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Tuesday, July 16, 2024

Your job is at stake!

As a consequence of decline in business activity, people are losing jobs.

Skyrocketed electricity rates have negatively impacted businesses as well as the households. Various changes have been made to rates of electricity and tariff structure in Pakistan under the governing laws, rules, and regulations of the Government of Pakistan and NEPRA.

The changes include the non-extension of relief for zero-rated industries as well as the relief on peak-hour electricity consumption for industrial consumers. The retailer tax with revised slabs has been introduced for commercial consumers. Non-Time of Use residential consumers will also see a revision in their applicable tariff along with a change in the methodology for their calculation.

Read more: Approaching SC for skyrocketed electricity bills

Previously, the Government of Pakistan allowed industrial consumers to use electricity during peak hours at the same prices as during off-peak hours. That exemption was granted through June 2022, with no additional extensions. Peak charges are now applied to industrial customers as well.

Former Minister for Finance and Revenue Hammad Azhar tweeted that increased rates of electricity which are unfavorable for the industry are resulting in manufacturers shutting down to avoid hefty losses.

As a consequence of decline in business activity, people are losing jobs. Unemployment rate in Pakistan is expected to reach 12.00 percent by the end of 2022, according to Trading Economics global macro models and analysts’ expectations. Pakistan’s unemployment rate for 2021 was 4.35 percent, a 0.05 percent increase from 2020.

Not only the unemployment, but the country is also facing rising inflation. The International Monetary Fund (IMF) has projected “stagflation” for Pakistan with a low GDP growth rate of 3.5 per cent and higher average inflation of 19.9 per cent for the current fiscal year.

Read more: Stagflation and Pakistan’s economy

With this prescription, unemployment and poverty are bound to rise in Pakistan under the stringent nose of IMF conditions.

In addition, massive floods have already taken the livelihood away from one-third of the country’s population. Not only the homes, but floods have also swept livestock and crops which are the common sources of earning for the people in those areas. Overall, flood victims are deprived of their homes, food, health, and employment as well.

Moreover, import restrictions also created hurdles for the business community especially for the automobile industry of Pakistan.  Pakistan’s two leading car assemblers, Toyota and Suzuki, announced temporary shutdowns due to unavailability of raw material amid import restrictions and exchange rate volatility. Moreover, bookings for cars were also cancelled due to price instability.

Summing up the prevailing situation in the country, rising taxes and electricity rates are hindering the economic activity, giving a rise to inflation, and ultimately causing unemployment. Depleting foreign exchange reserves, trade deficit, soaring debt, and exchange rate depreciation are also the major challenges faced by the economy of Pakistan. Poor as well as the middle-income class of the society is suffering the most as fulfilling necessities of life have become a challenge.

Read more: The magic wand for Pakistan’s economic woes

All these challenges require effective policies and structural reforms which cannot be made and implemented overnight. Importantly, getting rid of political instability is a prerequisite for bringing economic stability in the country.