OPINION
Ammar H. Khan
The case against a six-day work week
which if not available would lead to more load shedding for rest of the country. An unintended consequence of the same would be greater utilization of diesel for firing up generators, and that also means importing the same at peak of a commodity super cycle, resulting in a double whammy effect – as we will not only be using more power, but will also be importing more expensive fter a week-long constitutional crisis, a new government and dirtier fuel to use as a back-up source of power. is finally in place. One of the first decisions taken was Unless adding an additional working day improves a rushed one, devoid of any thought or consideration productivity of the workforce (very little evidence exists for of unintended consequences. It was announced that the same), the incremental benefit would be far lower than all government offices would be working six days a the explicit economics costs associated with the same. As the week, which had a ripple effect, eventually leading to banking systems move towards digital payments, the volume for the central bank announcing the same. As the world experiments with which is increasing at a rapid pace, there exists little to no reafour-day work weeks, we are taking a step back and moving towards a son to operate on a sixth day, when rest of the world’s financial six-day work week. system can operate well with five days. The decision to revert to a five-day work week was taken someOn the transportation front, it is expected that due to an time in 2013 as the country was in the throes of a major power crisis, additional working day, consumption of fuel for transportation with power breakdowns stretching hours at a time being fairly common. will also increase. It is estimated that due to additional four The decision was largely taken to reduce demand, such that the length days of work in a month would push up demand for petrol by of power breakdowns can be managed. The policy action certainly roughly 10 percent – this effectively means, that our import bill resulted in improvement in availability of electricity, with broad-based for petroleum products would increase by the same amount, load shedding eventually being phased out as more capacity came resulting in a higher current account deficit. For the first eight online. Fast forward ten years, a similar story is in play. The commodity months of the current fiscal year, Pakistan imported roughly super cycle and a global geopolitical crisis has led to a spike in energy US$ 9 billion worth of petroleum products – resulting in an prices as the world scampers for additional resources, with power annualized bill of roughly US$ 13.5 billion, assuming prices cuts and rationing even happening in more developed economies. An don’t increase significantly. For the remaining months of the emerging economy like Pakistan which is perpetually in a balance of fiscal year, we would be paying an additional US$ 350 million to payments crisis does not have the resources, nor the capacity to buy enwork an extra day, productivity benefits of which are sketchy at ergy resources at spot prices, resulting in significant quantum of power best. On an annualized basis, we would be importing addicapacity being offline due to non-availability of fuel. tional petroleum products of roughly US$ 1.35 billion – which Power breakdowns across the country have already begun, and as would add to an overall stressed current account deficit. the temperature increases, and correspondingly demand for electricity In a scenario where petrol for automobiles is already increases, power breakdowns are only going to get more severe. Adding heavily subsidized, with the national exchequer running losses an additional work day would mean greater incremental demand which of more than three billion rupees on a daily basis, the increased would put further strain on the system necessitating greater fuel usage, demand for petrol would increase the quantum of losses, while resulting in a higher deficit. The state needs to be doing more to reduce demand, whether that is through increase in prices and elimination of subsidies, or through demand management policy actions, which can range from enabling remote work for whomever possible, to reducing number of business hours in a day to rationalize demand. The writer is an Countries across the world are coming up with novel policy actions to rationalize demand while keeping independent productivity unchanged (or even increasing) – meanwhile our policy actions have an adverse effect on the ecomacroeconomist and nomic front, as well as on productivity. In-effect, increasing the number of working days would actually reenergy analyst. duce the real wages, in a scenario where real wages actually need to increase to combat double digit inflation. Inability to consider unintended consequences of policy actions has been a failure of successive governments. Making the same mistakes like clockwork seems to be a hallmark of the way we operate, wherein personality whims dictate economic policies. One hopes that better sense prevails and a more conscious decision is taken rather than a whimsical one. n
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COMMENT
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