Impact of Structural Adjustment Programmes on Overall Social Welfare in Pakistan

Abstract

This article discusses the impact of structural adjustment on poverty and inequality and overall social welfare in Pakistan over the adjustment decade (1988–99) based on household surveys. It provides an indepth analysis of poverty during the adjustment decade as well as an account of structural adjustment programmes and macro-economic policies. The article argues that adjustment programmes have been flawed by a lack of distributional analysis and by poor sequencing of reforms, notably premature financial liberalization. The conditionality of reduction of the budget deficit has led to expenditure cuts which have adversely affected the poorer sections of society. The findings show that since the 1988 bout of structural adjustment, public sector employment decreased while wages were frozen. Also, overall unemployment in occupations with a high incidence of poverty has increased and the real wages of both skilled and unskilled labour fell sharply. Overall, the likely impact of structural adjustment policies on labour and the poor presents a bleak scenario.