Workers’ safety net

Published November 8, 2016

LAST year, ILO chief, Guy Ryder, laun­ched a Global Business Network (GBN) for Social Protection Floors (SPFs) at the ILO headquarters in Geneva. Represen­tatives from 12 enterprises agreed to use the network to exchange information on current business practices, policies and programmes on social protection and support the development of national social protection programmes.

Following the event, Pakistan was identified by GBN members as a privileged country for collaboration. After identifying conditions prevailing here, it was decided to launch the National Business Network for SPFs with the following broad objectives:-

(a) Building business cases for social protection through hands-on research and documenting good practices; (b) raising awareness among enterprises and workers about the benefits of social protection; (c) creating a platform to provide concrete proposals to the government to change the governance of existing social protection schemes at the federal and provincial levels; (d) supporting the development of SPFs for uncovered groups such as the agriculture sector, home-based workers, etc.

In August 2016, an ILO mission visited Karachi to acquaint local employers about SPFs and seek their help in starting this initiative in Pakistani enterprises. Of the 28 countries where GBN members are keen to launch SPFs, Pakistan ranks among the top four along with Egypt, Indonesia and China.


Social protection for workers must be improved.


Despite its good intentions, I apprehend that establishing SPFs in the national and multinational companies will be challenging. Currently, Pakistan has nine labour welfare laws, which aim to provide social protection to workers of industrial and commercial establishments during and after their employment. Prominent among them are: Provincial Employees Social Security Ordinance, 1965; Employees Old Age Benefits Act, 1976; Work­men’s Compensation Act, 1923; Companies Profits (Workers Participation) Act, 1976 and the Workers Welfare Fund Ordinance 1971.

Of these, only under the compensation act do employers provide the stipulated amount of to their workers. In others, they contribute huge amounts to the government to provide their workers with medical benefits, old-age pension and operate various welfare schemes to disburse financial assistance, provide housing, etc. All the funds are generated by employers; the government itself does not contribute any money towards these schemes.

By virtue of collective labour agreements reached with their respective unions, progressive employers also allow fairly lucrative benefits such as cash incentives, bonuses and medical facilities, which contribute towards the workers social protection. Employers have always been highly critical of the government’s management of these schemes. They believe that were they to manage them with the same amount of funds, they would not only have achieved the objectives of the respective legislations but also given towards improving their workers’ living standards.

As a prelude to the introduction of SPFs by countries identified by GBN as potential candidates for cooperation, the ILO issued the following mission statement: “It is ultimately the responsibility of states to ensure the existence of adequate social protection for society and to plan, organise and in some cases finance the necessary protection. Enterprises can play a significant role in promoting and realising social protection floors adapted to each country.”

It is the state that has ratified ILO conventions and undertaken to provide social protection to the workforce all over Pakistan. Therefore in the first instance an exception should have been made in the 18th Amendment to not transfer the operation of active labour welfare laws, as mentioned above, to the provinces. In order to achieve the ILO’s goal, these laws need to be brought back within the federal government’s domain.

The caretaker government of Moeen Qureshi had shown concern about the poor functioning of three of the labour welfare laws, ie Employees Old Age Benefits Act, Provincial Employees Social Security Ordi­nance and the Workers Welfare Fund Ordinance. Soon after he took office as caretaker prime minister in 1993, a commission was formed under Naseem Mirza, then chairman ICI Pakistan, to formulate recommendations to bring about improvement in the management of these schemes.

After detailed discussions with the representatives of the labour and finance ministries, members of the commission proposed merging the operation of the three laws and introducing a one-window operation for payment of contribution by the employers. There would be one institution headed by a CEO from the private sector to manage the functions of the three schemes across Pakistan. The commission had also prepared a draft legislation to implement its recommendations.

The commission’s efforts were shelved by the succeeding PPP government for no reason. The present federal government may revisit the draft legislation submitted by the commission, which will surely help it in fulfilling ILO’s current expectation from Pakistan to provide social protection to its workforce.

The writer is an industrial relations professional.

Published in Dawn November 8th, 2016

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