Industrial Crisis In Pakistan 2022-2023

Pakistan’s industrial sector is bracing for additional job cutbacks and a dramatic drop in output. More than 1 million informal workers in Pakistan’s textile sector are expected to be harmed as a result of the country’s economic uncertainties, according to National Trade Union Federation Pakistan (NTUF) Secretary General Nasir Mansoor.

According to Mansoor, “at least 1 million informal workers, largely from the textile sector, are expected to lose their employment,” according to Pakistani publication The News International. Given their job status, informal employees in Pakistan will be denied access to any welfare system or severance compensation, he added.

Mansoor described the scenario as “bleak,” adding that because corporations are required by law to provide various benefits to employees, many of them conduct hiring procedures through third-party contracts.

As a result, all employees are informal, and terminating them is simply because they cannot go to court.

Mansoor further stated that existing employees will be asked to work longer hours to compensate for workforce shortages and rising operating costs. “Most firms urge informal laborers to come in for 15 days a month,” he added. Therefore, even if they submit a month’s worth of work, they are only paid for the 15 days they are present at the office.”

Another representative from a large Pakistani conglomerate stated that, while layoffs are understandable, most companies are attempting to retain people and use their experience for a variety of tasks.

Under the condition of anonymity, the official told the press, “Industries are opting for a temporary hiring freeze, and things will get better as soon as the country’s foreign exchange reserves grow.”

He went on to say that the Pakistani industry is suffering as a result of the 2022 floods and difficulties in issuing letters of credit.

Mansoor reported that the 2022 floods wiped out almost 45 percent of the cotton crop, causing significant havoc in India’s western neighbor. Mansoor is not the only one who believes that the delay in establishing letters of credit is to blame for the industrial downturn.

“Several enterprises have already ceased their activities due to a lack of resources,” said Irfan Iqbal Sheikh, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI)”.

He noted that containers containing vital raw materials have been held at ports for weeks and that the Shehbaz Sharif government’s lack of clarity on import limits is likely to aggravate Pakistan’s economic predicament.

According to the Pakistan Association of Automotive Parts and Accessories Manufacturers, 25,000-30,000 people in the country’s automotive industries have lost their employment as a result of the reduction in yearly sales.

According to a management-level representative with a Pakistan-based investment firm, industries that rely on imports, such as vehicles and automobiles, are more vulnerable to economic instability. He went on to say that increased interest rates helped the country’s banking industry.

The official went on to provide a cautionary warning, predicting that more firms will default as loan rates rise, causing demand to contract.

Meanwhile, you can also check how Dollar is affecting Pakistani Currency.