The International Labour Organization (ILO), a United Nations (UN) agency, has said that “very high levels of energy subsidies” in countries such as Pakistan are denting finances. In its report, the ILO also classified Pakistan among lower-middle-income countries.

As per ILO’s ‘World Employment and Social Outlook: Trends 2023’ released on Monday, the South Asian region remains highly vulnerable to natural disasters, for example on the flood plains of Pakistan and Bangladesh.

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“Countries such as Pakistan are also increasingly held back by very high levels of energy subsidies, which weigh heavily on public finances and are failing to reduce poverty effectively,” it said.

In the report, Pakistan was classified among lower-middle-income countries, sitting alongside countries including Bangladesh, Senegal, Nepal and Zimbabwe.

As per the report, South Asia has seen the strongest growth in the region and some of the highest regional figures in the world i.e. 6% in 2022 and 5.3% projected for 2023.

“Exports of services from the subregion are increasing and are expected to have contributed positively to growth in 2022 and to do so again in 2023.

“The digital services sector has performed particularly strongly, whereas sectors like tourism and construction have not recovered to pre-pandemic levels in most of the subregion,” it said

The report said that the current global economic slowdown is likely to force more workers to accept lower quality, poorly paid jobs which lack job security and social protection, so accentuating inequalities exacerbated by the COVID-19 crisis.

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It also projects that global employment growth will be only 1% in 2023, less than half the level in 2022.

“Global unemployment is slated to rise slightly in 2023, by around 3 million, to 208 million (corresponding to a global unemployment rate of 5.8%). The moderate size of this projected increase is largely due to tight labour supply in high-income countries. This would mark a reversal of the decline in global unemployment seen between 2020-2022,” it said.

Pakistan is currently reeling from one of its worst economic crisis in history, battling multiple challenges including dwindling foreign exchange reserves, energy crunch, and industrial/manufacturing slowdown.

The situation has prompted several companies to shut or scale back operations as policymakers scramble to secure dollar inflows from multilateral and bilateral donors in the face of a stalled International Monetary Fund (IMF) programme.


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