The week in focus

Anybody who has grievances against the government takes to the streets and calls a strike to press for demands.

The culture of staging strikes in a bid to pressurise the government and win concessions is taking roots in the country, a trend that disturbs the entire economic fabric from investment and production to revenue generation.

In this era, when many countries of the world are targeting to boost their economies to achieve prosperity, raise standards of living of people and gain greater clout in international affairs, Pakistan’s government is encountering difficulties in pushing its economy forward. Anybody who has grievances against the government takes to the streets and calls a strike, instead of resolving the matter amicably through negotiations, to press for meeting the demands.

The government seems to be in a vulnerable position as most of the time it succumbs to the pressure created by protesters, accepting their demands on the one hand and losing revenue due to strikes and protests on the other. During strikes, the whole country, and not only the government, is severely affected as industrial production is reduced, port activity is disrupted, tax revenue is lost and educational institutions are closed.

In these circumstances, some big questions come to mind like who will invest in these volatile conditions when investors, both local and foreign, are concerned about their personal safety and investment. In addition to this, disruption in educational activities disturbs the academic life of students.

Lack of governance

“Strike means loss of gross domestic product as well as revenue for that day and lack of governance on the part of government is the main cause of such illegal actions,” said economist A B Shahid. He said that market elements have become so powerful that they are enforcing their will on others and forcing the government to meet their demand.

Obviously, this will have an adverse impact on the country’s poverty level, which is feared to rise in the coming years and could cause social problems, Shahid said. Daily wagers are said to be the worst affected by strikes, which snatch their right to earn a respectable living for themselves and their families.

“The high number of strikes will increase the risk perception of Pakistan, which will hinder much-needed foreign investment in the country,” he said.

Consequently, these issues along with other problems will impede the progress of the country’s economy. The latest Asian Development Bank report highlighted weaknesses in Pakistan’s economy, caused mainly by energy shortages and security issues. According to the report, economic growth slowed to an average of three per cent over the last three years, well below the eight per cent needed to create jobs for the predominantly young population. On the other side, population growth stood around 2.1 per cent, which means that in real terms the economy has grown only marginally.

Comparing India’s economic performance to Pakistan, Shahid said Delhi also faces governance issues, evident from the fact that despite an economic growth of around eight per cent, India has 53 per cent of the population living below the poverty line. “This means the benefits of economic growth are not trickling down to lower levels of the population,” he said.

According to an analyst, strikes bring economic life to a halt and the government should address root causes of such activities. “The whole supply chain is affected by strikes as consignments are blocked and contract payments get stuck, which can lead to cancellation of export and import deals. Most importantly, critical supplies of pharmaceutical products are also stopped as a result of such activities,” he said.

the writer is incharge Business desk for the Express tribune and can be contacted at [e-mail]

 

Published in The Express Tribune, April 11^th,  2011.