Socio-economic impacts of Invisible Enemy

By: Syed Tahir Rashdi

On Friday, the finance ministry informed the Senate that around 3 million jobs are expected to be lost in the initial wave of the coronavirus. The industrial sector is expected to see 1 million layoffs while the service sector will see close to two million losing their jobs. The finance ministry said that the Pakistan Institute of Development Economics estimated 18 million jobs will be lost from the agricultural, services and industrial sectors collectively. Pakistan’s economy was in tatters even before the emergence of coronavirus, but the pandemic has added to the South Asian country’s economic woes. More than 100,000 people have tested positive for the virus. The country has recorded a huge spike in COVID-19 cases since Prime Minister Imran Khan’s government lifted lockdown restrictions in mid-May. The finance ministry on Friday told the Upper House of the Parliament that the percentage of people living in poverty would increase from 24.3 per cent to 33.5 per cent. Similarly, the fiscal deficit is expected to rise from the initial target of 7.5 per cent to 9.4 per cent of the Gross Domestic Product. It said exports will fall from USD 25 billion to USD 22 billion due to no trade with the United States, the European Union, the United Kingdom and the Middle East. Remittances will also fall from USD 23 billion to USD 21 billion. Tax revenue also decreased from USD 29 billion to USD 24 billion, while the Federal Bureau of Revenue is expected to suffer a loss of USD 4 billion to USD 5.5 billion between April and June. Amid the coronavirus crisis, the government is planning to shed a number of state-run enterprises. Hammad Azhar, the minister for industries and production, said Friday the government has decided to privatise Pakistan Steel Mills in order to revive and steer it out of losses. About 9,000 employees of the Steel Mills will be sacked in two phases after payment of their dues and one-month salary, Azhar told media. The Human Rights Commission of Pakistan (HRCP), an NGO, said it was “horrified at reports that 9,300 plus Pakistan Steel Mills employees may be laid off.” “Both the government and ECC (Economic Coordination Council) have a moral responsibility to ensure employees’ long-term welfare when the labor sector is already under immense pressure as a result of the COVID-19 crisis,” the HRCP, which is a membership-based independent organisation, said in statement. When Khan took power in 2018, Pakistans GDP growth was around 5.8%; now it is 1.9% and is likely to decline further. The country’s fiscal deficit is almost 10% and revenues have plummeted in the past two years. “I do not see any chance of improvement,” Shaikh told DW, adding that the global economy is facing recession due to coronavirus. “All we can do is wait for the coronavirus vaccine and the normalisation of economic activities around the globe.” Salman Shah, a former finance minister and current adviser to Punjab province’s chief minister on economic affairs, admits “more than 20 million people have lost their jobs” due to the health crisis. “Only 2.5% of GDP is being spent on providing social safety to the working class, it should be 10% at least. We want to increase it but International Monetary Fund’s conditions don’t allow us to do that,” Shah underlined.