‘Will wage growth revival feed inflation?’

This is apropos an op-ed titled “Will wage growth revival feed inflation?” carried by the newspaper yesterday.

In my view, however, a vast number of private sector entities, if not all, are still feeling the shocks of the woeful economic slowdown that has characterised the entire business landscape ever since Covid-19 hit the world, including this country.

It is true that more hours and less wages are constituting a reality of a large number of employees in the country. But there are some cogent reasons behind this reality.

It was during the government of Pakistan Tehreek-e-Insaf (PTI) that State Bank of Pakistan (SBP) lent a helping hand to private sector entities, particularly export oriented units, by offering them some financing schemes.

Temporary Economic Refinance Facility (TERF), for example, was and is a concessionary refinance facility aimed at promoting investment both new and expansion and/or Balancing, Modernization and Replacement (BMR).

Financing under the facility is available through banks/DFIs to all sectors across the board except power sector where SBP’s refinance facility for renewable energy projects already exists, according to the central bank.

However, SBP is expected to come up with some more concessionary schemes for the businesses in order to fuel growth which would certainly lead to creating more job opportunities and increasing the wages of employees.

In my view, the private sector will be able to look into the question of wage increase for employees with earnest only after the government rationalized energy tariffs.

Increasing further the gas rates for captive power plants by the regulator, Ogra, the other day doesn’t add to the confidence of gas-reliant and non-gas-reliant employers alike.

Sohail S. Paracha (Karachi)

Copyright Business Recorder, 2025