Reference ID: 07ISLAMABAD4358

Created: 2007-10-09 11:47

Released: 2011-08-30 01:44

Classification: UNCLASSIFIED

Origin: Embassy Islamabad


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UNCLAS SECTION 01 OF 03 ISLAMABAD 004358


SIPDIS


SIPDIS


E.O. 12958: N/A

TAGS: ELAB ECON EIND ETRD PHUM KTEX SOCI PK

SUBJECT: PAKISTAN EXPORTERS SEEK TO IMPROVE LABOR CONDITIONS WHILE

UNIONS STRUGGLE FOR BASIC RIGHTS


REF: ISLAMABAD 1178


1. Summary: While Pakistan has ratified 35 of the International

Labor Organization's 185 Conventions on Labor Rights, including all

eight core Conventions concerning the most basic worker rights,

working conditions are still poor, and the labor movement has a long

way to go to become relevant here. Although the largest civil

society group in Pakistan, labor unions lack the capacity to push

for more than just basic worker rights. Interestingly, employers

may be the ones to improve working conditions. A few promising

programs are being initiated by progressive employers, primarily

exporters, to improve worker rights compliance. Exporters view

enforcement of worker rights as necessary to maintain market share

in a competitive international marketplace. NIKE's pullout of Saga

Sports in Sialkot is a prime example of this tendency. End

summary.


CONVENTIONS RATIFIED, BUT NO ENFORCEMENT

----------------------------------------


2. Pakistan has ratified only 35 of the 185 International Labor

Organization (ILO) Conventions, including the eight core conventions

that contain the rights to organize, to engage in collective

bargaining, to equality at work, and the abolition of child and

forced labor. However, the ratification of these Conventions has

not secured labor rights for the majority of Pakistan's workers.

Enforcement is lacking and inspection regimes are viewed as corrupt.

When unions try to form, organizers are fired from their jobs

without recourse.


LEGISLATION NOT HELPING

-----------------------


3. Despite the relatively few conventions ratified, Pakistan's

labor legislation is relatively good compared to some of its

neighbors. However, the current trend is toward limiting workers'

rights. The Finance Act of 2006, which was passed to establish the

federal budget, included language that allowed for a longer working

day, no compulsory holiday closures, and eliminated overtime pay for

contract workers. In 2002, a new Industrial Relations Ordinance

(IRO) was put into place which curbed workers' right to unionize and

right to collective bargaining. Solidarity Center, along with other

labor organizations, fear the Draft Employment and Services Bill,

which is being finalized in the Ministry of Labor before being sent

to the Cabinet for review, will further codify the changes made in

the Finance Act.


4. The provincial governments are also restricting labor rights.

The Punjab Industrial Policy eliminated labor inspections and

replaced them with a self-declaration system whereby employers

themselves certify that they are abiding by all labor rules and

regulations. The province of Sindh joined in banning labor

inspections and touted it as a "pro-business" move. Sindh also

banned teachers' associations. This ban was later overturned by the

Sindh High Court, but the ban reflects the lack of appetite for

protecting labor rights in the provinces.


5. In addition, the labor inspection regime is notoriously corrupt.

Aleema Khan, Founder of the Pakistan Compliance Initiative (PCI),

stated that many inspectors do not even tour the factories they were

sent to inspect. Rather, they meet in closed-door sessions with the

factory owners to negotiate the payment for a clean inspection

report. Even employers in compliance must pay or risk receiving an

unfavorable report. (Note: Pakistan ranks 138 out of 180 countries

on Transparency International's Corruption Perceptions Index. End

Note.)


6. However, many observers believe that Pakistan has some of the

best industrial relations and social welfare laws in South Asia

despite recent legislative changes limiting worker rights. Zahoor

Awan, Deputy Secretary General of the Pakistan Workers Federation

(PWF) commented the problem is a disconnect between the law and its

enforcement. Inspections are infrequent (if at all) and fines, if

imposed, are usually minimal. Awan's view is that the cost of

compliance is often greater than the cost of paying fines for a

labor law violation.


SOME IN GOP ALSO CONCERNED

--------------------------


7. Dr. Sabur Ghayur, Chair of the Policy Planning Cell in the

Ministry of Labor, Manpower and Overseas Pakistanis, is working on


ISLAMABAD 00004358 002 OF 003



policies addressing some of these issues. He explained that the

current system of labor laws and inspections is inefficient,

mismanaged and corrupt. There are numerous complicated and

redundant laws that need to be simplified. He wants to narrow it

down to about five to six laws and anticipates an 18 month timeframe

for this process. Ghayur understands the need for Pakistan's labor

laws to be in line with ILO standards in order for Pakistan to

remain competitive in the world of global outsourcing and that

transparent enforcement of the law is of utmost importance. He also

commented on how the U.S. had previously assisted on policy design

back in the 1980s and early 1990s and suggested such assistance

would be helpful again.


CURRENT STATUS OF LABOR MOVEMENT IN PAKISTAN

--------------------------------------------


8. According to Greg Schulze, Country Director for the Solidarity

Center in Islamabad, just under two million workers, or about three

percent of the work force, belong to a union, compared to eight

percent of the private sector work force in the U.S. Union workers

tend to be better educated than non-union workers. While non-union

laborers tend to be largely illiterate, 60 percent of union workers

can read and write, however they still lack the training needed to

organize effectively. There is very little professional capacity,

with unions having one strong leader, but no lower-level personnel

to follow through with initiatives, or to groom for future

leadership roles.


9. Union workers in Pakistan fall into two categories - those who

fall under collective bargaining agreements and those who do not. A

growing number of them do not fall under an agreement. Before

employees can vote on whether or not to unionize, the union

organizers at the place of employment must register with the

National Labor Relations Council (NLRC). Once they register, the

NLRC often contacts the place of employment to notify the owners of

the union's plans. The organizers are then fired before a vote can

be called. Under current law, there is no recourse for the fired

employees.


10. To date, unions have focused on enforcing existing rights and

have avoided political action. The majority of factories do not

follow the law, and with the corrupt inspection system (or

self-validation as in Punjab), there is no need to. The stronger

unions have been able to ensure minimum wage payments and limited

the number of working hours, but have not had the ability to push

for better working conditions not already mandated by law.


11. There have been a few signs of increased political activities.

The Jamaat-e-Islami (JI), a conservative religious party, attempted

to take over one of the largest unions in the country at the Water

and Power Development Authority (WAPDA). The Pakistan Muslim League

(PML) attempted its own take over of WAPDA. Both were unsuccessful.



12. The Solidarity Center is also working to strengthen female

participation and leadership in unions. More women are entering the

work force. The labor force participation rate for women has

increased from 13.7 percent in 2000 to 18.9 percent in 2006 (the

last year for which statistics are available), and that growth is in

the industrial and trade sectors, not agriculture.


EXPORTERS SEE NEED FOR A CHANGE

-------------------------------


13. Although unions are struggling to improve working conditions,

two business-led initiatives are gaining momentum in changing how

employers view labor rights. One is Workers Employers Bilateral

Council of Pakistan (WEBCOP), established in 2000 by employers and

labor leaders to promote cooperation, trust and confidence between

workers and employers with a view to accelerate industrial

development and social progress through decent work. WEBCOP

provides a bi-partite institution framework for voluntary mediation,

conciliation and arbitration of industrial disputes. Currently,

WEBCOP is approaching various Chambers of Commerce in order to reach

employers to show them that labor rights are not a cost but a

benefit to business. Its philosophy is that better treatment of

workers leads to greater productivity, which in turn leads to

greater competitiveness.


14. The second business-led initiative is the Pakistan Compliance

Initiative (PCI). Its mission is to generate a competitive

advantage for Pakistani exporters by promoting a transparent system


ISLAMABAD 00004358 003 OF 003



of verified compliance with recognized ethical business standards

with active support of government and civil society. Essentially,

PCI is promoting corporate social responsibility and supply chain

integrity for Pakistan's largest export industry - textiles.


15. Both of the above initiatives have been spurred further by the

NIKE pullout from Saga Sports in Sialkot (reftel). NIKE inspectors

at the Saga Sports manufacturing center noted late wages,

unregistered workers, and homework, which cannot be monitored or

regulated. NIKE tried negotiations, but believed it could not work

with Saga and terminated the contract. This was a wake-up call for

employers around Pakistan who provide manufacturing for

international brands: child labor was not the only concern for

these buyers - workers' rights were, too.


16. Previously, manufacturers believed child labor was the only

concern of international brands. In 1999, Sialkot, the center of

the soccer ball manufacturing industry, worked with ILO, UNICEF and

Save the Children, UK in creating the Independent Monitoring Against

Child Labor (IMAC) organization. IMAC was responsible for

inspecting soccer ball manufactures for possible child labor

violations. Saga Sports received a clean bill of health on this

front. NIKE's pullout prompted ILO to hold a tri-partite conference

on the issue of worker rights, which changed IMAC's mandate and

prompted the Sialkot Chamber of Commerce to work to make Sialkot a

Center of Excellence in Manufacturing based on worker rights

compliance.


COMMENT

-------


17. While labor conditions in Pakistan are still poor, and

improving worker rights is low on the political agenda, labor unions

are still Pakistan's largest civil society group. They need to be

strengthened and trained on organizing and managing effectively.

Post has designed an International Visitors Program bringing

together labor, management and government to show how all three can

work together to promote better labor standards. In addition,

efforts by ILO and Solidarity Center need to be supported.


18. There are other bright spots on the horizon as well. After the

NIKE pullout from Saga Sports in Sialkot, export-driven

manufacturers saw a need for a change in labor relations. Post

believes it is important to take advantage of this paradigm shift.

As part of this, Pakistan needs to focus on worker rights and

training in order to increase its competitiveness an outsourcing

center for international brands. Funding for initiatives such as

WEBCOP and PCI are an important way to support improved labor

conditions. End Comment.


Patterson