We are living in an era of constant bad news. And Pakistan’s economy has been in particularly bad shape, impacted once again by the current macroeconomic trends that have sent shockwaves around the world. For years, Pakistan has struggled with uncontrolled unemployment, which currently stands at more than 6%. However, current economic trends indicate that this year will be even more difficult for almost all sectors, as layoff fears grip all industries. Representatives of textile associations revealed earlier this year, during a joint press conference, that approximately seven million workers in the textile sector and textile-related industries had been laid off since last summer.
Daraz laid off at least 11% of its workforce in early February. The top startup in Pakistan ceased operations last year, leaving its workers jobless. The National Trade Union Federation of Pakistan (NTUF) estimates that this year there will be another million layoffs of unorganised workers. Salaries are one of the most expensive expenses for all businesses, regardless of size.
And whenever their bottom line suffers, adjustments to this expense help most companies retain their status as going concerns. There are numerous explanations for these trends, including the world’s recession following the Ukraine war, the damage caused by the 2022 floods, a rise in interest rates in the United States, investor flight from emerging economies, and so on. But what is missing from the discussion is a coherent plan from the government, whose arbitrary decisions have exacerbated the economy’s already dire situation.
When the coalition government took power in April 2022, it announced an import ban on certain products. While the intention was to protect the country’s valuable foreign exchange reserves, most industries complained that the ban also created barriers to the import of essential raw materials and machinery for their operations. Six months later, the Pakistani rupee fell precipitously.
As the country’s reserves plummeted, industries across the country, particularly those that rely on dollars, experienced operational disruptions. When it comes to layoffs, companies in Pakistan wield considerable power. Because most employees are hired on a contract basis, they typically have few rights in terms of severance, etc.
The administration is supposed to figure out how to manage both the economic numbers and the people who are losing their wits as their futures fade away in a nation where inflation has reached near-crisis levels, at least for the salaried and working poor. Existing social welfare programmes may not be sufficient to compensate for the financial losses that people face after being laid off. Pakistan already has a dissatisfied workforce with dangerously low pay packages.
Most workplaces do not provide any incentives to their employees, and the vast majority of people live paycheck to paycheck. Under these circumstances, it is necessary to address the possibility of job loss for some of the already underpaid employees. With the recent floods having already driven at least nine million people into poverty, layoffs in industry will be disastrous. As impossible as it may appear, the government that came to power promising to help the country get out of its financial quagmire must devise a plan to protect the country’s already burdened citizens.