectionism in sectors like automobiles and sugar, which inflates prices and limits employment. The report proposes targeted reforms, suggesting shifts to growth-linked monetary policy and income-based taxation could generate millions of new jobs.

Key Points: 10 Policy Regimes Suppressing Pakistan's Job Growth: Report

  • High interest rates crush small business
  • Withholding taxes force informality
  • Auto sector protection limits jobs
  • Sugar subsidies drain public finances
  • Power sector contracts drag economy
2 min read

10 policy regimes that directly suppress job creation, productivity in Pakistan: Report

A report identifies ten entrenched policies in Pakistan that benefit elites, suppress job creation, and stifle investment, offering reform solutions.

"These policies benefit narrow and powerful elites while spreading economic costs across millions of citizens. - Business Recorder report"

New Delhi, Jan 10

Pakistan's worsening unemployment and economic stagnation are not the result of a lack of ideas or strategies, but the outcome of ten deeply entrenched policy regimes that directly suppress job creation, productivity and investment, a report has said.

The report by Business Recorder argued that these policies benefit narrow and powerful elites while spreading economic costs across millions of citizens, making large-scale job creation impossible.

The report said that Pakistan has normalised a high-interest-rate environment, with policy rates above 20 per cent treated as a long-term solution.

This, it notes, has helped banks and large depositors earn risk-free returns, but has crushed small businesses, startups, construction and manufacturing.

As credit dries up, youth entrepreneurship suffers and government debt servicing crowds out development spending.

Replacing this regime with growth-linked monetary policy and targeted credit for exporters, SMEs and agriculture could generate up to 1.4 million jobs, the report claims.

Another major concern highlighted is the blanket withholding tax system, where turnover-based taxes are treated as final taxes.

The report says this punishes compliant businesses, forces firms into informality and discourages investment.

It argues that a shift to true income-based taxation and simpler digital compliance could formalise businesses and create up to 1.3 million jobs.

The report also criticises long-standing protection in the automobile sector, where tariffs of up to 100 per cent have shielded a handful of assemblers for decades.

According to the analysis, this has resulted in high car prices, weak exports and limited job creation.

Opening the sector to competition with time-bound protection linked to localisation and exports could create more than half a million skilled manufacturing and allied jobs.

Heavy protection and subsidies for the sugar industry are flagged as another policy failure.

The report said guaranteed prices and export subsidies benefit politically connected mill owners while wasting water, distorting agriculture and draining public finances.

Redirecting land to higher-value crops and food processing could create up to 760,000 jobs across farming, logistics and agribusiness.

The report points to capacity payment contracts in the power sector as a major drag on the economy.

- IANS

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Reader Comments

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Priyanka N
The sugar industry point hits home. We've seen similar issues in India where water-guzzling crops are subsidized for political reasons. It's a vicious cycle that hurts farmers and the economy in the long run. Redirecting resources to food processing and high-value crops is the way forward for any agrarian economy.
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Rahul R
20% interest rates! 😳 That's a killer for any small business or startup. No wonder their youth is struggling. It's a reminder of how crucial stable and growth-oriented monetary policy is. Hope they can reform for the sake of their common citizens.
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Sarah B
While the report is critical, it's also constructive—offering solutions like digital compliance and targeted credit. Economic stagnation anywhere affects regional stability. Hoping for reforms that create opportunities for their talented young population.
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Aman W
The car tariff example is classic. Protecting a few assemblers for decades just makes vehicles unaffordable for the middle class and kills competition. We opened up our auto sector years ago and look at the innovation and job creation it spurred. Competition breeds excellence.
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Kiran H
It's sad to see a neighboring country's potential being held back by such policies. The youth there deserve better. When elites prosper at the cost of millions, it's a recipe for long-term trouble. The report's job creation estimates show what's possible with genuine reform.

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