Exclusionary economy bane of working class
July 27, 2012
The labour struggle in Pakistan centers as much on the premise of basic rights as it does on the state’s declining interest and concern for the working class that makes up a large majority of the population.
According to annual report of Pakistan Institute of Labor Education (PILER), the total labor force of the country stands at 57.24 million, out of which 53.84 million are employed and the unemployment rate stands at 5.42 percent. The share of three major sectors in employment stands at: agriculture, 21.2 per cent; industry, 25.4 per cent; and services, 53.4 per cent.
Apart from the lack of political will on part of the state to promote workers rights, the biggest challenge for workers is an increasingly exclusionary economy that seeks to promote the interest of the elites at the cost of the majority population of working class. Pakistan’s expanding informal sector economy that makes up 30 per cent of the economy, employs 73 per cent of the labor force.
This essentially means that three-fourth of the total population of workers has no access to basic rights as no labor law is applicable to the informal sector.
The Constitution of Pakistan is strong on labour rights, while the state has gone an extra mile signing a number of ILO conventions, including core labor convention, to reiterate the state’s commitment to labor entitlements.
However, Pakistan stands miles behind in implementation of constitutional provisions as well as the ILO Conventions as less than 3 per cent of the total workforce is unionized despite the constitutional provision (Article 17) guaranteeing the related right.
Less than 5 per cent of the workers benefit from EOBI, PESSI, and WWF, the social security systems run by the government, even though Article 28 of the Constitution provides for social security for all citizens.
Labor inspection remains officially suspended in two provinces (Sindh and Punjab). The tripartite system (government, employees and employers annual consultation on labor issues) too remain weak as the last tripartite meeting was held in 2009 after a gap of many years, while there is no information on the next. The Industrial Relations Order pursued by the government, and now by provincial governments following the constitutional reforms, is extremely exclusionary as it denies 80% of the workforce the right to unionization.
The entire agriculture sector that employs 45% of the workforce is regulated by no labor laws.
In Pakistan labor policy by and large has remained divorced from legislation. The previous five labor policies -1955, l959, 1969, 1972 and 2001- did not materialize into pro-labor legislation. The Labor Policy 2001 that came out after a long wait of 29 years, did not even acknowledge the right of association for all workers, not did it envision extending basic rights to agriculture and the informal sector workers.
Labor Policy 2010 is also silent on agricultural workers' rights of unionization and Collective bargaining. It only accedes to cover agricultural workers in mechanized farms (read corporate farms) for compensation on death or injury under the Workmen's Compensation Act 1923. On crucial issues of child labor and forced labor, the policy made cursory remakes.
The policy failed to outline strategic actions to address gender disparity in the work force and in workplace. Rampant violation of ILO Convention on equal remuneration for equal work and low participation of female workers is indicative of anti-women work environment.
Officially the country's workforce is divided in six major sectors. Data is collected and tabulated on these sectors alone. Various sub-sectors under each major sector are not investigated.
The most labor intensive sector is agriculture/forestry/hunting and fishing. Currently, 45.1 per cent of the total 50.79 million workforce is engaged in this sector. The next sector in terms of workforce strength is wholesale and retail trade which employs 16.5 per cent of the workforce.
Manufacturing engages a mere 13 per cent -- a sad reflection on the state of the country's economy. Construction involves 6.6. per cent, and transport and communications employ 5.2 per cent. The terms and conditions of work differ in each sector and its sub-sectors. The most crucial factor determining the status of workforce is its exclusion from the ambit of national labour laws. The largest component of the workforce i.e. in agricultural and fisheries, is excluded from all labour rights i.e. pertaining to wages, work time, social protection, health and safety. Profiling all the major sectors and/or sub-sectors is a mammoth task requiring matching human and financial resources, and are beyond the scope of this report.
Textile industry is on decline since the post-quota (post-2004) period. Its share in exports
decreased from 66 per cent in 2004 to 53.7 per cent in 2008-09. Pakistan, being the 4th largest cotton growing country, exports 75 to 80 per cent of its total produce of cotton and synthetic textile in the form of yarn, fabric, readymade garments and made-up articles.
Textile sector employs 38 per cent of total manufacturing labour force, or 6.7 million workers. Textile industry comprises three sub-sectors: cotton spinning, cotton cloth and textile made-up. Over the years, spinning expanded, partly due to access to cheap raw materials and in part due to protectionist fiscal policy and export subsidies provided to influential owners of ginning factories.
In contrast, the growth in the labour-intensive weaving and value-added textile manufacturing was low.
The recent years witnessed severe yarn crisis despite bumper raw cotton production in the
country. As international prices of yarn increased, the spinning sector, in a run to rake up profits, exported cotton yarn in larger quantities, leaving little for the local industry. Yarn exports amounted to 54 per cent of Pakistan's total exports recorded during July-February 2009-10. The weaving sector, comprised mainly of medium and small-sized enterprises, suffered closure of thousands of power loom units and a decreasing production in the absence of yarn in the local market. The crisis hit hard the unorganized power loom sector. Price of a 48-kg yarn bag rose from Rs1,200 to about Rs1,500-1,800, and led to the closure of about 100,000 power looms, leaving about 15,000 to 20,000 workers jobless. The Ministry of Textile restricted the export of yarn from 50 million kg per month to 35 million kg from March 2010.
The share of apparel manufacturing is 11.73 per cent only, with around 4,000 manufacturing units of garments, knit-wear and made-ups in the major cities-Karachi, Lahore, Faisalabad, Multan, Gujranwala, and Sialkot. According to the Pakistan Hosiery Manufacturers Association, 3,500 units of various sizes which had more than 700,000 workers on their payrolls were affected and 245 hosiery and knitwear producing units closed down over the last five years. As many as 99 closed down in 2008 only.
There is no official data available on the number of factories closed down during 2008-09, nor on the working hours lost. According to unofficial estimates, about 1,500 garment units, employing about 500,000 people, and as many as 300 garment units, i.e. 20 per cent, have closed down in Karachi alone (year of data was not mentioned).
It was reported by the Ministry of Textile that 94 big units, each employing more than 1,000 workers in the hosiery, knitwear, polyester filament, spinning, garment, denim, silk and rayon sectors, were closed in 2008.
The Pakistan Readymade Garment Manufacturers and Exporters Association (PRGMEA) estimated that about 40 per cent of readymade garment factories were closed down and 50 per cent of factories cut their production.
'The government exports yarn to China which processes it and re-sells it to Pakistan, but as the price is higher, the local industry cannot buy it. A study conducted by a community-based group, Child and Labor Rights Welfare Organization, in 2009 about the impact of global economic recession on factory workers in Bin Qasim, Landhi and Korangi industrial area in Karachi, found massive entrenchment in the garment factories. From the seven factories surveyed in Malir industrial area, three were completely shut down and 2,500 workers lost job. Two of the surveyed factories cut down their workforce by 600 and 300, respectively.
Two large and well-know factories also retrenched 30 per cent workers. In the Korangi
industrial area, the factories slashed workforce by 30 to 92 per cent. Some factories reduced the number of working days from 30 days to 20 per month. This had serious impacts on the workers' households as they struggled to survive during unemployment of the main breadwinner of the family.
Garment/Apparel industry is a labor intensive industry and relies on the skills of individual workers in Pakistan. Garment industry consists of a large number of small and medium sized firms sandwiched between the two giants – big textile firms that sell yarn/raw fabric and the mega-sized retailers who buy the finished product.
Small and medium-sized enterprises have little negotiation power in setting prices, and, essentially, they are rendered as 'price takers'. This structure has made the industry difficult to offer workers benefits and better wages. The industry seems to be stuck in a low-skill and low-productivity rut, which could be the reason that cutting labour cost is the only way they find to bring down production expenses to compete in the global market.