PAKISTAN is struggling to cope with a rising number of Covid-19 cases. The slowdown in economic activities by the month-old lockdown has adversely affected millions of livelihoods.

One of the most affected sectors is construction, which is also highly labour intensive. It contributes around three per cent to the country’s GDP while its share in the total non-agricultural employment is over 12pc.

The Pakistan Labour Force Survey (LFS) 2017-18 shows 4.7 million people were employed in the construction sector, with an overwhelming majority (4.4m) being engaged in informal activities. It shows that employment in this sector is of an insecure nature, with workers engaged without written contracts or access to social protection mechanisms like the Employees’ Old-age Benefits Institution (EOBI) or provincial employees’ social security institutions. The analysis by the employment status shows that this arrangement is pre-dominant, making up as high as 94 per cent or 4.17m of the total construction workforce.

A further disaggregated analysis of such employees indicates that 3.49m of them operated as casual workers while another 0.52m were engaged as piece-rate workers. This signifies the inherently vulnerable and insecure nature of employment in the sector. Merely 0.15m workers were regularly paid employees, receiving a monthly salary.

Reaching out to 4m vulnerable daily-wagers will be a challenging task as they are not registered in social protection databases

There are a large number of sub-sectors within the construction sector as defined in the International System of Industrial Classification (ISIC). The examination of employment at the more detailed four-digit level in LFS 2017-18 shows that a) the substantial majority of workers (3.7m) were engaged in the construction of buildings, b) the share of those engaged in more specialised sub-sectors is very small and c) the biggest chunk (0.32m) of the latter is employed in building completion and finishing.

Surprisingly, the number of workers involved in public-sector construction activities — the building of roads and railways and the construction of utility projects — is negligible at 16,000 and 48,000, respectively.

To further narrow down to the segments of construction workers immediately affected by the lockdown, the 4.17m category is further disaggregated by the periodicity of payments. The analysis reveals that the most paid employees in construction — 2.29m or 55pc — receive remuneration on a daily basis. They are followed by another 1.64m or 39pc workers receiving payments on a weekly basis while 0.13m workers are paid on a piece-rate basis. Only 89,000 of these paid employed workers receive payments on a monthly basis.

With most economic activities at a standstill for a month, it is likely that these nearly 4m construction workers earning on a daily or weekly basis are without any livelihood.

In the fiscal stimulus package announced by the prime minister, Rs200bn has been allocated for workers who lost their jobs or see a reduction in employment opportunities. The analysis clearly shows that the workers in the construction sector earning on a daily or weekly basis are most vulnerable and should, therefore, be provided with income support through this window.

However, reaching out to these 4m workers will be a challenging task as they are working in the unorganised sector and are not likely to be registered in any social protection database maintained by different government agencies.

The prime minister has also recently announced a special package for the construction sector, which has upgraded it as an industry. The sector has been extended a number of fiscal incentives, including the waiver on the declaration of the source of income condition, abolition of withholding tax on most construction-related material and a fixed tax rate regime.

While these incentives may seem attractive to large builders and developers, it is not clear how these will translate into improved job security and safety for the millions of construction workers that are usually engaged through a network of contractors and sub-contractors.

Construction activities have also been resumed recently. However, mechanisms to ensure the safety and health of constriction workers, specifically protection from the transmission of the coronavirus through the provision of personal protective equipment, seem to be missing. Given that the provincial labour departments carry out little or no regulatory oversight of working conditions, it may be challenging to enforce safety and health standards at construction sites. n

The writer is an economist

Published in Dawn, The Business and Finance Weekly, April 27th, 2020

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