NationalVOLUME 15 ISSUE # 18

Pakistan’s poverty quagmire

About 12.3 million to 18.5 million people may lose their jobs in Pakistan and the economy will suffer Rs2 trillion to Rs2.5 trillion losses in just three months because of moderate to severe shocks from the coronavirus outbreak, according to the government’s own estimates. However, independent-minded economists fear the situation could be even worse and the national poverty ratio, which was 31.3pc in June 2018, could jump to over 40pc this year and four out of every 10 Pakistanis will be poor.

The government has assessed the losses on the basis of the impact of the restrictions imposed to stop Covid-19 from spreading on business, tax revenue, international trade and the cost of unemployment for three months. The coronavirus is expected to take a heavy toll on the workforce, part of which was already struggling to make ends meet before the spread of the pandemic, as the proportion of people living below the poverty line is projected to double.

Wholesale and retail trade is expected to witness the highest layoffs of 4.55 million people, thus, the poverty rate in Pakistan can increase from 23.4pc to 44.2pc, says a report by Dun & Bradstreet Pakistan. According to the report, approximately 12.3 million people are likely to experience unemployment under moderate restrictions by the government, similar to those implemented currently to combat the Covid-19 pandemic. This is approximately 46.3pc of the total vulnerable workforce and 19.4pc of the total employed workforce in Pakistan, it said. The total labour force of Pakistan consists of 63.4 million people, out of which vulnerable employees are 26.41 million or 41.6pc.

The report defined vulnerable employment as the proportion of own-account workers and contributing family workers in the total employment. Poor workers generally depend on daily wages and they are likely to be the most vulnerable individuals who could lose their jobs due to the Covid-19 pandemic. Owing to a slowdown in economic activity and high proportion of vulnerable employment in the country, Pakistan could see a significant increase in poverty and unemployment in coming months, the report warned. It underlined that wholesale and retail trade was the second largest segment having vulnerable employment (6.49 million people) but still it was expected to lose the highest number of workers.

The report, which provides data and insights for businesses, points out that the agriculture sector has the highest number of vulnerable employees amongst all categories, at around 12.82 million. However, the coronavirus threatened the employment of only 2.56 million or 20pc of the vulnerable workforce in the segment. The transport and communication sector has 1.95 million vulnerable jobs where 1.76 million (almost 90pc) jobs can be lost. Similarly, the manufacturing sector has 2.16 million vulnerable jobs, out of which 1.51 million or 70pc can be laid off, it estimates. Hotels and restaurants, which employ 600,000 vulnerable workforce, are projected to lay off 540,000 or 90pc of it. Vendors provide jobs to 790,000 vulnerable workers and they may sack 470,000 or 60pc of them.

Other community or social segments are expected to lose 380,000 workers, construction may lose 220,000 and public administration sections may lose 130,000 vulnerable people. Real estate and similar businesses are expected to lay off 100,000 workers in the vulnerable segment. The education sector might lay off 60,000 or 66.67pc of vulnerable workers while the fishing sector is on the brink of losing 30,000 workers. On the other hand, the health and social work segment, having 190,000 vulnerable jobs, is not projected to lay off a single worker.

Workers in Pakistan, who mostly come from villages and towns to work in big cities, are facing the worst situation due to countrywide lockdown. Out of around 8.51 million migrant workers in Pakistan, some 3.78 million are facing a direct threat of layoffs and the process has already kicked off in major urban centers of the country, according to a report released by the Pakistan Institute of Development Economics.

The rapidly intensifying economic effects of Covid-19 on the world of work are proving to be far worse than the 2008-9 financial crisis, with cutbacks equivalent to nearly 200 million full-time workers expected in the next three months alone, the UN labour agency said. The warning comes weeks after the International Labour Organization (ILO) predicted that 25 million jobs were threatened by the new coronavirus. According to the agency, the latest dire assessment reflects the full or partial lockdown measures affecting almost 2.7 billion workers – four in five of the world’s workforce.

According to the World Bank, Pakistan may fall into a recession – for the first time in 68 years – due to the severe impact of the deadly pandemic, the economy expected to be shrinking up to 2.2pc and a painful decline in per capita income. Against its previous estimates of 1pc growth in the current fiscal year 2019-20, the WB projected a decline in Pakistan’s national output in the range of 2.2pc to 1.3pc, which will also hit personal incomes badly.

Authentic data is not available but it is estimated that around one million people lost their jobs last year and 12.3 million to 18.5 million more may lose their jobs this year because of the pandemic and a slowdown in the economy. It will push more people below the poverty line. More people may slip into abject poverty due to low economic growth and double-digit inflation.

Prime Minister Imran Khan came to power on the back of promises to provide 10 million jobs and build five million houses for the underprivileged. Poverty alleviation was on top of his manifesto. He had announced the provision of cheap electricity, gas, fuel and essentials to the people after coming to power. Instead, prices of all essentials have doubled. Over one million people lost their jobs last year when there was no Covid-19 in the country. Though the virus was a bolt from the blue for Pakistan and the whole world, yet the PTI government cannot absolve itself of its responsibilities towards the common people. It will have to find an out-of-the box solution to deal with the current situation and stop people from slipping into poverty.