(August-11-2023)Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain said on Friday that despite the inflation, the private sector is unable to increase the salaries of their employees as required due to the increasing cost of doing business.
Increased uncertainty and the rising cost of doing business have put the survival of many companies at risk, he said.
Mian Zahid Hussain said that the country’s production and exports have been steadily declining, bringing the GDP close to zero. Due to inflation, demand is also continuously decreasing, and due to the decreased production, thousands of private companies are facing surplus staff.
Talking to the business community, the veteran business leader said that now the majority of the companies have only the option of laying off the surplus staff and reducing the salaries for their survival, due to which the morale of the employees of these organisations is falling.
Political conditions, a constant increase in the price of everything, including electricity, gas, and petroleum products, and bank markups have brought economic activity to a standstill, so many companies have no option but to downsize to survive, he added.
Masses are paying heavy costs for all these developments with no relief in sight, he said, adding that manufacturers who are unable to reduce their business costs will not be able to withstand the financial pressure for long and will go bankrupt.
Mian Zahid Hussain further said that many large manufacturers are not retrenching despite the losses as they will not be able to re-hire the laid-off skilled workers after the situation improves, which will put them at a disadvantage.
Apart from this, some labour laws also prohibit downsizing. Private sector companies that lay off staff are not considered reasonable concerns, and talented people dislike working in such companies.
On the other hand, almost all sectors do not like to employ people who have lost their jobs somewhere else because it is generally believed that they will be incompetent.
Lack of communication between employer and employee also increases misunderstandings, which affect the business environment, he observed.
Companies facing financial difficulties should strengthen their relationships with employees, take them into confidence about the current difficult situation, make them aware of their constraints, and only then make tough decisions, he advised.
