NationalVOLUME 16 ISSUE # 10

Farewell to jobs

More than 18.5 million people are estimated to have lost jobs in Pakistan in the aftermath of Covid-19, though it only imposed smart lockdown instead of a complete shutdown, like the rest of the world. The loss of a large number of livelihoods points out flaws in our system and deep-rooted structural problems. The pandemic provides an opportunity to the country to overhaul the system to save people from the fallout of future threats to the economy.

The pandemic has not been as devastating in Pakistan as it has been in the region and the rest of the world. Most countries completely shut down to avoid the spread of the virus. Life losses in the countries were more than that of Pakistan. However, job losses in Pakistan are more serious. According to a credible think tank of Pakistan, job losses from the pandemic could be more than the government’s estimates and people of the Punjab and Khyber Pakhtunkhwa could be most affected by rising unemployment. According to the Pakistan Institute of Development Economics (PIDE), Covid-19 has shown that we couldn’t impose lockdown like the rest of the world has done because we lack the systems to do so. “The pandemic is not the ultimate problem of Pakistan, it is just the tip of the iceberg compared to the deep-rooted structural problems that we are just not ready to face. The unprecedented negative economic growth of the country is attributable to the badly impacted services sector as well the locked down manufacturing sector. The manufacturing sector remained shutdown leading to a massive shortfall in exports. The informal sector- the daily labour, small and medium industry and restaurants are badly suffering. As per the projections, poverty has gone up by 20-30pc and if the state of affairs continues, poverty is expected to double. The biggest problem of South Asia is not Covid-19 but the incapability of developing our economies for the 21st century,” it noted.

The coronavirus is still under control in Pakistan, though the number of fatalities and active cases are rising. The death rate from the pandemic in the country is still one of the lowest in the world. It may not be as harmful to Pakistani lives as it has been in other countries but it is more devastating for the economy and livelihoods of people of the country than the rest of the world. Calculating losses on the basis of the impact of the restrictions on business, tax revenue, international trade and the cost of unemployment for three months, the Ministry of Planning estimated that 12.3 million to 18.5 million people in the country would lose their jobs and the economy could sustain Rs2 trillion to Rs2.5 trillion losses due to moderate to severe shocks from the coronavirus outbreak.

In a report, the Asian Development Bank (ADB) feared that between 1.5 million and 2.3 million young Pakistanis had lost jobs during the pandemic. The country’s unemployment rate that stood at 8.9pc in 2019 is likely to hover between 17.3 and 21.5pc in the current year. According to the government’s own estimates, at least 10 million more people have slipped below the poverty line, raising the number of poor people from the existing figure of 50m to 60m. The ADB said Pakistan might have contained the loss of life and the economy but the damage is still enough to hurt its people badly. It said the long-term consequences of the pandemic and the locust swarms would become more apparent in the coming months.

In another report, the Word Bank said Pakistan’s economic outlook would remain fragile for at least two years, as the outbreak of the coronavirus had compounded the country’s miseries. In its biannual flagship report, the World Bank said domestic economic activity was expected to recover, as lockdown measures were lifted, with a gradual decline in active Covid-19 cases, but Pakistan’s near-term economic prospects are subdued. Given anaemic growth projections in the near term, poverty is expected to worsen. Vulnerable households rely heavily on jobs in the services sector, and the projected weak services growth is likely to be insufficient to reverse the higher poverty rates precipitated by the pandemic. Economic activity has contracted and poverty is expected to have risen in FY2019-20, as monetary and fiscal policy tightening, earlier in the year, was followed by lockdown, it noted. The World Bank estimates a 33c increase in poverty in India and the situation in Pakistan is not different in Pakistan. “With government estimates of pandemic job losses at approximately 14 million, poverty is expected to increase for the first time in two decades in Pakistan. The pandemic is also expected to exacerbate Pakistan’s human capital challenges,” it noted.

Millions of people have lost jobs in Pakistan. Prices have risen to a level where even middle-income families are struggling to survive. The opposition has upped the ante and people are attending its rallies against the government in a large number, only because of rising inflation. On the other hand, the government is trying to hide behind the pandemic. It claims the economy was poised to take off after three years of slowdown but the pandemic has hit people and businesses hard since mid-March 2020. However, fiscal indicators were bad even before the onset of the pandemic. The economy had slowed down, millions of people lost jobs and thousands of businesses shut down as a result of economic policies of the government. It blames the pandemic for all its failures while there was no pandemic in the country in the first nine months of the last fiscal year. As the pandemic situation has improved, the government has no excuse for its poor performance.