Industrialists warned of mass layoffs of workers if lockdown persists

Industrialists wanted  government help to pay wages to workers

The outbreak of COVID-19 known as coronavirus has forced the government to impose lockdown. The lockdown has forced the industries and businesses to close down their economic activities. The lockdown has severely impacted the livelihood of workers-self-employed and street vendors. The daily wage and contract workers have been hit very hard. They have been forced to stay at home without having much to live on.

Industrialists have warned the government that there will be mass layoffs of workers from industries if help not extended to them. The APTMA-chamber of commerce and industries in Lahore-Faisalabad and Karachi has asked the government to cut the taxes-reduce utilities bills-payment of tax refunds and shared burden of workers’ wages. They have warned that if lockdown extended and they are forced to shut the factories for longer period in that case they will be forced to lay off the workers.

Most of the factories have been close down. Only food and pharma industries are working.  One, waive rents and utility payments. Two, the salary and wage bill should be supported by the government for three months to help businesses get through. Three, interest on past loans should be waived and low-interest loans should be extended to businesses. Four, turnover tax should be waived for a year. Five, sales tax should be waived for a year. Six, the zero-rating policy should be brought back.

Zubair Motiwala chairman Council of Textile Associations told the media that businesspersons are facing a severe liquidity crunch due to industry shutdown. “The government should share 50% of the salaries of our employees out of the Workers Welfare Fund (WWF). The money in this fund, amounting to billions of rupees, is our money and should be utilised at this time of crisis.”

Suleman Chawla, president SITE Association of Industry Karachi also called for the utilisation of EOBI and WWF funds for industrial workers to protect them from starvation. “Industrial units contribute billions of rupees on account of EOBI and Workers Welfare Fund, which is lying idle in banks. This is the time to utilise these funds and compensate workers.”

Agha Shahab, President Karachi Chamber of Commerce and Industry (KCCI)told Geo TV that the KCCI was receiving several appeals from different sectors and industrialists who found the situation "extremely difficult". They said the lockdown posed a threat to their survival due to sluggish production and additional cost of paying wages to an unproductive workforce.

The business community is also of the opinion that most of the relief measures and initiatives taken by the provincial and federal governments so far will not yield the desired results as they do not cover all industries and businesses. 

The business community is urging the government to look into the possibility of a proposed 50% reduction in all tax rates, interest rates, utility charges and petroleum prices for three months.

President Union of Small and Medium Enterprises (UNISAME) Zulfiqar Thaver said the SME sector was the worst affected due to the lockdown and urged the government to reschedule the sector's debt. Thaver also criticised the government’s decision to shut down bakeries and urged the authorities to reconsider this decision.

Pakistan’s economy is projected to face a loss of up to 4.64% of gross domestic product (GDP) because of disruptions in trade, both imports and exports, after the outbreak of COVID-19.

The Ministry of Planning has assessed losses at Rs 1.2 trillion in a limited lockdown scenario, Rs 1.96 trillion in a moderate and Rs 2.5 trillion in case of complete restrictions on movement, which symbolises a curfew-like situation.

There are estimates that sales might be down by 50 per cent or more in the year ahead globally as well as domestically. Family disposable incomes drastically dropped domestically last year because of hikes in interest rates, salary tax and sales tax rates along with a large jump in inflation. It might take one year to for sales to recover fully from the slump.

The industrialists are proposing different measures to the government to help the industries and businesses to survive in these difficult times. They are asking for the salary and wage bill should be supported by the government for three months to help businesses get through. They want interest on past loans should be waived and low-interest loans should be extended to businesses. They are asking the government to waive turnover tax one year. They want to bring back the zero-rate policy for export industries.

                                                        Rukhsana Manzoor Deputy Editor