The pandemic isn’t quite done yet. With Pakistan expected to hit its Covid-19 “peak” in late July or August, several more months of economic uncertainty lie ahead. The finance ministry has recently stated that around 3 million Pakistanis would be rendered jobless during the initial phase of the crisis. How good is this estimate, for a database that actively tracks unemployment like in the US (Department of Labor) or the UK (Office for National Statistics) doesn’t exist here?
The Q-block’s estimate seems to be on the lower side. Recent research by PIDE, the think-tank of the Planning Commission, has suggested that moderate lockdowns may have caused 12 million layoffs. This corona-induced unemployment spans all economic sectors and hits hard mainly vulnerable workers who receive daily wages or piece rates. Monthly income loss of these workers is estimated at Rs187 billion.
Among other attempts at quantifying potential layoffs, a recent discussion paper by Gallup Pakistan postulates that 17 million people are at high risk of losing their jobs due to complete lockdown. That’s about 28 percent of employed labor force. Bulk of these individuals is the vulnerably-employed, such as daily-wage and piece-rate workers, apprentices, own-account workers and share croppers.
A complete lockdown has a similar layoff reading by PIDE, as 19 million newly unemployed are forecast at a monthly income loss of Rs261 billion. The alarm in such figures is palpable. However, there may also be reasons to consume such estimates with a pinch of salt.
First, such estimates are based on the Labor Force Survey, 2017-18. Between then and earlier this year, unemployment is expected to have increased owing to the painful macroeconomic stabilization that took place in late 2018 and 2019. So how much of the additional unemployment between June 2018 and June 2020 is attributable to “stabilization” policies and how much of the layoffs can be credited to coronavirus?
Two, how relevant are such estimates given that Pakistan didn’t go for complete lockdown? Total closure of public spaces continues to be actively and forcefully ruled out by the PM. At best, Pakistan has had a moderate lockdown for a month, and then things started opening up in late April, until the second week of May when it became the open season. And now, the country is mostly open for business despite rising cases. These numbers become relevant if rising death toll provokes extreme measures in coming weeks.
And three, the government’s direct relief measures and the SBP’s financing schemes may have caused some dent in the potentially horrific scale of layoffs in late March and April. Evaluation of such mitigation measures, no matter how well or poorly designed and executed they were, can provide better estimates. But as the country has been reopened, the government hasn’t signaled more relief. On your own!
Absence of real-time employment data makes it hard to i) assess how many people have lost their jobs since the middle of March and ii) provide some targeted relief measures. Also note that, at recent years’ pace of growth, more than one lac people are entering the labor force every month. The burden seems to be piling up. But what good are data when the PM declared “we had no choice but to reopen the country”. Some redistribution was needed in these times, but faith still seems to lie in the trickle-down theory.
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