New Delhi, Jan 10 : Pakistanâ??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