Everyone is Facing Soaring Inflation, Inequality & Hypocritical Policies From Govt & Different Firms
Due to the increase in petroleum prices, the inflation rate in many countries around the world has increased. Everyone is getting crushed by inflation.
Hello, Dear Readers and followers, welcome back to my new story, I hope all’s well. Today’s topic is going to be about inflation, From gas to food, the cost of everyday items has soared over the last few months at a historically high level.
In most countries as inflation surges to new heights, everyone is increasingly debating and every person has different opinions on this topic it is the most common and hot topic in discussion among different groups of people and everyone is worried about it. Every patriotic Pakistani is worried about the current situation in Pakistan.
In simple terms to understand, What is inflation:
The ghost of inflation eats all your hard-earned money. It feeds on the worth of your money. So, what is this inflation even mean? This term which we hear so much on news, what does it even mean?
In an economic sense, Inflation is defined as a situation where there is a sustained, unchecked increase in the general price level and a fall in the purchasing power of money. Thus, inflation is a condition of price rise.
In simple terms to understand easily, Inflation is an increase in the prices of goods or services. With inflation, one must pay more money over time to acquire the same goods and services.
As economist Ludwig said, “Inflation is the increase in the quantity of money without a correspondence increase in the demand for the money. In other words, inflation is prompted by the growth in the money supply.”
This phenomenon is called inflation. Inflation is the general rise in the price level of the economy. Inflation is one of the main causes for why things cost some amount become considerably higher amount after a long period.
In an ideal world, an increase in employment leads to an increase in wage earnings, hence, an increase in consumer spending (and investment, etc through indirect effects), and eventually, an increase in overall demand in the economy.
Since the supply is fixed in short term, the price level rises and we observe inflation.
Why is it happening?
Inflation, in general, occurs due to one of three reasons:
- Rising prices — when the cost of production rises, the manufacturers compensate for it by increasing the prices of their products — letting the consumers take the brunt of the rising costs. This leaves lesser purchasing power to the consumers.
- Rising demand — When the demand for particular commodities increases, and the supply chain is unable to keep up with the said rise, it leads to a rise in prices — resulting in inflation.
- The third is a vicious circle of the wage cycle. This happens when the labor demands a hike in their wages to suffice their lifestyle needs, thus impacting commodity prices, which eventually leads to more demand for hikes.
Read more ways to deal with inflation here
In most countries, Governments reducing inflation has been a key objective.
Government cannot produce wealth it can only consume or destroy it. So where does the government get its revenue? Three ways, taxation, borrowing, and printing.
“Inflation is like sin; every government denounces it and every government practices it.”
Governments view inflation as a force that inhibits economic growth by discouraging long-term investment, distorting the tax structure, and undermining the financial plans of firms and households.
Although this perception of inflation clearly predominates in policy circles, some analysts have argued that maintaining a certain amount of inflation over the long term can improve a country’s economic performance, largely by keeping unemployment in check.
Inflation in Pakistan:
A reasonable dosage of controlled inflation is necessary for the growth of any economy. But if inflation takes to rioting, just as in Sri Lanka economy will collapse leading to unimaginable dimensions. The state itself becomes a failed one.
Only when inflation becomes too negative where prices start to free fall, do injecting inflation become necessary to resurrect the economy to favorable growth.
But Pakistan's economy is on the downfall. Inflation is in double figures. The people are suffering from huge price rises and also the inability to get the essential commodities even if they are able to pay for the same. In such a situation injecting inflation is not an option.
Pakistan's government is not run by professionals. The Corrupt politicians and mafias look into the finance of the state from the perspective of its own mindset. Also, even the professional ones may be unable to take decisions independently. Thereby inflation is taking its toll.
It has been the worst in the last 4 decades. In the seventies, Zulfiqar Ali Bhutto brought PKR to half the then-existing value of USD. Since then PKR value is gradually eroded against the USD and on many occasions, it was bottomed by double digits. Now that the Current Govt. is following the same path and lowering PKR to above 40%. This has created a double triple whammy for inflation. Pakistan is importing Gas and petroleum products which are also utilized in power production and Urea production.
The Pakistan Bureau of Statistics has released inflation numbers for June. It claims that annual inflation in Pakistan is 21.32%/yr. FALSE! Today, I accurately measure annual inflation at 42.59%/yr, 2x the bogus official rate!
The political instability created by income inequality is a real danger. It’s a danger to democracy, and it’s a danger to capitalism.This is a dangerous trend.
Now people are paying a heavy price because petroleum products have increased in the international market and also dollar has gained 40% due to PKR depreciation. the fuel prices increase the transportation charges increases then the goods transportation cost from one place to another is increased…that is how the cost of goods is increased. the goods transported are raw materials then again the transportation of processed goods will affect the price of the finished products.
Agriculture products are becoming expensive and the cost of electricity and gas is more expensive. The common man is facing a double triple whammy in the cost of living. It is a harbinger of further inflation which will follow later.
Much of Pakistan’s economy runs on cash, even deals of Lakhs and crores are consummated in cash. If one keeps a close eye on the prices of standardized commodities like Wheat, Precious metals (gold, silver platinum), and base metals one might find a way to determine the real inflation rate.
You may feel these are small issues but this itself is the big factor for inflation. This tells us the pain through which ppl are going due to inflation in Pakistan and the severity of the economic crisis in Pakistan.
Pakistan’s energy crisis & sky-high inflation have Pakistanis in fury. Take a look as hundreds gather in protest of skyrocketing electricity prices and load shedding. Today, I measure PAK’s inflation at a stunning 40%/yr.
Instead of 2200, 1100 rented seats here.
Sorry if you feel bad but it’s true.
Everyone is getting crushed by inflation! In the Pakistan perspective, it is essential that the state take necessary measures to control inflation. If inflation becomes uncontrollable there is every possibility of state unrest leading to the situation.
The Effect of Economic Inflation on People’s lives:
Inflation affects different people differently. This is because of the fall in the value of money. When the price rises or the value of money falls, some groups of the society gain, some lose, and some stand in-between. Broadly speaking, there are two economic groups in every society, the fixed income group, and the flexible income group.
People belonging to the first group lose and those belonging to the second group gain. The reason is that the price movements in the case of different goods, services, assets, etc. are not uniform. When there is inflation, most prices are rising, but the rates of increase of individual prices differ much. Prices of some goods and services rise faster, of others slowly and still, others remain unchanged. We discuss below the effects of inflation on the redistribution of income and wealth, production, and society as a whole.
The Effect of Economic Inflation on Business :
Also, It depends on the type of business. Inflation affects the business because the cost of goods sold goes up. Many businesses will close their door for good because of the inflation rate. Specialty shops often sell items that people can live without, and in times of high inflation, they will do just that.
If the business is not able to pass on the higher costs to its customers, then profit margins fall and the business becomes less profitable, or may possibly operate at a loss.
A business cannot prevent inflation. They have zero control over the factors that create inflation, those happen at a macro level to the complete economy.
But a businessman's inflation affects in a positive way because a businessman can earn more profit in inflation as price of commodities increases in the market.
Inflation in the IT industry:
IT companies are the biggest beneficiary of rising dollar prices against PKR because most of their revenue comes from abroad depending on their business projects. And U.S is the biggest overseas market for IT companies. In the next quarter, IT companies will outperform market expectations.
First, we need to understand the IT industry which is mainly dependent on the export market. IT industry, in general, comprises computer hardware, software, electronics, semiconductors, internet, telecom equipment, e-commerce, and computer services. But in Asian countries like Pakistan, the IT industry is more or less comprised of main software and different IT services.
During the pandemic, most industries including IT went to a halt. But IT mostly servicing, being a less capital-intensive business didn’t report as many financial losses as other industries. Apart from what we have experienced actually many jobs which were offline suddenly wanted to go online. And here comes a new opportunity for IT to boom its business. More jobs were created. Most companies, not only IT thought WORK FROM HOME was a bad idea before the 2020 pandemic.
Now coming in recent times, there is a fear of recession in the global market, and indices also not doing good. The nature of inflation in Pakistan is mainly cost-push inflation, which leads to rising in rising in factor costs such as land, labor, and capital. Since the IT industry is more dependent on Manpower, the cost of HR increases significantly in the form of salaries. This rise in cost in the IT industry is compensated by the depreciation in the value of the rupee.
Therefore, the IT industry is largely unaffected by inflation unless there is an external factor like a global economic slowdown, etc.
Inequality & Hypocritical Policies From Different Government & Companies For Their People & Employees Around The World
In the last few days, everywhere debates about it specifically on some social media like Twitter, especially Linkedin where everyone shares their views and reactions on the current situation Inflation, and the increased price of fuel which impacted everyone's lives, businesses, and also country’s GDP.
Inflation increases risk of recession in global economy
So, Everyone is worried about this situation. If inflation increases people's purchasing power decrease because of the increasing price of the commodities. It affects poor people very much because their income is stable but expenditure increase and their purchasing power is very low.
Now coming in recent times Inflation and Fuel prices are very high, and nearly everyone notices. Employees (workers) are affected, Some are, some aren’t, depending on their monthly salaries. Inflation affects different people differently.
They are no special class of people. Any citizen who has money in his pocket when he goes to the market and finds that the cost of goods is higher than what he or she paid a month ago for the same shopping realizes that there is inflation and prices have gone up.
But not the companies. IT companies are concerned about foreign exchange rates. though technically some capital goods are affected by inflation so companies are affected but companies manage these costs, by shifting the costs to their clients.
Many people are aware of the effect of inflation on their savings in a theoretical way. People who work for a living are certainly conscious of prices going up and their wages being stagnant. But not all have the knowledge of why it is increasing and its effect on the rise of inflation.
Most times inflation takes a long time to have a noticeable effect unless it is quite high. And also Most people won’t feel the effect of this until it’s too late.
Most People are more likely to notice their personal costs of living than government figures.
During this hard time, most Standard companies and IT firms are ready for helping employees with inflation because at the time of inflation prices of all goods are to be increased and it will positively affect the turnover and profitability of the company.
At that time standard companies are taking some initiative and increasing the wage rates of employees and a part of their incremental profit is given to their employees through wages, salaries, or gives some extra allowances in the form of inflation and fuel, to their employees so no one could suffer in these hard times.
But the other side, there are some other companies and IT firms that are not provided these benefits in the situation of inflation even they are already making the recession ready, they are laying off employees or some have double standards and introduced inequality and hypocritical policies for different employees are different.
Every penny spent that way is a penny that’s not spent on things that might help lower employee turnover rate, or raise workers’ pay and better position them to be competitive in the future.
Worker pay at many companies failed to keep up with inflation last few months. But those same businesses had enough money for stock buybacks and others
You have workers, many of whom have performed heroically in recent years or months to keep your company’s financially going, and yet their efforts aren’t valued more than just a tiny fraction of the value.
In IT Sector, Some employees like software or Network engineers, Graphic designers, or anyone else who works for their clients get a lot of benefits in form of different ways. There is no objection here because they are key assets for any IT firm even these employees deserve more.
And also the widening gap between Top management and worker salary has gotten so extreme and also their gets a lot of other benefits as well.
It’s a basic matter of fairness and intentions.
In the last few days, I came across a lot of people debating and discussing with others on social media Linkedin, or Twitter different things like corruption, inflation, injustice, Inequality & hypocritical Policies from Govt. and IT firms, and different companies.
Inflation May Get Much Worse This Summer And Could Linger ‘Many Years: Experts Warn
The economic crisis is expected to produce secondary mental health effects that may increase suicide rates. It is well known that mental health problems are related to deprivation, poverty, inequality, and other social and economic determinants of health. Economic crises are therefore times of high risk to the mental well-being of the population and of the people affected and their families.
There is no health without mental health
Mental health is an indivisible part of public health and significantly affects countries and their human, social, and economic capital. Mental health is not merely the absence of mental disorders or symptoms but also a resource supporting overall well-being and productivity. Positive mental health is a state of well-being in which the individual realizes his or her own abilities, can cope with the normal stresses of life, can work productively and fruitfully, and can contribute to his or her community.
Good mental health allows for cognitive and emotional flexibility, which are the basis for social skills and resilience in the face of stress. This mental capital is vitally important for the healthy functioning of families, communities, and society.
As with individuals, societies can be more or less resistant to such
stressors as economic crises. Economic shocks can destabilize public
service budgets and affect education and health care systems.
However, available data show that legislation for protecting social
welfare can increase the resilience of communities to economic shocks
and mitigate the mental health effects of unemployment and the stress-related consequences of economic downturns.
Work changes increase the cognitive and emotional demands of work. Absenteeism and withdrawal from the labor market have increased because of stress, anxiety, and depression-related disorders. In many countries, about one-third of new disability benefits are attributable to mental health conditions, and this share is increasing.
Thus, mental health is an important economic factor. The shift from a manufacturing to a knowledge society emphasizes, even more, the importance of mental health for sustaining productivity. Good population mental health contributes to economic productivity and prosperity, making it crucial for economic growth.
Mental health is determined by socioeconomic and environmental factors
An economic crisis affects the factors determining mental health. Protective factors are weakened and risk factors strengthened. Employment benefits mental health. Job security, a sense of control of work, and social support at work are factors promoting the mental health of employees.
Stable employment, secure incomes, and social capital predict good mental health. Social capital is the quality of social relationships within societies or communities, including community networks, civic engagement, a sense of belonging, and norms of cooperation and trust.
Conversely, poverty, financial problems, and social deprivation are major socioeconomic risk factors for mental health problems and disorders. In most parts of the European Region, alcohol consumption is negatively associated with the population’s mental health. Alcohol consumption plays a considerable role in increasing suicide, especially among men.
Mental health problems contribute significantly to inequality in health in the European Region. Relatively high frequencies of common mental disorders are associated with poor education, material disadvantage, and unemployment. Suicide is more common in areas of high socioeconomic deprivation, social fragmentation, and unemployment.
Increasing income inequality has been linked to increased suicide rates. The greater vulnerability of the disadvantaged people in each community to mental health problems may be explained by such factors as the experience of insecurity and hopelessness, poor education, unemployment, indebtedness, social isolation, and poor housing.
It is the poor that will be hardest hit by the current economic crisis.
The current economic crisis is increasing poverty in many countries around the world. The economic crisis will hit people with low income and those made poor through loss of income or housing the hardest. The economic crisis has increased the number of households in high debt, repossession of houses, and evictions.
The current economic crisis is probably increasing the social exclusion of vulnerable groups, low-income people, and people living near the poverty line in many countries.
Such vulnerable groups include children, young people, single-parent families, unemployed people, ethnic minorities, migrants, and older people. Economic pressure, through its influence on parental mental health, marital interaction, and parenting, affects the mental health of children and adolescents. The effects of extreme poverty on children include deficits in cognitive, emotional, and physical development, and the consequences on health and well-being are lifelong.
Social gradients of health exist in many countries, and moving down the socioeconomic ladder due to loss of jobs and income affects people’s health. During recessions, social inequality in health can widen. The least well-educated people are at the greatest risk of ill health after job loss.
Unsurprisingly, substantial research has revealed that people who experience unemployment, impoverishment, and family disruptions have a significantly greater risk of mental health problems, such as depression, and suicide, than their unaffected counterparts.
Especially men are at increased risk of mental health problems and death due to suicide during times of economic adversity. Unemployment contributes to depression and suicide, and young unemployed people have a higher risk of getting mental health problems than young people who remain employed.
Evidence indicates that debt, financial difficulties, and housing payment problems lead to mental health problems. The more debt people have, the more likely they are to have mental disorders overall.
The crisis will increase mortality linked to mental health problems. In many countries, increases in national unemployment rates are associated with increases in suicide rates.
It can be concluded that the economic crisis is likely to negatively affect health, especially mental health. The next sections outline possible measures to mitigate the mental health effects of the current crisis.
An important reminder:
Due to inflation and several reasons, inflation had already made our life worse, People need to speak up against the practice of imposing those inequality policies repeatedly was not only unjustified but also cruel which divide people and spread negativity, and promote surged hatred.
Under freedom of expression, Something everyone should remember and accept is that freedom of expression gives us the right to be angry and to politely and positively criticize anything. everyone is upset in this inflation time and has the right to criticize their inequality policies and double standards but don’t go overboard every time. It's creating a negative impression. And They should accept positive criticism and fix it.
Federal Minister of information and broadcasting, Maryam Aurangzeb announces Rs 2,000 monthly subsidy to those earning less than Rs 40,000. so that they could absorb the inflationary pressure after the increase in petroleum products prices.
Anybody whose monthly salary is less than Rs40,000 would get Rs2,000 per month from the government. Whether it was a laborer, a farmer, a teacher, a vendor, a working woman, or a student who did part-time work to bear the expenses of his/her education, all would be given the subsidy, she told a news conference.
The minister said the relief package was announced prior to the decision taken by the government to increase the prices of petroleum products. “We have done this before and set the example by doing it again. We do not raise mere slogans and lecture others as it is the opposition which had given the gifts of inflation, massive unemployment, and economic woes to people,” she observed.
Unlike Ms. Sania Nishtar, who is a humble and down-to-earth personality, Have a look at the Federal Minister of information and broadcasting, Maryam Aurangzeb’s arrogant tone from our own taxes, Govt. Pakistan is giving ‘its 2000 Rupees and you can solve all problems and invest further too. ’.
Something similar attitude like Federal Minister Maryam Aurangzeb, Those other companies or It firms who made some policies to help their different employees in a different way and different amounts of allowances for a different level of employees are basics shows injustice and Inequality in their employees where they give allowances and other benefits to Top managements and other who have High salaries but forgets lower-level workers like office boy, etc.
Here, I would like to say one famous slogan “Koi Sharam Hoti Hai Koi Haya Hoti Hai (Some are ashamed)”
In simple words, unjustified and there is no make sense behind those policies. The Top management and different IT specialists have already earned very high and a lot of other benefits. even sometimes some of these Top management or different IT have their own work or work on different other freelancing projects.
But unfortunately, lower-level employees have that one salary that is not enough for their family to live a better and simple life when inflation is high and everything is expensive and they can not able to buy them.
So, It's my personal opinion, These kinds of employees deserve the same level of benefits and allowances which you gives your top management or others. Because they are so human beings and inflation also, even more, affect their lives.
The numbers of suicide attempts are high during pandemic and inflations time. and that is reality.
During the COVID-19 pandemic, Suicide increment during and afterward a pandemic is highly common and now, Suicide is higher among economically inactive and unemployed persons than employed persons. The COVID-19 pandemic has created a major mental health challenge throughout the world. the unimaginable mental sufferings such as depression, panic, fear, anxiety, stress, trauma, adjustment disorder, etc.
Read more about Suicides may increase during the pandemic, warns expert here;
An unemployed young man committed suicide by jumping from the third floor of Karachi’s Lucky One Mall
The victim, Zaheer Hussain had been unemployed for a long time and had come for a job interview in a company before committing suicide. After stress and depression, He had committed suicide by jumping from the third floor of Karachi’s Lucky One Mall.
Read more about it here;
inflation in 2022 is worldwide. The stresses of recession and unemployment triggered by the global financial crash. So, Financial hardship is a top risk factor for suicide attempts.
According to a new study, people who have recently experienced severe financial strain may have a 20-fold higher risk of attempting suicide than those who have not encountered hardship.
The researchers also warn that, due to the current inflation’s impact on economies, suicide attempts may become an even greater worry in the near future.
“We could well be seeing a dramatic increase in suicide rates moving forward,” he further speculates.
The researchers found that being in debt or facing a financial crisis, unemployment, past homelessness, and having lower income were each associated with suicide attempts.
The researchers predict that people who have experienced all of these financial stressors could face a 20-fold higher risk of attempting suicide than individuals who have experienced no financial strain.
There is a “need for further research examining relationships between financial strain, mental health, and empowerment,” they write, explaining that a person’s lack of opportunities for financial mobility may also play an important role.
So, how do you manage your expenses with these rising prices?
Inflation creeps in slowly and fades away slowly. One needs to be patient, not panic and deal with a rational mind.
To ensure that inflationary conditions don’t hit you hard, here are a few things you can take care of:
- Following a strict budget:
Disciplined expenses come in handy big time in a tight economy. It is important to be mindful and watch your expenses in such a situation. Don’t spend more than you need. Don’t spend more than your means. The resultant smaller savings will come in handy. - Prioritizing expenses
In an inflationary economy, where you cannot control how much you spend on essentials, you can cut down on unnecessary spending. The key here is to continue saving the same amount of money as you were earlier. Eat out less often. Step back on shopping unless absolutely necessary. Find alternative solutions like free or low-cost online courses and more. - Don’t touch your contingency funds
If you have been saving up for an emergency corpus, do not touch it. Inflation leaves you with less money in hand, so it is best to work on spending less, not on saving less. Usually, the first step people take is stopping their investments, even liquidating them, so that they do not have to cut back on lifestyle spending. But adjusting a bit for a few months isn’t a big deal, is it? - Adjust your debt repayments
If you have borrowed a personal, student, or any type of loan, see if you can reschedule your repayment plan. While you may not be able to cut back on all expenses, putting off your debt repayment for a while can give you some breathing space.
Final Thoughts:
A recession and inflation are always a final chapter in people losing confidence in the economy, Under the current scenario, the economy is introducing rate hikes to tackle the recession. But we can’t be sure of the recession by end of 2022.
inflation and recession will ALWAYS outpace incomes, get used to it. Either get higher pay, make your money work for you, save and live inexpensively, or start your own small work to supplement your income.
No job in this world is a guarantee. We must realize that. It is only if we save we can survive.
It’s in people’s self-interest to try to contain this.
After the recession, there will be a recovery. Post recovery new themes and business booms emerge. Add more knowledge to your skillset, it will help you capture the next big rally, as you are an experienced professional.
Here I would like to say those people who too much expect others. Never expect too much things from others. Expectations are actually our worst enemy. It can definitely make you or break you. Put your faith in Allah instead, and do things for yourself. Never expect others to do it for you.
Hope this article inspired you to do something that you always wanted to do but lost interest in, due to something. I thank those who took time from busy schedules to read and recommend my story. I would like to express great gratitude to all who reviewed this article and generously feedback to me with their comments and suggestions. Their recommendations were blessings showered on a thirsty writer, and I am grateful and honored by each one. These special people have been instrumental in my life equipping me, inspiring me, walking with me, and wanting others to hear my story. I pray that they will be blessed by the blessing they have bestowed.
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Thank you for reading!
Finally, I pray to Allah to benefit those who read this article and others, grant me truthfulness in what I say and do, preserve my thoughts and my pen from deviation and guide me in all my affairs.
And all praise and thanks are due to Allah, without Whose help and guidance nothing can be accomplished. May Allah bless you with happiness, success, guidance, health, and knowledge. May Almighty Allah give us the strength to follow the Sunnah of our beloved Prophet Muhammad (P.B.U.H) and make us part of the group who is among the most righteous! Ameen.
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