Shrinking job market

Companies are cutting costs and reducing workforces in order to cope with sky-rocketing inflation and fuel prices

The current economic slowdown the government is trying to achieve — amid not just negotiations with IMF but also global destabilisation as a result of the Russo-Ukrainian war — is proving to be unsustainable for the labour and working class. The trouble that the interim government now faces is the sudden shrinking of Pakistan’s job market, resulting in untimely and wide-scale layoffs.

The Economic Survey 2021-22 shows that the unemployment rate decreased from 6.9% in 2018-19 to 6.3% in 2020-21, indicating slight growth. Now, with the Central Bank anticipating an economic slowdown to 3-4%, companies have started cutting costs and reducing workforces in order to cope with sky-rocketing inflation and surging fuel prices. Those who previously held 9 to 5 office jobs are now being forced into pursuing odd jobs to make ends meet. Another cause for concern is the export sector that has taken a massive hit due to cancellation of orders by international buyers amid fears of global recession. The result: layoffs and non-payment, particularly in the textile sector. Pakistan’s “poster-child” startup, Airlift, that had raised the largest financing of $85 million in the country’s history has permanently shut down operations after exhausting their current finances and failing to secure further funds. Their statement explicitly mentions global recession and downturn in capital markets as the main reasons. Previously, Swvl and VavaCars, two other startup competitors had suffered a similar fate, indicating that startups, the one glimmer of economic hope, are also suffering.

Overall, back-breaking inflation coupled with high energy prices and supply chain shock has resulted in unfavourable conditions forcing businesses to make tough decisions. In order to counter this economic distress, future decisions must be made with extreme caution. A potential option would be to approach ally countries and secure investment for sustainable means of energy in order to counter high oil prices. Investing in grass-root technological development is also a sensible option.

 

Published in The Express Tribune, July 18^th, 2022.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.