By Hina Kiyani
Covid-19 has attacked more than 270 thousand people globally and numbers are ticking upwards. More than 11000 are already dead nonetheless more than 90 thousand are recovered. Alarmingly, close to 8000 are in very critical situation. Started in Wuhan, city of China and spreading in almost 160 countries it is the most common frightening thing globally. The entire world is shutting down. Factories have stopped production, businesses are stopped, schools and colleges are closed, due to keeping social distances there is lesser economic activity, no social gatherings and streets of the most happening towns of the world have become ghost streets.
Covid-19 pandemics infects the global economy. International Labor Organisation (ILO) estimates that out of 188 million global labour force 5.3 million people might lose job (low scenario) to 24.7 million jobs (high scenario). During the financial crisis 22 million people lost their job. UNCTAD estimates $2 trillion loss in income of the people due to the pandemic.
First case in Pakistan was confirmed on 26 February 2020, while today the tally has reached 534. The number has been increasing especially in the last week. Government may move towards the lockdown situation. Nevertheless, it seems they have plenty of other cards with them before locking down. Following the examples of China and Italy, Government would lockdown and working out on the possible challenges they can face.
Karachi is the business hub of the country is already locked down. Government offices are closed, following social distances, having important meetings online. Most of the businesses are stopped and waiting for the things to improve. In this scenario, it will have significant impact on the livelihood especially dependent on the businesses linked to Karachi/Sindh.
Besides lockdown, we can unambiguously say that supply shock due to global coronavirus outbreak mess up value chains. Outbreak in China forced factories in China stopped production that reduces the demand for oil, raw material, intermediate goods as well as supply for intermediate and final goods to the world from China. Soon after when the pandemics hit European countries, it affected their economy negatively. Thus, overall incomes of the world will be decreasing as well as raw material and intermediate goods for their factories will be reducing as well. Thus, negative supply shock of global economic downturn directly affects Pakistan’s exports. Hence significant increase in the employment, especially the contractual workers and production workers linked with the exports sector.
Before moving to the sectoral probe, let’s look at the change in work environment and work habits.
Due to decrease in demand as well as fear of virus many businesses are running from home, decreases their work hours. Consequently, underemployment is also expected to increase on a large scale. Hence, reduces the overall productivity per day. Lower demand and the emergence of involuntary unemployment leads to decline in economic activity.
Wages and salaried workers and own account workers are more vulnerable than the employer. However, in our case self employed is also vulnerable because of restrictions on the movement of people. Three major sectors are considered in general, Agriculture and livestock, industry and services. As far as agriculture and livestock is concerned, they will be the less effected sector compared to the other two sectors. This implies an interesting fact that livelihood of the 38 percent of the employed labour force employed in this sector is safe. Divergent argument could be no. Agriculture sector has similar risks of livelihood as other sectors.
Large scale manufacturing and small and medium enterprises will be hit hard, especially the ones who are exporting globally. Informal employment as well as production workers will be laid off as a result of production house shut down.
It is imperative to see that not all the employees will be laid off. The manufacturing units will hoard important labor who are working with them for a very long time.
Construction workers, generally, belong to labour class, work on daily wages or piece rate are very vulnerable. One can expect the pandemic will hit this sector the hardest. Similarly, labour working in wholesale and retail trade, transport, hotels and restaurants will be hit very hard. Similar to manufacturing sector, the employee especially the daily wage or contractual workers will have the strongest effect on their livelihood. Decline in employment implies large income losses for workers. ILO estimates for the world ranges between USD 860 billion and USD 3.4 trillion by the end of 2020. Out of 33.3 million vulnerable employment estimated by the PBS using 2017-18 Labour Force Survey, if we safely say that one third of the non-agriculture employed labour force will be affected in case of one and half to two months lockdown of different cities. It implies that around 5-6 million people will face job loss and 12-15 million people will experience significant decline in their incomes.
Increase in unemployment, especially for the most vulnerable class will eventually results in increase in poverty. Provision of social protection for all would be difficult for the government at this time. Therefore, it is necessary to call for urgent action that must be coordinated around protection of workers in the workplace, stimulating the economy and employment, and supporting jobs and incomes. Social protection can be increased by involving private sector through proper identification using the government’s existing infrastructure such as Lady Health Workers, although it is not their job description. Short term employment retention through government’s tax relief to the corporate sector would work as well. Reducing the existing extra cost of business especially to the exporters may impact less on the laying off.
For short term assistance, civil society long with private sector conducts a ration bag system to mitigate the impact of extreme hunger and poverty on the vulnerable group that loses job.