Saturday, January 22, 2022

Productivity dilemma - The News International

Last updated Monday, January 10, 2022 20:00 ET , Source: TopWireNews

LAHORE: Productivity in Pakistan is hostage to informality. The larger firms with 500 or more employees are highly efficient than the small informal firms making the same product.
Larger firms are operating on more efficient technologies than smaller firms. Their workforce is highly skilled then the low or no skill employees of smaller firms.
Quality of the products of larger firms is similarly much superior to that of smaller firms. The reason for this gap is that the larger firms are operating on more efficient technologies than the smaller firms.
Some economists, not well versed with the tax culture in Pakistan wonder as to why the inefficient businesses not only operate but flourish as well. The simple reason is that the smaller firms operate outside the tax net.
They do not comply with labour laws and do not pay their workers even the minimum wage. By saving taxes and labour costs, these smaller firms can compete with more efficient manufacturers.
Quality conscious buyers do prefer better products produced on high-tech machines, but bulk of the consumers’ compromise on the quality, if the price is low. This is the reason that we see our markets flooded with low standard replicas of products produced by quality producers.
Increasing productivity gap between the large and small manufacturing firms in Pakistan with the latter as the larger provider of employment in the country is keeping the overall productivity low in the country. It should be a matter of concern for...

Read Full Story: https://www.thenews.com.pk/print/924211-productivity-dilemma

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