The COVID-19 pandemics has spread with alarming speed, infected millions and bring economic activity to a near standstill as the country imposed tight restrictions on movement to halt the spread of the virus. As the health and human toll grew, the economic damage already evident and representing the largest economic shock the world has experienced. The June 2020 Global Economic Prospects describes both the immediate and near-term outlook for the impact of the pandemic and the long-term damage it has dealt with prospects for growth. The baseline forecast envisions a 5.2 per cent contraction in global GDP in 2020.
Pakistan is an already fragile economy had only just been moving towards stability when the health crisis struck. Experts fear that the pandemic’s economic fallout will considerably ruin the country’s recovery process. It has been reported that Pakistan has lost one-third of its revenue and exports dropped by 50% due to COVID-19 outbreak and lockdown. Economists warn of recession amid virus lockdowns in Pakistan. Similarly, the World Bank also warned that Pakistan might fall into a recession. The biggest and most immediate impact of the lockdown is the halt in business operations. Due to lockdown, out of 2700 factories in Karachi less than 50 were operating on the first working day.
Further, reported that there are around 5 million people in Pakistan who live just at or below the survival line, while there are the masses of largely unskilled or low-skilled people such as labours, waste recyclers, construction workers, transport workers, and domestic workers who work in different industries, services, and agriculture, and rely on daily wages to meet their needs. According to the study, around 4 million people are working on a daily wage basis in Karachi alone, besides, it is estimated that around 4 million individuals are also working in the Punjab province. These daily wagers have been hardest hit by the lockdowns.
The overall nationwide situation has made pressure on researchers to think about future business strategies and plans. Instead of freezing merit increases, now may be a good time for your company to build a target base pay structure if you don’t already have one. A sophisticated compensation structure which is informed by market data and strategies to business growth especially one which is see-through will keep top performers on board and provoked for the company’s slope up once the recession eases.
The reason you want to give employees raises is to keep them on staff. It’s still important to recognize employees growing abilities. Employees who have grown are worth more in the market. Their high performance should likewise be worth more to your company.
Five reasons why the economy is slow downing
- Tight monetary and fiscal policies
- Global headwinds
- The financial sector in a mess
- Farmers empty pockets
Changeability is flattering critical to salary structures as it helps to associate pay with performance. Today, the terms of engagement between an employer and an employee have become more balanced. Before the slowdown, it was in favour of employees, who could demand very high salaries. During the slowdown, employers had an upper hand, and now both have fair their negotiating powers.
A BIG dream: Returning to normalcy by 2021
The world economy is in total disaster due to the Covid-19 pandemic. IMF chief, Kristalina Georgieva, said it would be the worst economic crisis in 100 years. However, she once in a 100-year crisis seems to be rather short-lived as the IMF expects a full global recovery next year.
According to its June World Economic Outlook report, the world economy is projected to contract 4.9% in 2020 but will rebound strongly with 5.4% GDP growth in 2021. Therefore, all income loss from the pandemic will be restored. The year 2020 is just a bad dream that will disappear without leaving any trace after midnight on Dec 31. Others global organizations came up with a similar conclusion. The World Bank in its June publication shows projections of -5.2% growth for 2020 and a rebound of +4.2% in 2021, while the Organization for Economic Co-operation and Development (OECD) in its September press release reports there would be a 4.5% economic decline in 2020 and robust growth of 5% in 2021.
The only nation Pakistan in the Asia-Pacific who will record a substantial decrease in salaries made next year on the back of rising inflation and depreciation of the Pakistani rupee, according to a report released on Tuesday by mobility consultancy ECA International. The Salary Trend Report published by the group contends that the average real salary increase in Pakistan is expected to be negative, and employees will likely be worse off than they were last year.
Rewarding growing talents in top-performing firms
Throughout this year, we saw that what top-performing Organizations are doing to retain and attracted top talent and particularly what differentiates top performer from typical Organizations. When it comes to benefits and Compensation, giving a bigger pay increase to high performer was at the top of the list. We also saw that top-performing organization were more likely to invest in more types of variable pay as well as better benefits and perks.
Balanced compensation in talent management:
Many firms as well as startups are struggling to find the right compensation balance between employee insight and paying for performance. The last goal is to dedicate enough money to motivate the desired results without paying too much or, worse, motivating the wrong results.
Comparing salaries with compensation based on employee performance.
Increasing your salary and incentive budget is not always an option so leaders need to make sure that they assign rewards in ways which clearly distinguish based on performance. Even those companies that can increase these budgets should focus on this type of differentiation.
Successful companies often must make tough decisions to provide salary increases only to employees in a critical job or any other important employee group, such as those with inadequate skills. You may find it helpful to reserve a portion of the salary and incentive budget, sometimes called a “Market Adjustment Budget” and allocate that amongst a defined group of critical employees. This ensures that the company’s investment is targeted toward those employees who truly create value.
Submitted by Alina Khan, Date 01 January 2021.