LAHORE: People around the globe expect relief and a better life. However, businesspeople desire transparency so that they can compete in an era of boom and bust. They want relief in all situations, however, in Pakistan.
When the economy is under stress, businesspeople play the employment card and warn the state of widespread unemployment if they don’t get their requests for assistance or subsidies. Sometimes, depression is due to global gloom. The government isn’t in a position provide needed relief.
It happens that the country’s economy is in crisis and the global economy is suffering from the long-running Russia-Ukraine conflict.
It is not difficult to understand why our illiterate population cannot grasp the limitations of state power under these conditions. However, businesspeople are well aware of the limitations of state aid to the public and businesses.
A wave of layoffs has been caused by Pakistan’s economic turmoil and the global recession. Some are related to global recession, while others relate to domestic policies that the government lacks resources to help.
Businesses blame faulty government policies for entire retrenchments. They ignore the fact that layoffs are now a regular feature of developed and emerging economies due to the decline in trade volumes.
Amazon, the largest ecommerce and retail outlet, issued marching orders in January to 19,000 employees. Last week, another 9,000 were fired. Twitter and Microsoft are constantly trimming their workforces.
As western buyers decreased their export orders, thousands of Vietnamese workers lost their jobs. India experienced an export decline of nearly 20 percent in the nine-months that ended in September. This obviously hurt the textile sector. Cambodia is also suffering from this.
Bangladesh is the only exception to this rule. Its textile sector has been proactive. The Bangladeshi government placed similar restrictions on L/Cs that were applied by the Pakistani government.
Bangladeshi government jacked up the power and gas tariff above Pakistan’s. However, the textile and clothing sector is still growing. It is investing in technology improvements that pay off.
Pakistan has experienced a similar decline in textile and clothing exports to India. India is a rapidly growing economy. This sector has a high level of unemployment, which is in line with global trends. Because the apparel industry is dominated by small and mid-sized enterprises, the owners are well versed in their job, it was able to manage the decline.
Even the majority of garment exporters who have scaled up, achieved this status by being part of the SME sector. Basic textiles are in trouble because their production costs are higher than those of other countries.
There is not much protest as we must understand that Pakistan’s economy is sustained by the informal sector that provides employment to the majority of workers at really low wages.
Other formal economic sectors are also experiencing large negative growth due to the huge rupee depreciation (it doesn’t impact exporters much), but the restriction on imports most directly impacts them.
At the moment, the government has no choice but squeeze imports as hard as it can. It will then have to decide on priorities. The import of wheat or edible oil must not be restricted. Import of crude oil, petroleum products and other petroleum products must be prioritized.
Next comes the import of pharmaceutical raw material, and then there are inputs from exporting industries. The foreign exchange reserves are so low, that even priority imports have to be halted. The government has taken strict measures to thwart the threat of default. When the International Monetary Fund programme resumes, relief would be available.