Big businesses urge furlough system to avoid layoffs.

Byline: Khaleeq Kiani

ISLAMABAD -- With the prolonging Covid-19 pandemic and its economic fallout, big businesses have started making the case for cash contribution from the government to put in place a furlough system for labour to avoid big layoffs and insolvency challenges.

Informed sources said leading businessman Mian Mansha led a delegation of his business group and met with Finance Adviser Dr Abdul Hafeez Shaikh. The meeting aimed to sensitise the federal government about the upcoming challenges in labour intensive sectors - such as garments - arising out of the global economic downturn.

Sources told Dawn that the business magnate informed the government team that majority of labour in garment industry would move into the poverty zone if businesses send them on leave at 50 per cent of salaries while using various schemes of the government and the State Bank of Pakistan under the Covid-19 Relief and Stimulus Package.

Also, it was advocated that there was a lot of fixed cost to labour intensive sectors like garments and textiles in the shape of paid leave without any work, slow economic recovery, interest payments, utilities and so on and many businesses might be facing solvency issues in the near future.

Mr Mansha suggested that labour could survive with 80pc of salary for which a furlough system could be put in place provided the government takes responsibility for the additional 30pc financial burden. There were some examples, including that of Thailand, quoted to the government where support was coming from the government while in some other countries such as Germany there were inbuilt contract provision for sending labour on half paid leave.

An official statement said the delegation of Nishat Group met with the finance adviser to apprise about the damage done by Covid related economic downturn to large scale manufacturers.

Adviser to the Prime Minister on Commerce Razak Dawood, Minister of Industries Hammad Azhar, Adviser Institutional Reforms Dr Ishrat Husain, Finance Secretary Naveed Kamran Baloch and FBR Chairperson Nosheen Javed Amjad also participated in the meeting.

The delegation reported that owing to the pandemic induced demand compression, size of balance sheets of large manufacturers was not maintainable, confirmed...