Employees face job losses, pay cuts and reduced non-essential consumer expenditure amidst pandemic

As the country faces a deadly pandemic, the citizens, primarily low-income workers, face threats of job losses and financial instability as consumer expenditure also demonstrates a shift to survival mode.

In the wake of the deadly pandemic that has grasped the country, more than 50% of the working class in Karachi has either suffered a pay cut or unemployment, or both. Fears of unemployment in the future owing to the devastating situation has also battered down on others’ confidences.

According to Dun & Bradstreet (D&B) Pakistan and Gallup Pakistan joint report on the ‘Impact of Covid-19 on Consumers in Pakistan,’ “54% respondents have either faced salary cuts or have been laid off by their employers in an attempt to reduce operational expenses.”

This statistic has been concluded after taking into account the views of 1,291 residents through a telephonic survey conducted between June 04 and June 16, 2020.

It was reported that as businesses halted operations under the government’s orders and guidelines, millions of jobs were lost. Many employees were laid off while others were sent on paid or unpaid leaves. This created a state of panic amongst the working class.

Around 18% of the respondents have already lost their jobs due to the pandemic. It was observed that most of the people who suffered job losses were low-income workers. Moreover, 59% of the respondents harbored anxieties of being laid off in the wake of the pandemic.

Considering these fears, it was observed that there was a shift in consumer expenditure from non-essential to essential items as well. 33% of the respondents quoted an increase in grocery expenditure, 32% recorded an increase in household cleaning items and 32% cited an increase in medical expenditure.

Moreover, 39% of respondents claimed to have reduced expenditure on apparel and footwear.

In June, consumer expenditure on entertainment and education saw a sharp decline, while expenditure on medicines and household cleaning items increased. High-income consumers also reported a reduction in luxury expenditure, for instance, a 53% decline in travel expenses, 51% on apparel and footwear, and 49% on outdoor entertainment.

In the wake of the closure of brick-and-mortar stores, consumers displayed reluctance to use online payment options. This meant that only 15% of consumers moved to digital payments.

Sindh however, has rapidly adopted the avenue of digital payments. 21% of respondents were first time users, according to the report. Around 1 in 5 respondents in the province have used digital payments for the first time due to coronavirus outbreak.

While most respondents in Pakistan faced concerns over safeguarding their family’s health, securing finances and the impact on savings, nearly 80% of respondents were worried about the spread of COVID-19 and the way it continues to affect daily lives.

41% of respondents expected the situation to normalize within the next six months.

Source: The Express Tribune

Author: Wardah Javaid