Money Matters

The new normal

Money Matters
By Majyd Aziz
Mon, 06, 20

Lockdown. Soft, smart, full. Unlike Wuhan, China or Italy, the lockdown in Pakistan has been a subject of political, social, and public controversy. Those not in favor of any lockdown, talk about the economic impact due to closure of business enterprises. Notwithstanding these concerns, the fact is that lockdown was imperative and essential. It is another story whether Pakistan's Federal and Provincial governments managed lockdown in the real sense. What is more important is that the economy has been severely impacted and the ramifications in the short and long terms are and would be devastating. No one is sure when normalcy would return.

Lockdown. Soft, smart, full. Unlike Wuhan, China or Italy, the lockdown in Pakistan has been a subject of political, social, and public controversy. Those not in favor of any lockdown, talk about the economic impact due to closure of business enterprises. Notwithstanding these concerns, the fact is that lockdown was imperative and essential. It is another story whether Pakistan's Federal and Provincial governments managed lockdown in the real sense. What is more important is that the economy has been severely impacted and the ramifications in the short and long terms are and would be devastating. No one is sure when normalcy would return.

The initial outbreak of the virus forced the federal and provincial governments to announce immediate factory closures, mandate which type of shops could stay open, while caring less about disruptions to supplies in most of the sectors. The lockdown syndrome, instead of being preventive and precautionary, actually became a political ping-pong ball, more so between Islamabad and Sindh. Point-scoring became the daily humdrum with a devil-may-care attitude towards the economy.

There have been ad hoc measures taken by the federal government and to some extent the provincial governments, to deal with the economic fallout. Each Province makes its own rules and issues notifications and, in the case of Sindh, the COVID-19 Emergency Relief Ordinance 2020 that was recently promulgated by the Sindh Governor under Article 128 of the Pakistan Constitution, albeit without any consultation with the stakeholders. Although the draft was in circulation for some weeks, there was this hope that the governor would discuss with industrialists and, if there were to be any amendments, it would be conveyed to the Sindh chief minister. Nothing of this sort happened because the governor had tested COVID-19 positive again and was in quarantine. The burning questions remain: why only Sindh? Or, to be more precise, why only Karachi?

This Ordinance reeks of some sort of vengeance against the private sector of Karachi rather than any attempt to establish the writ of the government. The ramifications of enforcement under the Ordinance would be sinister and threatening for the private sector. The death knell has been sounded, and this Ordinance would become a dead albatross around the neck of Karachi's already harried industrialists.

The COVID-19 pandemic situation, when economic activities are at an all-time low, has also forced industrialists and businessmen to reframe their business tactics and strategies, their future investment planning and development, their financial projections, and more importantly, their human resource arrangement. The after-effects of the virus will not ebb away as fast as it came in the world. The governments may have to rearrange their priorities, rules and regulations that could be contrary to WTO system, but they have to decide on a focused and prescribed rearrangement that is essential to maintain survivability of the economy. There could be a significant shift towards precautionary measures and creation of a new paradigm to jump-start the nation's economy.

What would be Pakistan’s situation post-COVID? The warnings are very ominous for the nation's economy. A country that was already under internal and external economic pressure, where bad tidings were a norm each day, where the economic managers were still lost at sea, where the exports were stagnant, currency diving south, policy rate abnormally high, large-scale manufacturing crossing the negative red line, and poverty was on the rise. Ad hoc measures, band-aids, and unsustainable solutions have been the hallmark of the economic team of this government whose policies are akin to bringing a knife to the gunfight. The virus has further compounded the nation's agony. It is more like jumping from the frying pan into the fire. The GDP rate will definitely go negative; the forecast by the government is that GDP would be minus 1.50 percent although some analysts are pushing a higher negative number, more than the official figure. Large-scale manufacturing was down by over 23 percent in March alone, and the figures of April and May would reflect a huge dive. During July-March 2020, the dip was 5.3 percent with negative seven months out of the nine months. All impressions of positive and plus economic factors are now consigned to the dustbin by one pandemic virus.

In the context of Pakistan industrial relations, the scenario is gloomy and dire. Despite the edicts emanating from the government, large employers who have muscle have openly fired hundreds of their workers and have brazenly defied the government. There are many reports of employers denying workers the wages of May although most of them have reportedly cleared the April wages.

The tensions and frustrations are brewing among employers as well as workers. Recently, a mob, egged on by a politically-motivated tout attacked and ransacked a denim plant in Korangi, Karachi. Similarly, workers and even non-workers blocked roads in protest, against nonpayment of bonus and/or wages. This may be the beginning of national workers' protests that would increase post-Ramazan, as more and more employers lay off or fire workers. The Sindh Ordinance will be the catalyst to drive away new investment and industrialization in Karachi and there is a strong possibility of plants shifting to Punjab in the months to come.

The virus is not going away anytime soon but life will have to go on. When Federal Ministers start talking about a loss of up to 18 million jobs due to COVID-19, they are just echoing what Employers Federation of Pakistan had predicted all along. EFP has also sensitised the leaders of various workers federation that are mature enough to understand the gravity of the impending scenario. However, pygmy labour leaders and pseudo-socialists with self-given titles such as comrade, either only representing themselves or having a small membership base have not comprehended the situation or are hell-bent on destroying the industrial peace. Karachi industrialists suspect a conspiracy hatched up by some political rogues who could use these pygmy drones to create an industrial unrest unseen since the pre-1977 days. Sad fact is that the silence of the law-enforcers is deafening.

The post-pandemic job environment is now a serious concern of the tripartite stakeholders of ILO. The recently coined buzzword is New Normal. Companies would be faced with the simultaneous challenge of both supply and demand disruptions. Notwithstanding these ideals, the fact is that in Pakistan industrial relations would undergo a marked change. Freedom of Association, Freedom of Collective Bargaining, Gender Equality, etc that are enshrined in ILO Conventions may be routinely ignored by many employers. Unionism would be ruthlessly discouraged by many employers who would mostly rely on manpower service providers rather than having a large permanent workforce. The possibility of workers willing to work for less than the minimum wage looms large, and this would be exploited both by manpower providers as well as employers, mostly small and medium enterprises. Labour inspection system would also be impacted, and in the manner of the monthly extortion money that local markets would collect from members to give to political or ethnic parties, the same system could be replicated in offices of industrial town associations for one-stop distribution to inspectors and auditors.

The government will be between the devil and the deep blue sea. On one side, it must ensure compliance of ILO International Labor and Environmental Standards in order to maintain the grant of EU GSP Plus status while on the other side is the possibility of defiance of such standards by industrialists. The government does not have the critical mass to handle massive unemployment nor does it have financial resources to provide safety nets to the unemployed or semi-employed. The wake-up call for the government would be when the jobless youth start agitating for jobs. The youth does not want charity or handouts but want a quality of life earned through meaningful work. Mere slogans of prosperity, devoid of any concrete and doable programmes, will not succeed because youth unemployment is a formidable problem and, with the economy in turmoil, political leaders must now accord priority to the nation instead of family, party, province, and self. This should be the New Normal for Pakistani politicians. As the iconic song sung by Doris Day says, "Que Sera Sera, whatever will be, will be. The future is not ours to see". It is hoped and prayed that sanity prevails and the dark cloud will have a silver lining.


The writer is ex-president Employers Federation of Pakistan