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. But, they want all relief in Pakistan.
The businesspeople often play the employment cards when the economy is in trouble. They warn the state about widespread unemployment if they do not receive relief or subsidies. Sometimes the depression is caused by global gloom, and the government is unable to provide the needed relief.
It happens that the country’s economy is in crisis and the global recession due to the ongoing Russia-Ukraine conflict are both common.
It is easy to see why the majority of our population, who are illiterate, cannot comprehend the limitations of the state in these circumstances. 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 online retailer and ecommerce site, issued marching orders to 19,000 employees last January. Another 9,000 were also fired last week. Twitter and Microsoft are constantly trimming their workforces.
As export orders declined from western buyers, thousands of Vietnamese workers lost work. 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. Similar restrictions were imposed by its government on L/Cs to those imposed by the Pakistani government.
Bangladeshi government jacked up the power and gas tariff above Pakistan’s. Despite this, Bangladesh’s textile and clothing industries are growing. It continues to upgrade its technology, which is paying off.
Pakistan has experienced a similar decline in textile and clothing exports to India. India is a rapidly growing economy. The current global trends in the sector have led to a rise in unemployment. The decline in the apparel sector was managed to be controlled by the small and medium-sized enterprises that are well-informed about their jobs.
Even the majority of garment exporters who have scaled up have achieved this status by graduating out of the SME sector. Because of its higher production cost, the basic textile sector is facing serious problems.
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 has the greatest impact.
At present, the government is forced to reduce imports as much possible. The government must set priorities. It is impossible to limit the import of wheat and edible oils. Priority must be given to the import of crude oil and other petroleum products.
Import of pharmaceutical raw materials is next, followed by inputs from exporting sectors. These priority imports are restricted because of the low foreign exchange reserves. The government has taken strict measures to thwart the threat of default. When the International Monetary Fund programme resumes, relief would be available.