Social protection

August 14, 2019


The writer is an industrial relations professional.
The writer is an industrial relations professional.

THE promulgation of at least three labour welfare laws during Ayub Khan’s martial law, starting with the Provincial Employees Social Security Ordinance, 1965, had generated lot of excitement among industrial workers. The ordinance vowed to introduce a scheme of social security “for providing benefits to certain employees or their dependants in the event of sickness, maternity, employment injury or death and for matters ancillary thereto”.

Just before it ended, the regime introduced the Companies’ Profits (Workers’ Participation) Act, 1968, which provided for workers’ participation in the companies’ profits. Although a small fraction of the five per cent amount of a company’s annual profit would be allocated to the fund and paid to eligible workers, it was a novel idea.

The parting gift to the workers by Z.A. Bhutto’s PPP government was the Employees Old-Age Benefits Act, 1976, for persons employed in industrial, commercial and other organisations. The rate of monthly pension which started with Rs75 is Rs6,500 at present.

Province-wise workers’ benefits create anomalies.

The above schemes were run efficiently prior to the 18th Amendment, meeting their respective defined goals of catering to workers’ financial and medical needs reasonably well. Following the amendment, their management has unfortunately gone awry.

Ensuring the compliance of social protection schemes with conventions ratified by Pakistan rests primarily with the federal government, for which it is answerable to the International Labour Organisation. In case of any failure, it must apprise ILO officials about remedial measures being undertaken.

The PTI government should take a bold initiative in the interest of workers and revive the federal status of all the aforementioned three enactments as they existed prior to devolution in April 2010. There is a strong justification and rationale for doing so.

Social protection schemes should not remain dependent upon the whims of the provinces, which may deviate from the respective preambles of the relevant legislation. When these enactments were promulgated, the federal legislature — keeping the element of commonality in mind — would have desired to make the benefits of medical and pension schemes available to workers all over Pakistan. It would never have intended different types of medical facilities or variable rates of pension in every province.

Had these laws remained with the federal government, it would have issued eligible employees medical and pension cards acceptable anywhere in the country. Consider the case of the many migrant workers from Khyber Pakhtunkhwa employed in industries in Karachi and Lahore. The benefits of social security schemes also apply to the workers’ dependent parents. If the parents are residing in KP, how will the provincial social security institutions of Sindh and Punjab extend to them facilities beyond their ambit? Similarly, if the migrant workers go back to KP after retirement from service in Sindh or Punjab, from where will they draw their pensions?

There are also other issues that would be handled better if all the three enactments go back to the federal government. Both the institutions constituted under the ordinance of 1965 and the act of 1976 issue demand notices to employers claiming contributions for land revenue arrears. In November 2016, the Supreme Court decided that when the respective institutions are required to provide certain services in return for the payment of contribution by the employers, such payments are not considered tax but as a fee. Hence both social security and pension laws need to be amended to repeal this provision.

The definition of ‘wages’ in the EOBI Act was amended in 2005 to denote the wages dec­lared under the Minimum Wages for Unskilled Wor­­kers Ordinance, 1969. As this ordinance lost its validity for the provinces after the 18th Amendment, and the EOBI is still being managed centrally, most employers continue to pay the monthly contribution at 6pc (including 1pc as employees’ share) of Rs6,000, which was the minimum wage fixed under the ordinance in July 2008. Since the existing minimum monthly wage is Rs16,200 in Sindh and Rs 17,500 in the other provinces, the losses incurred by EOBI on this count will make it difficult to disburse the pensions in 2022.

The federal nature of the Companies Profits (Workers’ Participation) Act, 1968, continues to protect the interests of workers in KP and Balochistan, which have fewer industries and businesses. If Punjab also enacts its own legislation on this welfare law as has Sindh, the industrial workers of both the smaller provinces will be deprived of benefits from the welfare fund, which they have been deriving for the last 50 years plus.

The earlier the management of these three enactments goes back to the federation, the better it will be for the workers, employers and the industrial environment within the country in general.

The writer is an industrial relations professional.

Published in Dawn, August 14th, 2019