Monday, September 1, 2008
Pakistan's Economic Slump Hurts Workers
Pakistan has a diverse economy that includes textiles, chemicals, leather products, food processing, financial services, telecommunications, retail, automobile manufacturing, light and heavy armaments, agriculture and other industries. It is the 45th largest economy in the world in terms of official exchange rates ($144b) and 25th largest based on purchasing power parity ($410b PPP). Its service sector accounts for more than half of its GDP.
As the economies in the US and Europe slow down, Pakistan's key exports of textiles and leather products are experiencing a slowdown in growth as well. This is particularly painful at a time when the country's import bill has skyrocketed due to rising oil and food prices. Textile exports in Pakistan grew from 8.92 billion USD in 2004-05 to 10.11 billion USD in 2005-06, reflecting a growth rate of 18%. As against this, in the current year, export growth has been only 5%. For all leather goods excluding footwear growth was 24.05%. Of the total leather sector export target of $1.135 billion, the tanned leather, in particular, achieved excess export by $38 million till April 2008. However, the new target of $1.5b by 2010 is proving to be difficult to achieve. Reliable figures are hard to find but the closure of a large number of textile units due to power cuts during the last three months has led to job losses for more than 15 percent of the textile workforce, according to Karachi's Business Recorder newspaper.
Textile industry represents the biggest exporter and the largest industrial employer in Pakistan. According to most recent figures, textile exports fetched $7.805 billion of total export of $13.476 billion during the first nine-month. The sector lost considerable share in overall export of the country as it dropped to below 58 percent in July-March of current fiscal year, which used to be around 65 percent in the past. The textile exports declined by three percent from the export figures of the corresponding period last year and they missed the target for this period with a huge margin of $979 million or 11 percent.
Leather industry is the second largest exporter. The industry employs about 200,000 people directly, producing fine quality finished leather for export as well as for home consumption, according to Pakistan Tanners Association.
In Asia, Pakistan is the 8th largest exporter of textile products. The contribution of this industry to the total GDP is 8.5%. It provides employment to about 15 million people, 30% of the country work force of about 49 million. However, the proportion of skilled labor involved in textiles is relatively small as compared to that of unskilled labor. Agriculture still the largest single employer with 44% of the country's work force but it only contributes 21% of the GDP.
In addition to continuing political instability and power cuts in Pakistan, the worldwide economic slowdown is causing concerns and hurting the textile and leather industries and employees. According to a report by Gregory Warner for American Public Radio's Marketplace program, the leather industry is not growing like it used to and unemployment and crimes are on the rise.
The Marketplace report talks about the young, mostly Pashtun workers, who come from their villages to seek unskilled, low wage jobs in Karachi and other urban centers in Pakistan. It singles out one young worker, 17-year old Momin from Pakistan's north-west frontier province (NWFP), who makes $68-$88 a month transferring skins from a cart to a conveyor belt in a Korangi tannery in Karachi. When asked if he ever visits his village to see his parents, Momin tells the reporter, "How can I go home? If I have to keep paying somebody? I keep paying what my family owes." On top of that, his father wants him to pay for his Hajj, a journey to Mecca that costs at least $3000.00.
A recent BBC report talked about an unemployed textile worker, Gul Rehan, also from an NWFP village, who says he has never depended on charity to cope with hunger and poverty before. But now he sits in a line outside a restaurant in Karachi, waiting for free food. First, his crop on a little piece of land in NWFP failed, and then the towel factory where he took a job, like most knitwear industries, closed down last year.
According to the BBC report, three times a day, hundreds of men, women and children queue up outside dozens of Karachi hotels for meals which are paid for by philanthropists and charity donors.
The rapidly rising unemployment and skyrocketing inflation together have dramatically increased hunger and poverty among the most vulnerable in Pakistan. At 33%, the sum of unemployment rate and inflation, known as the misery index, stands at its highest level in Pakistan's history, and it is likely to increase social strife and hurt the chances of recovery.
These reports highlight the deteriorating economy in Pakistan and its disproportionate impact on the poor migrant workers. Unless the current leadership finds a way to stabilize the economy, the workers suffering is likely to add to greater political instability in Pakistan.
There are many Pakistanis who argue that we must give democracy half a chance to cope with the challenges even if it means going through a slump in exchange for sustainable power of the people to govern themselves. Unfortunately, people like Gul Rehan and Momin, who can least afford it, end up bearing the brunt of such sacrifices. The "civil society" and the "fearless pro-democracy leaders" usually do not forgo their meals to achieve democracy.
I am all for sacrifice, I just wish that the sacrifice be shared more equitably by all of the people. We should all help however we can through various charitable institutions. But I think the "pro-democracy leaders" such as Aitazaz Ahsan, Nawaz Sharif, Asma Jahangir and others who have contributed to the current economic decline have a special responsibility. They can and should use their celebrity status to raise awareness of the issues of poverty and joblessness. They should help organize efforts to build a safety net for the most vulnerable. This would demonstrate their sincerity of concern for the poor and the disenfranchised.
Here's a video clip about skyrocketing inflation in Pakistan and its impact on the poor: