Economic slowdown triggers massive unemployment in Pakistan

Millions of jobs in formal or informal sectors of Pakistan economy have been lost due to a massive decline in industrial production so far this fiscal year.

The ongoing restrictions on the import of raw materials, the foreign exchange crisis and rising costs caused by surging power and gas bills have severely hampered production activities.

In four industrial sectors of Karachi and the countrywide auto vending units, stakeholders claimed that “over 500,000 people have faced joblessness.”

However, an official from the Sindh government’s Directorate of Manpower Labour Human Resource, said that the businessmen are exaggerating the figures.

“I think joblessness in the industrial sector is in the range of 15-20%,” he said, attributing the job crisis to various reasons, including the exchange rate problems.

When one of the analysts/report contributors at the Bureau of Statistics, Planning and Development Department of the Sindh government was approached for comment on unemployment in industries, he suggested checking the Bureau’s Monthly Industrial Production and Employment Survey (MIPE) of February.

As per MIPE, the total number of employees in 18 categories of industries in February stood at 202,663 as compared to 221,163 in February 2022. Similarly, production workers in the above categories of industries in February 2023 plunged to 151,194 from 164,791 in February 2022.

The overall number of production workers in large-scale units in February was 155,000 as compared to 165,000 in February 2022, while the total number of employees in February 2022 was 205,000 as compared to 220,000 in February 2022.

Site Association of Industry (SAI) president Riazuddin said except for the food sector, around 100,000 people out of the 500,000 in the Site area had lost their livelihood in different categories of industries, mainly from October 2022 to date.

He said that industrial activities in the area had dropped by 30-40% with some industries either closed or suspending their one shift during the current fiscal year.

“I think 50% more industries will close down after the withdrawal of the Rs19.99 power tariff and $9 per mmBtu gas tariff,” he feared.

Riazuddin said that the federal government’s departments, like the Sindh Bureau of Statistics (SBS) and various departments of the Sindh government, have become active since July 2022 in seeking unemployment data from industries. Businessmen are reluctant to provide any job loss data fearing any harassment from these departments, while listed firms might be presenting their workers’ data every month.

He suggested that the various provincial government departments should defer their targets of collecting taxes and levies until the revival of industrial activities.

North Karachi Association of Trade and Industry (NKATI) Chairman Faisal Moiz Khan said the area comprises nearly 5,000-6,000 small and medium-sized units of which 60pc are export-oriented, providing working opportunities to five to six million workers.

Amid an unfavourable economic situation, around 25% of the industries have shut down their units rendering more than 100,000 contractual employees unemployed while 75% of the industries scaled back their productions, he said.

“Nearly 30-50% of the textile Industry in Sindh have partially shut down and their numbers will increase,” he added.

The $19.3bn export-focused industry is expecting a downward trend in global shipments in the current FY23 as loyal foreign buyers are now reluctant due to delays in order completion and shipments, he said.

Moiz said the estimated cotton production losses have been worth more than $2bn.

The domestic cotton production is significantly shorter this year than the textile sector requirements which consumed nearly 15m bales last year. The current season’s anticipated demand indicates that the textile sector will need to import 10 million bales, he added.

Chairman of the F.B. Area Association of Trade and Industry (FBATI), Haroon Shamsi, said that “currently, around 15pc of the workforce has been spared out of 320,000-380,000 workers in 1,800 units since the textile exports have been falling for many months.”

President Korangi Association of Trade and Industry (KATI), Faraz Ur Rahman said “Over 50,000 workers have lost their jobs directly and indirectly of which 10,000 are only in pharmaceutical sectors in the Korangi industrial area due to raw material shortage as a result of import restrictions.”

Senior Vice President of the Pakistan Association of Auto Parts Accessories (PAAPAM), Usman Aslam Malik, said that the countrywide vending industry has experienced the loss of around 250,000-300,000 direct and indirect jobs due to frequent auto plant shutdowns since August 2022.

The Large-Scale Manufacturing shrank by 11.6% in February compared to the same month 2022, while it posted a negative growth of 5.56% in 7MFY23 on a year on year basis.