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Tuesday June 25, 2024

Layoffs cometh?

By Editorial Board
March 01, 2023

We are living through times of constant bad news. And Pakistan's economy has been in a particularly bad state, once again affected by the current macroeconomic trends that have caused ripples across the world. Pakistan has been dealing with uncontrolled unemployment -- at present it stands at over six per cent – for years now. But the current economic trends show that this year will be even tougher for almost all sectors, as fears of layoffs grip all industries. Earlier this year, during a joint press conference, textile associations representatives revealed that around seven million workers in the textile sector and textile-related industries had been laid off since last summer. In early February, Daraz laid off at least 11 per cent of its workforce. Last year, Pakistan’s top startup shut down its operations, leaving its workforce without jobs. The National Trade Union Federation Pakistan (NTUF) predicts that another one million informal workers will lose their jobs this year. For all companies – regardless of their size – salaries are one of the biggest expenses. And whenever their bottom line suffers, adjustments in this expense help most companies to retain their status of a going concern. There are countless explanations for these trends – the world in recession post the Ukraine war; damage caused by the 2022 floods; rise in interest rates in the US, forcing investors away from emerging economies, etc. But what is missing from the discussion is a coherent plan by the government whose arbitrary decisions have caused more harm to the already battered economy.

In April 2022, when the coalition government came to power, it announced an import ban on certain products. While the idea was to save the country from losing its precious foreign exchange reserves, most industries complained that the ban also created hurdles in the import of the essential raw materials and machinery required for their operations. Six months later, the country saw a sharp fall of the Pakistani rupee. As the country’s reserves nose-dived, industries across the country – especially those who rely on dollars – saw disruptions in their operations. In Pakistan, companies enjoy a lot of power when it comes to layoffs. Since most employees are hired on a contractual basis, they usually have few rights when it comes to severance etc.

In a country where inflation has reached near-crisis levels at least for the salaried and the working poor, the government is expected to figure out how to manage both the economic numbers as well as a people near the end of their wits as they see their futures dissolving right in front of their eyes. Existing social welfare programmes may not be enough to make up for the financial losses people suffer after they are let go. Pakistan already has a dissatisfied workforce whose salary packages are dangerously low. Most workplaces provide no incentives to their workforce and most people live paycheck-to-paycheck. Under such circumstances, the fact that some of the already underpaid workers may lose their jobs needs urgent attention. With the recent floods already having pushed at least nine million people below the poverty line, layoffs in industry will be disastrous. Impossible as it may seem, the government that came to power promising that it would help the country steer out of its financial woes needs to come up with a plan to protect the already burdened people of the country.