Representatives of the country’s largest retail sector trade body, Chainstore Association of Pakistan (CAP), have once again requested the government to provide liquidity support and revise economic activity amid the ongoing coronavirus pandemic situation; stating that any further delay would trigger massive job losses.

Employers warn financial losses could trigger mass dismissals; say govt offering economic stimulus to big businesses, offering silence to 45 million lives dependant on retail. 

“Retailers have already faced losses amounting to a staggering 900 billion rupees during the 45-day lockdown period. This is not good as the (retail) sector contributes around 16% (which roughly translates to 7 trillion rupees) to the country’s GDP on an annual basis,” says Chainstore Association of Pakistan (CAP) Chairman Rana Tariq.

He further states that direct employment in retail (and wholesale) sector makes up 18% of the country’s total formal workforce. “That is about nine million people and their families (supposing each household has on average five members) – hence 45 million people are dependent on the retail sector for their livelihoods. If the government didn’t systematically tackle retail sector’s concerns, the whole sector will get an economic Corona.’

His statement comes three weeks after the body first reached out to Prime Minister (PM) Imran Khan for providing support to a sector that currently stands on the brink of collapse. Despite having provided several suggestions for “saving the biggest contributing sector in middle class development”, Tariq says that the executive has yet to take action on this front.

But the CAP chairman is not the only one who has warned of potential job losses in the ailing retail sector. Mohammad Qasim, Managing Director at Firhaj Footwear (Hush Puppies Pakistan), expresses similar views; stating that millions of semi-skilled and skilled people face the risk of losing their jobs in the wake of the current situation.

“Retail sector of Pakistan is one of the fastest growing retail markets of the world and contributes to approximately 16.5% of GDP, employing 18% of the labour force of the country. This sector has been hit most adversely during this pandemic due to lockdowns, not just in Pakistan but also globally. If the situation persists for a longer period, then one could only imagine the number of layoffs,” he says.

While the introduction of a financial cover for the retail and wholesale sector remains to be seen, employers fear that the tremendous costs required to run business operations would take a toll on their already drained resources.

“We are trying very hard to sustain most of our workforce and manage the other fixed costs that are associated with a documented retail business such as rents, utilities and high taxes. Over the last 19 years, our biggest investment has been in our people of which many have been able to upgrade their skills and become main bread-earners for their families,” says Asfandyar Farrukh, Managing Director at Hub Leather.

He further voices his disappointment over the lack of fiscal incentives for small and medium-sized enterprises (SMEs) in the country; maintaining that a refinance scheme introduced by the State Bank is meant to provide relief to big businesses.

“It is tragic that the retail workforce from the middle class is being neglected and over a month has passed without any meaningful relief. We feel very overlooked when the government announces hundreds of billions in relief primarily for exporters and big businesses that are already leveraged.

“The SBP scheme is good on paper but private banks are unwilling to take the risk on SMEs especially where collateral and quick approval is an issue. There is still some hope that the government will announce relevant measures and ensure fast delivery to those who need it,” he states.

Altaf Hashwani, Director at Sana Safinaz, reiterates the importance of introducing a funding scheme for SMEs; arguing that the absence of such measures would adversely impact the capacity of retail outlets to retain their employees during the going lockdown period.

“Our teams are an integral part of our business and we want to retain our workforce, but without immediate support, an industry that has lost weeks of revenues will be unable to sustain for much longer. Without a customised package, the organised retail sector will be forced to shed jobs leaving a large skilled and semi-skilled workforce without employment and negatively impacting the growing middle class in the country,” he adds.

Asad Shafi, CEO at Cross Stitch, opines that the central bank’s refinance scheme aims to provide facilitations to large-scale exporters and big companies. “SBP relief is only a viable option exporters or companies that are operating on partial to full capacity. With a complete shutdown of revenue how does the government expect a retailer to utilize this scheme?” he questions.

“The government is basically offering us to book a loss, take a loan to cover the loss and pay interest on it. We are unable to meet our current financial liabilities including banks and vendors. How will we further add debt and pay interest in a model where there is no revenue? Our employees are like family and retail is a team sport; however it cannot be played without immediate government intervention.”

“Retail workforce in Pakistan employs the most skilful and value-added labour. Our management has spent years of training and development to enable and provide a retailing experience in Pakistan which is second to none, even when compared with international brands. Local retail brands are the face of our workmanship and merits the existence of our skill capacity on the world map.

“It would be a sad state of affairs if government doesn’t provide relief to this struggling sector. Moreover, retail sector supports an entire chain of value added suppliers who also would collapse shall there be no support from the government.”