Abstract
Introduction
Pakistan is a developing country with the sixth largest population and the 10th largest workforce in the world (Pakistan Economic Survey, 2015). The total estimated active workforce in Pakistan is 70 million, which makes its total employment to population ratio of 51 per cent (Danish Trade Council for International Development and Cooperation, 2018; Employment Sector, 2009). Pakistan’s labour market suffers from low level of HR development (Employment Sector, 2009), creating a shortage of skilled labour force in the economy (Pakistan Employment Trends, 2007). This is primarily attributed to less spending on education and training (Pakistan Employment Trends, 2007).
In Pakistan, arguably skill development has always remained a low priority (Pakistan Employment Trends, 2007). The basic reason for such a trend can be associated with the poor educational background of Pakistan’s labour force, very low wages and imitated skill development at the workplaces. It is estimated that 46.2 per cent labour force of Pakistan during the year 2005–2006 had one-year schooling (Employment Sector, 2009). One out of three labour earns under $3.1 a day (Danish Trade Council for International Development and Cooperation, 2018) due to which gaining required skills for a job remains beyond the reach of most people leading to very limited skills development at different levels of the economy (Employment Sector, 2009).
With the growth of technological advancements and globalization, today, the critical importance of small to medium enterprises (SMEs) in an emerging economy has gained significant attention (Wang, 2016). Most developing economies today look to the growth of the SME sector to achieve the desired economic results (Keskin, Senturk, Sungur, & Kiris, 2010). However, this consideration requires an alignment of SMEs training programmes with the economic growth strategies of a country (Pakistan Employment Trends, 2007).
In the aforesaid background, the following interview with Mr Mukesh Kumar, Provincial Chief—Sindh, Small and Medium Enterprises Development Authority (SMEDA) conducted to shed some light on the working of his organization for the SME skills development through training programmes. SMEDA was founded as the premier government organization for the development of SMEs. It is the only organization in Pakistan which provides distinctive training to SMEs for their development. It is also an SME policy-advisory body for the government of Pakistan and facilitates SEMs in policy formulation, business development and sector development.
Mr Mukesh Kumar is associated with SMEDA as Provincial Chief—Sindh, where his focus is on the development of SMEs. He has over 20 years of professional experience in designing and implementation of SMEs’ training programmes. He has designed and implemented numerous training programmes and prepared over 100 business plans attracting an investment of over one billion rupees. He holds an MS degree from SZABIST Karachi, MBA degree from IBA Karachi and BE degree from the NED University Karachi. In this interview, he shares his experience on SMEs, HR function, training programmes, the role of different bodies, and future outlook of SMEs in Pakistan. The interviewer has added further empirical references to the statistics quoted in the interview.
What Roles and Contributions Do SMEs Play and Make in the Development of a Country?
Economists consider the development of SMEs as a key element in achieving the economic growth of a country. SMEs are significantly contributing to the development of a country by creating job opportunities and bringing economic prosperity. A good example is China which has developed SMEs to achieve economic prosperity. In 2012, SMEs in China contributed 59 per cent to the economy and 60 per cent in country sales (Wang, 2016).
In a developing country, SMEs are accounting for 60 per cent of total employment and contributing 40 per cent into the GDP of a country (Ndiaye, Razak, Nagayev, & Ng, 2018). The future of SMEs is very bright. According to the World Bank, in the next 15 years, globally 600 million workers will enter into the workforce. The majority of the workforce will be primarily from the Asian and sub-Saharan African countries in which four out of five new jobs are expected to be created by SMEs (Ndiaye et al., 2018).
How SMEs Are Important for the Economy of Pakistan and What Measures the Government Have Adopted for Their Development?
SMEs in Pakistan constitute 90 per cent of all the enterprises and employ 80 per cent non-agricultural labour force and contribute 40 per cent to the GDP (SMEDA, 2018). Due to the significance of SMEs contribution, the Pakistani government considers the SME sector as a high priority sector. The government has made significant efforts for the development of SMEs, including the founding SMEDA in October 1998 as the premier government organization under Pakistan ministry of industries and production. Its core objective is to develop SMEs in Pakistan by providing policy-advisory and training which facilitate SMEs in the development of their business.
How You Define SME in the Context of Pakistan?
SME in Pakistan can be defined as a firm which has a maximum workforce of 250 and an annual sales turnover of Rs. 800 million. Since the term SME is the combination of small and medium enterprises, for broader understanding, this concept can be further elaborated as a firm employing 1–50 employees with 10–50 million sales turnover being termed as ‘small enterprise’ and a firm employing 51–250 employees with 51–800 million sales turnover being termed as ‘medium enterprise’.
What Is the Role of the HR Function in the SMEs?
The HR function of SMEs is not well organized. Mostly, I have not observed any proper job description, job specification, training department, compensation programme and hiring process. SMEs do not focus on the development of well-mechanized HR department, so it will be very hard to align their HR department in line with the level of their revenue generation.
In your Opinion, How Can SMEs Develop a Proper HR Department?
I think the realization is the first step for the development of proper HR department. Once SMEs start realizing the importance of proper HR department, they will start developing an HR system to obtain better performance. Secondly, they should start hiring talented employees.
What Specific Contributions Has SMEDA Made in the Development of the SMEs?
Our vision is to ‘to be the leading facilitator in providing affordable, appropriate and innovative training services for SMEs in Pakistan’. Accordingly, SMEDA has conducted extensive training for the development of SMEs. So far, 150,000 SMEs owners and their employees have been trained by SMEDA. Besides, formally engaging SMEs through training programmes, we have established help desks at our offices which provide assistance to SMEs to address their problems.
SMEs’ training involves a complex procedure and requires expertise to properly conduct training needs analysis (TNA) and converting these TNAs into meaningful training programmes. Lack of SMEs’ expertise, private sector’s inability to cater to the training needs of SMEs, and high cost and difficulty to train SMEs are the key concerns that lead to our decision to provide training services to the SMEs.
SMEDA training services mission is to ‘facilitate SMEs in their HR capacity building of entrepreneurs, managers, supervisors and operational staff for improving their level of skills, competencies and awareness in technical, marketing, financial, policy, regulatory, legal, commercial and other functions through the provision of direct and indirect training services’.
With the quality of our training programmes which are distinct, affordable and market-competitive, SMEDA has been able to build the capacity building of SMEs owners and employees in all segments which are very essential for the success of SMEs’ business. Besides, our training programmes mostly cover the issues which are being faced by the SMEs. From marketing to legal, from financial to a regulatory requirement, from company formation to company operations, access to finance, business plans and business development, we provide each and every training and service to SMEs to gain success in business.
With Limited Resources, How SMEDA Is Able to Provide Quality Training Facilities to the SMEs?
Government subsidiaries play a pivotal role in providing compatible training to SMEs. Along with it, mostly we design our training programmes on a break-even basis. If a training programme is yielding the benefit of the capacity development of SMEs without contributing to our revenue, we consider it as a big success.
While the break-even formula helps us in maintaining the cost leadership strategy in our training programmes, the rigorous training process helps us in achieving the differentiation strategy. Similarly, our trainees are SMEs which are rarely focused by the private training firms, thus it also helps us in gaining and maintaining the focus strategy. Our training programmes unlike other training programmes are quite different as our trainers mostly provide training to SMEs at their production floors to help them to improve their energy efficiency to gain more performance. So far, we have conducted 500 energy efficiency training programmes at the factories of SMEs. Besides, international consultants and trainers from Germany, Japan, Netherlands and Korea continuously provide free of cost training to SMEs within and outside their factories, which also further helps us in maintaining cost leadership, differentiation and focus strategy.
How Do You Assess the Training Needs of SMEs? Is There any Specific Process?
We follow specified, interrelated and complex process to identify the needs of the SMEs. We work closely with the industry experts, trade associations, SMEs associations, government bodies, chamber of commerce, provincial and federal governments, international experts and agencies and sometimes NGOs to identify the training needs of SMEs. Based on their feedback, we convert these training needs into meaningful training objectives and accordingly develop and implement our training programmes.
How Do You Design and Deliver Training Programmes?
For meeting the training needs, we follow a training mechanism which starts with getting feedback from all the stakeholders to the delivery of the training programme. We also get guidance from leading national and international trainers to assist us in maintaining the necessary fundamentals of a training programme. Getting stakeholders’ feedback, training needs assessment, converting training needs into meaningful objectives and scheduling of training programmes are mostly handled internally, while for the delivery of training we have a pool of national and international trainers and based on our needs we request them to design the training programmes along with its delivery. We also have a training feedback mechanism. At the end of every training, we collect quantitative and qualitative feedback from trainers, trainees and stakeholders which helps us in improving our future training programmes.
How Is Your Training Making Difference in the Working of SMEs?
SMEs are improving day by day. In comparison to 2001 when SMEs were not aware of the creation of the firm, legal requirements, taxes, exports, imports, marketing, finance, and etc., SMEs are now more aware of the regulatory and other matters which are very useful for the success of their business. Around 320 training programmes were conducted by SMEDA in 2017 and 12,400 SMEs were trained.
Who Are the Participants in SMEDA Training Programmes?
Mostly, SMEs owners and their employees are the participants in our training programmes. However, we have observed that of late entrepreneurs and university students are also participating in our training programmes.
What Is the Focus of SMEDA Training in Terms of Soft Skills and Hard Skills?
SMEDA focuses on both the soft and hard skills in their training programmes. It depends on the needs of our SMEs. We also categorize our training programmes in terms of urban areas training programmes and rural areas training programmes. The urban areas training programmes are mostly conducted at metropolitan cities and mainly cover industry-related training. The rural areas training programmes are mostly conducted in the rural areas and mainly cover agriculture-related training programmes such as harvesting, agribusiness and poultry farming.
How Is SMEDA Associated with the International Training and Donor Agencies in Supporting Your Training Programmes?
SMEDA has partnered with key international training and donor agencies, such as United Nations Development Programme (UNDP), The Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), United Nations Industrial Development Organization (UNIDO), Japan International Cooperation Agency (JICA) and The United States Agency for International Development (USAID). They provide international experts and trainers for the training of SMEs and also assist us in the development of unique and innovative training programmes.
Since Last Few Years, SMEDA Has Started Implementing Public Sector Development Projects (PSDP). How Does It Help in the Development of SMEs?
Public sector development projects (PSDP) have further enriched the expertise of SMEDA training programmes. Previously, we were confined but with the implementation of PSDP and their heavy investments on machinery and infrastructure, we are now more able to provide technical training on product processing’s and their development, use of advanced machinery and the laboratory testing training of the products. After the end of training through PSDP training programmes, trainees are also given an opportunity to use our machinery and laboratories for the development of their products.
What Kind of Training Is Provided in PSDP Programmes?
Mostly technical training is being imparted to the trainees under PSDP. In Sindh, we have successfully imparted training in footwear designing, glass and bangles productions, processing of red chillies and fruits on advanced and modern machinery, which also involved the lab testing of the products. Currently, PSDP at Sindh province is focusing on extending training services for agro-processing and agriculture entrepreneurship.
How Do You See the Future of SMEs Training in the Context of Pakistan?
With the boost in the economic activities through China Pakistan Economic Corridor (CPEC), globalization and technological advancements, there will be further growth in the demand of SMEs training in the context of Pakistan. CPEC will bring opportunities and challenges. There will be an increase in the training activities of SMEs. At the same time, there will be a tremendous pressure on us to develop our SMEs in line with the SMEs of the world. China’s one belt one road initiative through CPEC will link most of the countries altogether and there will be an increase in the competition of SMEs. Our job during that process will be to develop our SMEs at par with those from other countries to gain competitive advantage.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The author received no financial support for the research, authorship and/or publication of this article.