IF Pakistan fails to act swiftly, it is feared that the nominal export growth and declining capital inflows could further shrink because of its current ranking in the World Governance Index.

The index covers the business environment, better work standards and respect for human rights. The annual assessment exercise is based on data from 215 countries compiled by the World Bank.

According to a source in an economic ministry, a strongly worded letter has been received by the government from the International Labour Organisation Secretariat in Geneva, lamenting Pakistan’s performance and urging it to make measurable gains towards implementing 27 UN Conventions.

We believe that if overseas buyers really care for our people and their welfare, they need to devise a mechanism where they share the cost of social compliance — Webcop Chairman Ahsanullah Khan

The ILO has even pushed the date for initiating the ‘Better Work Programme’ in Pakistan from 2015 to 2016, the source told this writer.

Pakistan has already lost textile business of about $200m this year, when Walt Disney removed it from the list of permitted sourcing countries in April. Business circles feared that other Western companies may also withdraw from the country for similar reasons.

“The Walt Disney decision has turned an already hostile trading environment more challenging for our exporters,” a leading textile tycoon said. “The sword is dangling over our heads. To me, it is only a matter of time before others follow Disney.”

According to information gathered, Walt Disney has not shown any inclination to revisit or revise its decision. This is despite the fact that the country’s diplomats in the US directly approached the corporate giant. “We interacted with the company, just as the government wished,” Jalil Abbas Gilani, Pakistan’s Ambassador to the US, recently told Dawn in Washington.

The gentleman, however, declined to share the outcome, and asked the scribe to seek comments on the follow-up from the relevant ministries in Islamabad.

“Losing business hurts, but Pakistan’s image at multilateral forums is also damaged. The country will have to raise its ante at economic diplomacy,” commented Khurram Dastagir Khan, federal commerce minister.

“We can’t let others play with our vulnerabilities. We have approached the IFC to organise a meeting with the ILO in Pakistan to allay its concerns,” he told this writer over telephone from Islamabad.

The minister said the government will launch a fresh diplomatic initiative to make a case for progress on implementation of the legal framework that is already in place.

“The focus was temporarily lost after the 18th amendment, which led to devolution of power to the provinces. There are still issues associated with the pace of progress, but the provinces are persistently moving in the desired direction,” he said while responding to a question over the decision to stop inspections of industry to monitor implementation of labour laws.

Farhan Khawaja, Punjab’s labour secretary, confirmed that the province revived the practice of physical annual inspection of industrial units. His department e-mailed a brief overview giving details of surveys conducted during the past three years.

“To improve the reporting process that had earlier lacked transparency, the department decided to computerise its manual system, with ILO collaboration. A software was developed for this by the labour market information and resource centre,” the overview stated.

According to details, 5,527 establishments were inspected in 2012, 4,273 warnings were issued and 547 units were prosecuted. In 2013, inspections increased to 9,198; 4,848 companies were issued warnings and 1,177 were prosecuted. During the current year till September, 6,891 inspections were carried out, 4,603 warnings were issued and 2,829 cases were forwarded for prosecution.

The response from Sindh was weak. The provincial labour secretary Noor Ahmed Leghari was out of the country, and other officers were either reluctant or did not have a report ready to share.

Ahsanullah Khan, chairman of the Workers Employers Bilateral Council of Pakistan (Webcop), spoke at length about the widespread corruption in departments vested with the responsibility of ensuring implementation of laws related to social compliance by businesses.

“We opposed unilateral action by the government as it used to be directed against businesses. The personnel of the relevant departments used to blackmail our members. They showed no interest in laws or their implementation, and used to focus on the money theycould squeeze out of businessmen,” he lamented.

“Besides, I do not think it is fair to burden the manufacturer with the cost of providing social protection to his employees, given the challenges of doing business here. We believe that if overseas buyers really care for our people and their welfare, they need to devise a mechanism where they share the cost of social compliance,” Ahsanullah made a point.

“They want quality at the cheapest price. But even that is not enough for mighty trading partners. Now they want to dictate terms of employment for our workers. How is it fair?”

The situation for workers in sprawling industrial areas all over the country is far from satisfactory, say labour representatives. “In a country where there is no mechanism to check the violation of the minimum wage law, who cares for terms of employment or the quality of the working environment in factories,” commented a labour leader.

“The multinational companies offer comparatively better working environments, but local companies are trying to contain their cost of production by scaling down their spending on workers to the bare minimum. The government neither wishes nor even pretends to protect the workers from exploitation,” he added.

“As the world’s attention shifts to the Middle East from South Asia, the coldness of the West is too obvious to ignore. It seems to perceive Pakistan more as a problem than a partner,” said a minister who returned from a trip to the US, implying that it is politics that decides the nature of economic ties.

Published in Dawn, Economic & Business, November 3rd, 2014