Employment in the Sindh’s manufacturing sector dropped by 2.8% in the financial year ending June 30, 2023 due to the economic slowdown. Pakistan’s economy went through turbulent times during the last financial year with Sindh, having the largest industrial base, bearing the brunt of the slowdown in the economic activities, caused by dollar crunch as well as the high cost of utilities and shortage of raw materials. “Employment in the manufacturing sector was down by 2.8% at the close of FY23,” according to the latest figures of Sindh Bureau of Statistics (SBS). The drop in the employment in the manufacturing sector is also evident from the studies of national and international organisations, which identified that Pakistan’s recovery from the Covid-19 pandemic and floods catastrophe remained incomplete with an estimated 5.6 million people expected to be unemployed in the current year.

Pakistan’s employment-to-population ratio in FY23 was at 47.6%, the lowest in decades. Concurrently, the number of jobless individuals is projected to reach 5.6 million, marking an increase of 1.5 million since 2021, according to International Labour Organisation. According to SBS, the manufacturing sector’s output in Sindh didn’t show any substantial growth, and if some industries showed some progress, it was negligible, which led to layoffs as well as no new job creation in the sector. According to World Bank, poverty in Pakistan shot up to 39.4% as of last fiscal year with 12.5 million more people falling into the trap due to poor economic conditions. About 95 million Pakistanis now live in poverty, the global lender said. The contraction in the Sindh’s manufacturing sector has pushed more population below the poverty line in the province.

Historically, Sindh's contribution to the country’s GDP has been between 30% and 32.7%. Its share in the services sector has ranged from 21% to 27.8%. The province’s agriculture sector’s share in GDB has been between 21.4% and 27.7%. Much of Sindh's economy is influenced by the economy of Karachi, the capital of the province, and also the largest city and economic capital of the country. According to SBS, a robust manufacturing sector stimulates economic growth by increasing domestic production, exports and jobs. In Pakistan, with its contribution of 12.4% to GDP, the manufacturing sector dominates all other sectors of the economy. The sector employs 14.9% of the country's labour force. The manufacturing sector traditionally can be divided into two sub-sectors; large scale manufacturing (LSM) and small & household manufacturing industries.

The country reported a decline of 10.26% in the LSM output during the fiscal year 2022-23, compared to the previous fiscal year (FY22). This marks a significant setback for the country’s industrial sector. According to the provisional Quantum Index numbers, LSM output exhibited a sharp decrease of 14.96% for June 2023 when compared with the corresponding period in 2022. The decline in LSM output is undoubtedly a formidable challenge for Pakistan’s economy. This downturn emphasises the critical need for sustained investment and support to resuscitate and fortify the country’s industrial sector.

Credit: Independent News Pakistan (INP)