COVID-19: More job losses coming
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As the timeline of the pandemic extends and with developing countries likely to receive medical solutions with a delay relative to advanced countries, more job losses cannot be ruled out.
During the first wave, the private sector was allowed refinance and other support facilities to ensure that layoffs were at a minimum. However, as fiscal deficits expand globally and debt levels surge, the ability of states to continue with such emergency financing to private enterprises will be constrained.
The opening up of routine activities in the industrial sector led to a growth of 5.5 percent in large scale manufacturing (LSM) during the July-October period. This is a good sign, but the NCOC has warned that as the positivity rate increases during the second wave, some activities might see a re-closure. October’s monthly data shows that growth in LSM is primarily driven by pharmaceutical, cement, food, beverages and chemicals. However, even within the LSM, many other sectors are still in the danger zone. This includes leather, engineering goods and electronics.
As per a recent assessment by Sustainable Development Policy Institute (SDPI), in case the second wave leads to prolonged micro and smart lockdowns as seen for several economic activities, job losses could be acute in sectors which include mining, agro-processing, wholesale and retail trade, transportation, leisure and hospitality, education services, professional services, and financial services. The construction sector could remain insulated until the time government support continues.
At the 23rd Sustainable Development Conference hosted by SDPI, noted economists said that the economic growth rate for the ongoing fiscal year could be a mere 1 percent and that too, in an optimistic scenario. This is much lower than the rate at which the number of temporary unemployed or new stock of working-age labor will grow this year.
There will be workers who will never be recalled to their past jobs – indicating permanent changes in post-pandemic consumer behavior. In several services sectors, strict social distancing measures have already instigated changes in the demand for labor and reallocation of resources in favor of automation of systems and processes.
Dr. Vaqar Ahmed
The identification of jobs lost by sector or by region is unfortunately not a straightforward task given the data gaps which exist in the federal and provincial statistics machinery.
As these statistics departments are not independent bodies, credibility also becomes an issue and donors who wish to help mitigate job losses end up conducting their own surveys.
An increase in the demand for social safety nets is also expected in coming days. Here again, rapid assessments of who is losing jobs in the informal sector becomes difficult. Women employment prospects in traditional sectors has seen a dent during the pandemic. Most schemes to prevent short term job losses lack a gender lens. There are parts of Pakistan where our bureaus of statistics rarely visit due to sampling approaches which prefer convenience over comprehensive coverage.
It has taken a donor to help the country set up a jobs portal. While this is a step in the right direction, we know from the past that the sustainability of such portals is often weak as donor-exit results in a lack of interest by those in the government.
Secondly, the well-intentioned people managing this portal will have to go that extra mile to extend outreach and bring people online, particularly in regions where Internet penetration is a major issue.
While one hopes that such IT-related interventions will help reduce the gap between employers and job seekers, but expected job losses during future waves of COVID-19 will have both economic and political repercussions. Pakistan Democratic Movement is already using this argument to their advantage. Also there will be workers who will never be recalled to their past jobs – indicating permanent changes in post-pandemic consumer behavior. In several services sectors, strict social distancing measures have already instigated changes in the demand for labor and reallocation of resources in favor of automation of systems and processes.
A supply and demand side effort has to be simultaneously mobilized to move people toward a new career paradigm. This will include active and passive labor market programs that upskill and reskill for jobs in sectors which are expected to see growth in 2021 and beyond.
At an individual level, there are significant costs involved in a career shift amid the pandemic. Pivoting to the future is not a luxury available to many in these times. It is therefore important that these costs be clearly identified by relevant government bodies and a plan chalked out to divert resources toward individuals ‘not-in-education’ and ‘not-on-the-job’.
It is heartening to see that the leadership of important institutions including Ehsaas, National Vocational and Technical Training Commission (NAVTTC), and Kamyab Jawaan, have been on their toes trying to understand and respond to the above mentioned. However, at a more macro-level it is not clear why the political leadership in the federal government and provinces hasn’t been devoting more time to this issue. The opposition benches also haven’t played their role being more occupied with preparations of jalsas.
A comprehensive response will need to identify structural barriers to saving and creating jobs in Pakistan. Most will agree that these barriers are the same which stifle long term economic growth and productivity in the country.
*Dr. Vaqar Ahmed is an economist and former civil servant. He tweets @vaqarahmed
