Lockdowns devastated working class but incomes recovering, survey finds

Published December 6, 2020
A new survey released by the prestigious Centre for Economic Research in Pakistan (CERP) shows many households are recovering from the devastating impact of the Covid-19 lockdown, but full recovery is still some distance away. — AFP/File
A new survey released by the prestigious Centre for Economic Research in Pakistan (CERP) shows many households are recovering from the devastating impact of the Covid-19 lockdown, but full recovery is still some distance away. — AFP/File

KARACHI: A new survey released by the prestigious Centre for Economic Research in Pakistan (CERP) shows many households are recovering from the devastating impact of the Covid-19 lockdown, but full recovery is still some distance away.

In the month of September, for example, 51 per cent of the respondents said they had to make some sort of compromise on food in order to make ends meet. 87pc of those who had difficulty procuring essential food items in the month of June, by when the income degradation from the loss of employment would have been hitting a peak, said the difficulty was simply a lack of sufficient money to pay for these food items.

“There has been a significant but incomplete recovery, with rural areas lagging behind urban,” according to Taimur Shah, one of the researchers involved in the study.

Despite the difficulties though, the CERP says “respondents increasingly feel that the lockdowns were effective in slowing the spread of the coronavirus.”

“While mean incomes have rebounded from their May levels, they are still 10.75 percentage points less than their pre-Covid levels in February,” the report says. The poorest segments of the working class appear to have recovered faster.

“For households earning below minimum wage in February, mean income has recovered to 97.6pc of their pre-Covid values,” the results show.

Those slightly above the minimum wage threshold have made a more modest recovery. “For households who earned more than Rs17.5k per month, Incomes have only recovered to 86pc of their pre-Covid levels.”

Most revealing, perhaps, is the finding that household spending continued apace during the period of income loss. “Household spending remain relatively unchanged, despite income losses,” the findings show.

Equally revealing is the finding that despite some recovery since May, when the lockdown was in its early days and its impact on household incomes among the working classes was at its most devastating, the number of households earning less than Rs17,500 is still 11.7 percentage points higher than it was back then.

This finding suggests an increase in the number of people who have slipped below the minimum wage threshold as a result of the lockdown.

“Similarly, there has been a recovery in the unemployment rate from June, but it is still 4.49 percentage points higher than it was in February,” the findings show.

The number of people reporting that they had missed at least one monthly payment (most often reported as the electricity bill) was 48pc in May, but this figure dropped to 27.5pc by August.

By the month of September, incomes may have recovered, but the report finds that food inflation “has become a major driver of food insecurity, along with a lack of resources.”

The report is based on the findings of two rounds of a survey done in Punjab.

The first round was in June-July and the second in September-October. In both rounds the data in the study was generated using a technique known as random digit dialing.

The sample size in round one was 323 respondents, while round two had 1,492 split more or less evenly between urban and rural (round one was 51 urban and 48 rural). Responses from residents of peri-urban areas were not included for purposes of this study.

Around 33.7pc of the respondents said they were unemployed in round 1, whereas 21pc said so in round 2.

The principal investigators on the project are Saher Asad of the Lahore University of Management Sciences, Javaeria Qureshi of the University of Illinois at Chicago, Taimur Shah at the Centre for Economic Research in Pakistan and Basit Zafar from the University of Michigan, Ann Arbor.

Published in Dawn, December 6th, 2020

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