Pakistan Economic Crisis Results In Big Layoffs; 1 Million Textile Workers To Be Hit

Pakistan Economic Crisis Results In Big Layoffs; 1 Million Textile Workers To Be Hit

Pakistan’s manufacturing sector is getting ready for additional job cutbacks and a significant drop in output. According to Nasir Mansoor, secretary general of the National Trade Union Federation Pakistan (NTUF), more than 1 million informal workers in the textile industry are likely to be harmed by the economic unrest that has engulfed Pakistan.

According to Mansoor, “At least 1 million informal workers, especially in the textile industry, are expected to lose their jobs.” This is according to the Pakistani daily The News International. Given their job status, he added, informal workers in Pakistan will be denied access to any social welfare programme or severance pay.

Mansoor described the scenario as “bleak,” noting that many employers use third-party contracts for hiring practises since they are required by law to provide various benefits to employees. Because they cannot access a court of law, all employees are therefore considered informal, making it easier to fire them.

Mansoor further indicated that current employees would be required to put in longer hours to make up for workforce shortages and rising operating expenses. Most businesses need migrant workers to report for 15 days each month, he claimed. Also, they receive payment for the 15 days they spend at the office even if they submit a month’s worth of work.

While fears of layoffs are legitimate, according to another representative of a significant Pakistani conglomerate, most businesses are working to retain people and use their skills across the board. Under the condition of anonymity, the official told the news that “industries are choosing a temporary hiring freeze, and things will improve as soon as the country’s foreign exchange reserves increase.”

He continued by saying that the floods of 2022 and the delays in the opening of letters of credit are hurting Pakistan’s industry.

Mansoor said that the floods of 2022, which caused severe destruction in India’s western neighbor, wiped out almost 45% of the cotton crop. Mansoor is not the only one who believes that the delay in opening the letters of credit is to blame for the industrial slowdown.

Irfan Iqbal Sheikh, the head of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), stated that “Several enterprises have already ceased their activities due to a lack of resources. The economy is going to have a difficult next three to four months.

He said that vital raw material containers have been sitting at ports for weeks and that the Shehbaz Sharif administration’s ambiguity on import limits is going to make matters worse for Pakistan’s economy.

In addition, the Pakistan Association of Automotive Parts and Accessories Manufacturers estimates that between 25,000 and 30,000 workers in the nation’s automotive sectors have lost their jobs as a result of the decline in annual sales.

According to a management-level employee of a Pakistani investment firm, industries that depend on imports, like the auto and automotive industries, are more susceptible to the effects of economic instability. He added that the nation’s banking industry had improved as a result of higher interest rates.

The official also issued a cautionary note, stating that as rising interest rates result in a compression of demand, more businesses are likely to declare bankruptcy.

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