Pakistan: “Turn on the lights”

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The heat is building in Pakistan and Ramadan is just around the corner. The whole country seems to be holding its breath, awaiting the next chapter in an ongoing social and economic crisis.

Will there be another drone strike against suspected Taliban militants in South Waziristan? Will sectarian violence continue unabated in the industrial powerhouse of Karachi? Will yet another female teacher be assassinated in the northern frontier region?

But the biggest question on everyone’s lips, beyond a doubt, is: “When will the lights be turned back on?”

When will full uninterrupted power return to the national grid to lighten the daily grind of living half-a-day without electricity – and, most importantly, light up a stagnant economy?

Chronic power outages – known locally as “load shedding” – have crippled the country’s economy and are having a bigger impact on economic development, say many observers, than the so-called ‘War On Terror’, law and order issues and sectarian bloodletting.

Many parts of the country, even the capital, Islamabad, and the major cities of Karachi and Lahore, have as little as 12 hours of gridline electrical power every 24 hours. Overall, Pakistan is suffering a massive 4,000-6,000 megawatt shortage of electricity.

Pakistan’s biggest challenge

“Load shedding is crippling everything. Along with rising utility prices, this is making the whole country very vulnerable. Overall economic activity has been very adversely affected. I believe this to be the most serious problem facing the country,” Dr Sabur Ghayur, one of Pakistan’s top labour economists, told Equal Times in an interview earlier this month.

Ghayur was the former divisional director of the then-International Confederation of Free Trade Unions (ICFTU) Asia-Pacific Regional Organisation between 1998 and 2006 and the ex-chairperson of the Policy Planning Cell in Pakistan’s Ministry of Labour.

He is currently the senior economic advisor to the Pakistan Workers’ Federation and works closely with the All Pakistan Federation of Labour (APFOL), an ITUC affiliate.

“Getting Pakistan back on to the grid, or rather getting the [power] grid back to the economy and the people, is the biggest challenge facing the new government,” stressed the trade union economist. “I estimate the power shortage is shaving at least four per cent off our GDP.

“And the power problem has directly caused the closure of 42,000 industrial units around the country.”

For the time being, 60-year-old Ghayur remains “cautious” and “not very optimistic” about Pakistan’s economic prospects: “For the last five to six years the GDP growth rate has remained stuck at around two to three per cent, almost the equivalent of the population growth rate.

To get real economic growth to generate employment opportunities, we need to see the GDP growing by at least seven per cent,” he explained.

“Investment rates have fallen sharply. Overall investment has fallen. National savings are low. The tax to GDP ratio is also low. At the moment the tax to GDP ratio is only nine per cent, which is very serious indeed,” said Ghayur.

Yet amid all this doom and gloom one bright shining truth remains illuminated – for the first time in its troubled history Pakistan has seen a peaceful transition of power from one democratically-elected government to another.

Perhaps Pakistan’s historic 11 May elections, with the victory of Nawaz Sharif’s Pakistan Muslim League (PML-N) party, signals “a silver lining” and an opportunity for sustained economic growth.

“Ending the darkness”

For much of its life, since independence from Britain in 1947, Pakistan has been ruled by military strongmen, who have pumped around 40 per cent of the nation’s annual wealth into building a formidable, nuclear-tipped war machine. Other sporadic crypto military-civilian regimes have been riddled with corruption.

Education, infrastructure and social welfare, have consequently been starved of funding, increasing the burden on the poor and working class.

In conflict areas, for example, it is estimated that 70 per cent of the population survives on less than one US dollar a day. Child labour – always a strong indicator of fundamental economic weakness – has, if anything, grown in the last decade to around 12 million working children.

This is Sharif’s third tenure as his country’s Prime Minister. His two previous governments were both overthrown in military takeovers.

Sharif, a successful Punjabi steel baron, returned to power on the promise of delivering “a shining Pakistan” and a pledge “to end the darkness”.

As an industrialist, he has always been traditionally pro-business; reflected in the stock market surge after his election victory that broke the 21,000 index for the first time in Pakistani history, notwithstanding speculation.

And Sharif’s younger brother, Shahbaz, reaffirmed as Chief Minister of Punjab, is considered even more pro-business.

Labour law overhaul

“The challenge for this new government is not only to revive the economy, but also to do it through labour intensive development,” said Ghayur. “What do we need to make a person a real worker? We’re not just looking for ‘nonsense’ employment.

“Working men and women should have the right to organise and bargain collectively. They need universal worker rights. This is where the role of the trade unions is absolutely vital for Pakistan’s future.”

To achieve this, Pakistan’s mishmash labour laws need a fundamental overhaul, Ghayur stressed.

“Each of our provinces has different labour legislation,” he said. “In some provinces only industrial workers and service workers have the right to organise but no right to bargain collectively.

“In Punjab, for example, only units with over 50 workers can organise. But what about industrial units with 49, or less, workers? And what about workers in the informal sector? They are totally uncovered by labour laws.”

Overseas labour migration by Pakistani workers has thrown the country an important fiscal lifeline. In Saudi Arabia and the United Arab Emirates alone, there are around 10 million Pakistani migrant workers. Last year they remitted an estimated S$20 billion home to their families, through both formal and informal channels.

Pakistan’s agricultural sector, too, has been doing well, with good wheat crops; along with high-quality rice yields for export. Value-added cotton exports, textiles and clothing, are worth another US$10 billion to the economy; while the energy and mineral sectors also promise real growth.

“We already have a significant middle and lower-middle class,” noted Ghayur. “There’s enough brain power to exploit any opportunities. We have two million students enrolled in degree colleges and universities. And we are already operating in the export zone with capability.”

Karachi, Pakistan’s largest metropolis and industrial powerhouse, remains the great conundrum. Around 40 per cent of the country’s tax revenues come from the port city on the Arabian Sea.

“At the moment Karachi is bleeding. But if law and order is restored; if power is restored, then I’m sure it will pick up again,” he said.

Walking down the five floors from his office to street level to say our goodbyes, Dr Ghayur points to the building’s shuttered elevator. “Too many people were getting trapped in the lift because of sudden load shedding,” he joked. “Let’s hope next time you come to visit it will be working again.”