WB for lenient labour rules: Temporary workers get 36pc of job market
By Khaleeq Kiani
ISLAMABAD, Dec 16: Pakistan has one of the largest populations of temporary workers in the world, who experienced a 3.5 per cent decline in real earnings between 1997-98 and 2003-04, according to a World Bank report. Still, the bank advised the government to go for more lenient labour market regulations, believing that stricter measures were resulting in a lack of investment and a reduction in regular jobs.
In a confidential report on Pakistan’s labour market, the bank says the most significant piece of evidence that labour regulation “is excessive in Pakistan happens to be that the share of temporary workers in Pakistani businesses is one of the highest by any international standard, standing at about 36 per cent against, for instance, 15 per cent in India and three per cent in Bangladesh”.
It says the national economic growth rate has been improving during the past four years but job growth remains slower than the increase in labour force, which now includes more than 45 million workers. Interestingly, this slower growth in job creation is not compensated for by improvement in job quality.
“Job earnings are low and Pakistan faces the double challenge of providing more jobs while also improving earnings and the quality of jobs.” Average earning of salaried employees in 2003-04 was Rs4,088 ($68) per month. For a typical family of six with one person employed, the average earning placed that family below the poverty line. Statistics on earnings of self-employed are not available but are believed to be much lower.
Underemployment – seasonal or chronic – is another problem facing many workers, especially those in self-employment or the farming sector. Underemployment translates into income losses. Many workers in rural areas have three ‘inactive’ months in a year where they are mostly unemployed, with some 40-60 idle days per year. Average earnings of poor rural workers are less than Rs2,000 ($33) per month.
Earning differentials are large – average earnings in rural areas are 68 per cent of earnings in urban areas, while female employees earn 59 per cent of males, although it is not clear if it is for similar work. Earning differentials between rural and urban areas have been diminishing, while those between men and women have been increasing.
For elementary workers (which are focus of minimum wage legislation), average real earnings eroded by 11 per cent from Rs2,671 in 1997-98 to Rs2,374 in 2003-04. Real earnings in the private sector fell more in the informal than in the formal sector. In contrast, government employees saw real wages improve by 21 per cent on average. Real wage gains were also made by some of best-paid professional categories. The rest experiences falling real earnings, with a sharp fall in real wages of illiterate or less-educated workers.
The report says “informality is widespread and has been growing”. The informal sector accounts for 70 per cent of non-agricultural employment and 55 per cent of wage employment. Informal sector comprises 73 per cent of workers in rural areas and 67 per cent in urban areas. “Informality overall grew by five percentage points from 65 per cent in 2001-02 to 70 per cent in 2003-04”.
Interestingly, some 61 per cent of the employed labour force in 2004 was self-employed or unpaid family helpers – up by two percentage points from 2001-02. Lack of job opportunities rather than inherent entrepreneurial spirit was cited as the main reason people become self-employed, the report said.
