Inter-relationship between Labour Market and Macroeconomic Policies: Pakistani Manufacturing Industries under the Structural Adjustment Programme

Pakistani Manufacturing Industries under the Structural Adjustment Programme

Abstract

To resolve its structural deficiencies, Pakistan launched a structural
adjustment programme with the assistance of donor agencies. The
programme was an amalgam of trade, fiscal and monetary policies aiming to
improve economic efficiency and international competitiveness. These
policies had economy-wide implications including the manufacturing
industries. The programme although did not directly address the issues of the
labour market but influenced it through the secondary effects. It, therefore,
becomes pertinent to analyse the way the functioning of macroeconomic
policies and the labour market interact to determine the international
competitiveness. For Pakistan who faces persistent balance of payments
problems, it is critically important to improve and maintain the
competitiveness of export products in international market. This paper shows
how labour market flexibility along with macroeconomic policies affects the
behaviour of competitiveness of the manufacturing industries, which in turn
affects the growth of manufactured exports. The paper concludes by offering
some policy recommendations