Published: 08:47 PM, 14 August 2023
The job dilemma in Pakistan
Collected Image The stark reality of economic downturn in Pakistan is dawning on the productive and services sectors, with companies scrambling to cut expenses, and weighing the option of job cuts, salary freeze or reduction in salaries.
Official data reveals that production has declined in almost all manufacturing and services sectors in the country during the past one year and even the earlier construction booming has slumped. This has resulted in surplus staff in all these sectors. Companies generally are trying to keep the workforce that worked with them during high economic growth. However, the economic realities have now forced them to consider their options of either sacking the employees or taking measures that reduce their cost of employment.
Entrepreneurs that want to retain their workforce are paying a high retention price as the decline in production in many cases ranges from 20-40 percent or even more. Both exporting companies and domestic suppliers have been impacted by the recession. Most companies may not be able to sustain the financial burden for long. The situation is not new for most entrepreneurs as the Pakistani economy has gone through frequent cycles of boom and bust. In earlier bust cycles, most of them targeted pruning of their workforce as the first cost cutting measure.
But when the economy started growing, these companies found it difficult to attract talented human resources and could not properly benefit from the boom. In fact, a culture has developed in the labour market where retrenchers are looked down upon. Moreover, the industrialists involved in mass scale retrenchment are looked down by the peers in that sector.
Experts say that one of the biggest challenges organisations face in a downturn is managing employee morale. Anxiety and discontent are bound to exist at such times. Strong employee-engagement initiatives, including robust communication mechanisms, open channels between managers, their teams and HR, and training programmes to keep employees relevant are some of the measures organisations can take to address this issue. Many multinationals have tried to put the “lay off” mindset into their employees and there is much greater awareness that those jobs can be terminated at any time. However, the employees do not really believe it can happen to them.
It is still seen as just a clause in their appointment letters. This is true even from the management side. Wherever terminations do take place, there is tremendous discomfort among the managers. We must also recognise that a large percentage of our population is first generation in the workforce from agriculture. There is, therefore, an underlying expectation of loyalty.
The other big issue in Pakistanis is the social stigma attached to losing a job. Losing a job has more than just financial implications because people work long hours at the workplace and are paid very well; their families tend to believe that they play a crucial role within the organisation. If they were to suddenly lose their jobs, it is perceived as a reflection on their competence. The social environment does not understand that one can be asked to leave a job because there is an economic downturn.
After experience of previous downturns, the entrepreneurs preferred tightening the belt instead of cutting jobs. Instead of giving marching orders to a certain number of workers, the administration calls a meeting of the entire workforce and suggests a uniform cut in salaries during the recession.
The cut suggested is equivalent to the desired cut in cost that could have been achieved by laying off a certain number of workers. This option worked in the past, but this time around workers need hefty increases instead of cuts. Now the employers have no choice but to reduce their workforce.
>> Source: The News
