Tuesday Mar 24, 2020
ISLAMABAD: Pakistan could expect between 12.3 million to 18.5 million layoffs in different sectors of economy in the aftermath of a partial or complete shutdown due to the countrywide outbreak of the coronavirus, reported The News on Tuesday.
Three renowned economists belonging to the Pakistan Institute of Development Economics (PIDE), namely Dr Nasir, Naseem Faraz, and Mahmood Khalid, outlined their findings in a research paper.
Titled Sectoral Analysis of the Vulnerable Employed COVID-19 and Pakistan’s Labor Market, the study noted that all provinces in Pakistan were under lockdown to control the spread of the virus.
The paper highlighted three stages through which the impact of the virus on the economy could be understood. The average monthly loss of Stage-I was estimated at Rs22 billion, Stage-II at Rs187 billion and Stage-III at Rs261 billion.
The estimated monetary value of the layoffs in each sector of the economy was also calculated. The researchers advised the government to think about possible mechanisms to reach out to laid-off workers.
It is worth mentioning here that the estimated losses in the study are monthly losses. As the period of lockdowns extend, the losses would also increase proportionally. According to experts, if the lockdown of clusters or cities can be phased out, the monthly losses can be mitigated.
The researchers claimed that it is imperative the government uses all its resources to track the virus spread to create firewalls through selective lockdowns in order to hold the losses down.
"These lockdowns would have economic effects which could emerge through several channels, including, but not limited to, sharp declines in domestic demand, decreased tourism and business travel, production linkages, supply disruptions, and health effects," the study underlined.
The research stated that under Stage-I, the education, hospitality, wholesale and retail trade sectors would be strongly affected. These sectors are also very vulnerable across the three stages. Job losses in these sectors have already begun.
The most hit sectors in Stage II would be the wholesale and retail trade, agriculture, manufacturing, transport and communications, the study found. Vulnerable employment is high in these sectors and they are also more sensitive to lockdowns, the study noted.
Based on the estimates, the majority of layoffs as a result of the economic shutdown would be of daily-wage workers, the study claimed.
The study highlighted several possible ways to address the crisis, some of which are listed below.
Originally published in The News