Islamabad: Pakistan, a cash-strapped country is witnessing a downfall in the productive and services sectors as the companies are scrambling to cut expenses and weighing the option of job cuts, salary freeze or reduction in salaries, The News International reported.

Pakistan is already struggling to keep up with IMF policies and these losses in production and services sectors are like an additional issue for the country, the report said.

Companies generally are trying to keep the workforce that worked with them during high economic growth. However, the economic realities have now forced them to consider their options of either sacking the employees or taking measures that reduce their cost of employment.

Entrepreneurs that want to retain their workforce are paying a high retention price as the decline in production in many cases ranges from 20-40 per cent or even more. Both exporting companies and domestic suppliers have been impacted by the recession. Most companies may not be able to sustain the financial burden for long, as per The News International.

The situation is not new for most entrepreneurs as the Pakistani economy has gone through frequent cycles of boom and bust. In earlier bust cycles, most of them targeted the pruning of their workforce as the first cost-cutting measure.

But when the economy started growing, these companies found it difficult to attract talented human resources and could not properly benefit from the boom. In fact, a culture has developed in the labour market where retrenchers are looked down upon. Moreover, the industrialists involved in mass-scale retrenchment are looked down upon by their peers in that sector.

Looking at the situation, experts said that managing employee morale is one of the biggest challenges and as the country's economy is falling day to day, it becomes harder for them to manage their anxiety, reported The News International.

Anxiety and discontent are bound to exist at such times. Strong employee-engagement initiatives, including robust communication mechanisms, open channels between managers, their teams and HR, and training programmes to keep employees relevant are some of the measures organisations can take to address this issue.

Many multinationals have tried to put the “lay off” mindset into their employees and there is much greater awareness that those jobs can be terminated at any time. However, the employees do not really believe it can happen to them.

It is still seen as just a clause in their appointment letters. This is true even from the management side. Wherever terminations do take place, there is tremendous discomfort among the managers. We must also recognise that a large percentage of our population is the first generation in the workforce from agriculture. There is, therefore, an underlying expectation of loyalty, according to The News International.