Ranks of the jobless in Pakistan swelled during the Covid-19–induced lockdowns. Indicators suggest that many millions are still out of work despite 3.9 per cent GDP growth. The base of economic recovery has probably been narrow.
This growth almost excluded the informal sector in which three of every four people lost their livelihoods between April and July last year, according to an official report. Will the budget, due next week, respond befittingly to the deepening job crisis?
Sources in the Finance Division told Dawn the government’s focus has so far been on sustaining and accelerating the growth momentum. Finance Minister Tarin, however, was reported to have remarked on growing unemployment. He said last week the country needed to create two million jobs annually to keep public frustration from spilling over into the streets. He disclosed that the government intended to boost development spending by 40pc in the budget to create jobs and enhance productivity.
Dr Waqar Masood, special assistant to the prime minister on finance and revenue, told Dawn the government was looking at a bottom-up strategy in place of a trickle-down strategy. He believed that up to 90pc of the retrenched people regained their jobs and, based on growth data, assumed that many must actually be earning more than they did in the pre–Covid-19 period.
‘The fallout of Covid-19 has been starker for semi-skilled youth and women. The uneven impact reflects harsh, deep-rooted inequities that stem from structural flaws and class biases’
He also mentioned the Ehsaas programme that was expanded in 2020-21. “In all, 16m families benefited from direct cash transfers in the outgoing year when the going was very tough. The government is aiming to cover 12m households in the year ahead.”
As for employment, he mentioned the expansion in manufacturing and extra gains in agriculture worth Rs1.5 trillion. “It is reasonable to assume that growth in large-scale manufacturing (LSM) and agriculture has had employment and income effects.” He dismissed the perception that the growth has not been inclusive.
Defending the government, he said: “The government picked the tab of electricity bills to ease pressure on small and medium enterprises (SMEs). The power bills cost Rs50 billion.” In the budget, he said, the government is likely to expand credit access to self-employed and SMEs by engaging microfinance banks and institutions that have a better outreach than commercial banks.
Syed Salim Raza, former governor of the State Bank of Pakistan (SBP) and a member of the Economic Advisory Council, was cautiously optimistic. “In my personal opinion, while economic recovery is apparent, there appear to be parts of our informal economy where some groups have been more deeply affected than others by the Covid-19 slowdown. It may be advisable to consider some form of targeted relief or protection for them during the interim until the economic momentum becomes broad-based.
“It is important to identify where the damage has been longer-lasting. Our commercial banks do not really deal with the broad base of the pyramid. But the microfinance sector, with about 8m clients, deals with the economic base. Their insights, when reviewing the relative positions of different economic groups, would be useful in gaining an idea for who the left-behind groups might be.”
Late last year, the Pakistan Bureau of Statistics and the Ministry of Planning and Development joined forces to study the impact of the pandemic on the economy and on people’s lives. The report titled “Special Survey for Evaluating Socioeconomic Impact of Covid-19 on Wellbeing of People” was published and posted online in December 2020.
It made evidence-based projections detailing the fallout of the pandemic. Despite limitations in terms of data gaps, the report depicted broad patterns. The labour market, the report says, shrank by 13pc in the April-June quarter 2020, rendering 20.7m people jobless. The pre–Covid-19 workforce consisted of 55.4m people. In the post-lockdown recovery period from August to October 2020 (first quarter of the current fiscal year), all but 2pc were able to regain employment.
The dissection of the data collected showed that the impact was the gravest in the informal segment in cities where three out of every four people suffered. The low-skilled young workers were hit the hardest. The shrinkage was the sharpest in Punjab and smallest in Khyber Pakhtunkhwa. During the recovery, Balochistan was found to be ahead of the rest as it surpassed the pre–Covid-19 labour participation rate by 1pc in October last.
“The economic fallout of Covid-19 has been all around, but it is clearly starker among semi-skilled youth and women. The uneven impact reflects harsh, deep-rooted inequities, stemming from structural flaws and class bias in education, employment, housing and healthcare. To lift the miserables from subhuman existence, there is a need to adjust the orientation of public policies to make them people-centric as opposed to corporate-centric. This is a big ask,” commented an analyst.
Experts watching global labour trends believe that post–Covid-19 readjustments mean that some lost jobs may never reappear as some sectors may shrink permanently and others flourish and expand.
Published in Dawn, The Business and Finance Weekly, June 7th, 2021