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Pakistan’s Industrial labour market still below pre-Covid level: Report

January 14, 2021

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The State Bank of Pakistan (SBP) in its latest report has indicated that despite the ease of Lock-Down restrictions, by the end of August 2020, the industrial labour market was unable to recover its level to Covid.

According to a central bank report, employment data in Punjab and Sindh provinces show an improvement in the manufacturing sector during the fiscal year period of July to August 2020, compared with a peak period of restrictions from mid-March 2020 to April 2020.

The gradual easing of restrictions on movement has led to an increase in industrial employment in these provinces.

The report showed that during the first phase of isolation, up to 10 percent of industrial workers lost their jobs. The gradual easing of restrictions in the following months allowed for some employment gain; However, the industrial labor market was unable to restore its pre-Covid level by the end of August 2020.

According to the provincial data, Sindh’s manufacturing job losses were higher and the pace of recovery was also slower. The report says the high loss of jobs in Sindh could be attributed to heavy monsoon rains and subsequent flooding, especially in August 2020 in the industrial center of Karachi.

From the sectorial perspective, while there were widespread job losses during the peak of Covid, they were most evident in the sugar and leather industries.

Compared to the February 2020 level, 23.5 percent of workers lost their jobs during the sugar industry lockdown. Even after the ban was lifted, the sugar industry continued to report job cuts.

The leather industry also experienced a reduction in the number of employees during the isolation period; However, unlike sugar, jobs in the leather industry are starting to grow in a post-lockdown.

However, as restrictions are lifted, more workers are appearing in some industries. For example, by August 2020, the number of jobs in the cement and textile industries exceeded pre-COVID levels.

The positive changes coincide with the growth of production in these industries. Cement and textiles production rose 22.8 and 2.1 percent in the first quarter of fiscal year 2021, compared with clear contractions of 12.8 and 33.9 percent in the fourth quarter of fiscal 2020.