Skill training can break poverty cycle

[Naveed Yaseen]

By Mansoor Ahmad
THE Punjab government should rethink its poverty reduction strategy as instead of unconditional cash transfers to the poor it could with almost the same amount empower the poor youth with skills so that they have access to gainful employment.

Lack of income especially in the case of the very poor is strongly correlated with the skills they have. There are very few growth and targeted poverty reduction programmes that address the poverty issue by empowering the poor with demand-driven skills. The Punjab government is providing free vocational skill training to the poor youth through 145 vocational training institutes run by the Punjab Vocational Training Council by using a fraction of Zakat it annually collects. There are no budgetary allocations for this purpose otherwise.

More resources are currently being allocated to reduce the impact of poverty through cash transfers as is being done through Benazir card and the Punjab Food stamp scheme. Unfortunately these transfers are unconditional and are likely to make the poor addicted to state dole outs.

The PVTC has received Rs 2.5 billion from Zakat fund during the past seven years. During this period it trained 90,493 poor girls and boys in different skills. Each student was provided Rs 2,200 per month out of which Rs 1,700 was consumed as the monthly fee of the student and Rs 500 as the monthly stipend.

The average cost per skill per worker was Rs 27,626. The duration of each skill course varied from eight to 14 months (including on job training).

Over 63 per cent (57,011) of those who completed and passed PVTC courses got gainful employment and are earning from Rs 5,000 to Rs 30,000 per month and are helping their families come out of poverty. Compared with this the Punjab government is spending around Rs22 billion on cash transfer that is not reducing poverty but just partially fulfilling the cash needs of the poor without generating additional income.

Since the 1980s, markets and systemic forces have produced a situation very different from the postwar years of growth, where, at least for some, inclusion and social integration were promoted through the expansion of formal-sector jobs in government and manufacturing and solidified through “corporatist” arrangements for the benefit of given groups. But this has come to a halt ever since privatisation became in vogue.

It is true that building institutional capacity of institutions such as the PVTC would take time still they have developed capacities to absorb and prudently use funds its 145 training centre are currently getting. It could double its annual pass out capacity from 26,000 to 52,000. At the employment rate of 63 per cent, this could rescue 32,760 families from the poverty trap every year. It would improve the quality of life of 0.11 million people (average family size of 6.5 persons).

The amount required would be Rs 2.5 billion annually. With increase in capacity, the amount could also be increased and a sustainable path would be set. The employment is almost guaranteed because now industries are themselves sending their demand for the skills they require. One leather garment unit of Sialkot has in fact has agreed to take 2,000 stitchers after completion of their training at the PVTC. It is bearing partial cost of training as well.

Chronically poor women and girls are also subject to a confluence of gender-based vulnerabilities that keep them trapped in poverty. The gender inequality fuels the intergenerational transmission of poverty.

Ideally, interventions to improve the lives of women should seek to build both women’s assets and their societal status in order to transform gender roles. Institutes like the ones run by the PVTC that provide free training plus nominal stipend could play a vital role in empowering the fair gender. Its current enrolment ratio of two girls enrolled for every three boys is good but needs to be improved to bring it at par with boys.

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