Our invisible and neglected workforce
The government needs to at least set up rules and mechanisms to monitor the plight of informal workers
The writer is a development anthropologist currently based in Fairfax, Virginia
Pakistan is estimated by the International Labour Organisation (ILO) to have the ninth-largest workforce in the world. However, since our formal employment is limited to a few sectors oriented towards exports, including textiles, leather and footwear, the bulk of our national workforce is employed in the informal sector. The informal sector is, in fact, a pervasive economic feature of most developing economies, contributing to employment creation, production and income generation. In terms of its contribution to the GDP, it accounts for between 25 per cent and 40 per cent of annual output in developing countries in Asia and Africa (World Bank).
While on the one hand, informal employment can provide a cushion for workers who cannot find a job in the formal sector. On the other hand, a large informal sector entails a loss in budget revenues by reducing taxes and social security contributions paid by employers, and, in turn, diminishing the availability of resources needed to improve infrastructure and other public goods and services. An informal sector also leads to a high tax burden on registered labour. A high level of informality also can undermine the rule of law and governance, when a significant proportion of a nation’s productivity occurs outside the preview of state laws and regulations. The exploitation of workers in the informal sector is also a common phenomenon. Women, migrants, religious minorities and other marginalised/vulnerable groups of workers, who are excluded from other opportunities, often have little choice but to take jobs in the informal sector.
In Pakistan as well, the informal sector provides measly remuneration to men and women who are often working under poor working conditions. These workers are often also compelled to engage their children in labour to ensure household survival, in turn denying them the right to education and hence perpetuating the vicious cycle of poverty. This cycle of exploitation goes on unchallenged within the informal sector.
Pakistan’s informal sector has been found the poorest paymaster in a working paper on ‘informal labour markets in Pakistan’ recently released by the State Bank of Pakistan. Nearly 48 per cent of surveyed firms within the informal sector were found to be paying their workers below the minimum wage, in comparison to only 17.5 per cent of the formal sector paying their workers below the minimum wage.
Informal employment lacks any form of contractual obligations, no legal protection in case of wage disputes, there are no safeguards to prevent termination of work without notice or due compensation. Informal workers also lack guaranteed social benefits such as pensions, sick pay or health insurance. The Home Based Women Workers Foundation, for instance, has recently estimated that around 1.2 million women work from their homes, but the formula of minimum wage is not applied on them and neither are they provided with basic healthcare by their employers, nor do they have any form of unionisation which can represent them. Multitudes of informal workers are similarly slogging away in agriculture, at brick kilns littered across the country, in fishing, mining and leather tanneries. Hundreds of thousands of poor families are trapped in bonded labour arrangements due to their indebtedness.
Our Senate Standing Committee of Law and Justice seems reluctant to ratify ILO conventions regarding rights of informal workers. This hesitation is understandable given the logistical and on-ground challenges. Tracking down informal workers, registering them and keeping track of the conditions they work is not easy. Informally employed workers are scattered and most are not even aware of their rights. The government needs to at least set up rules and mechanisms to monitor the plight of informal workers and to punish infringements, even if implementation takes a longer time. Unless some regulatory attempt is made, the informal sector will not rectify itself on its own.
Published in The Express Tribune, July 23rd, 2016.
While on the one hand, informal employment can provide a cushion for workers who cannot find a job in the formal sector. On the other hand, a large informal sector entails a loss in budget revenues by reducing taxes and social security contributions paid by employers, and, in turn, diminishing the availability of resources needed to improve infrastructure and other public goods and services. An informal sector also leads to a high tax burden on registered labour. A high level of informality also can undermine the rule of law and governance, when a significant proportion of a nation’s productivity occurs outside the preview of state laws and regulations. The exploitation of workers in the informal sector is also a common phenomenon. Women, migrants, religious minorities and other marginalised/vulnerable groups of workers, who are excluded from other opportunities, often have little choice but to take jobs in the informal sector.
In Pakistan as well, the informal sector provides measly remuneration to men and women who are often working under poor working conditions. These workers are often also compelled to engage their children in labour to ensure household survival, in turn denying them the right to education and hence perpetuating the vicious cycle of poverty. This cycle of exploitation goes on unchallenged within the informal sector.
Pakistan’s informal sector has been found the poorest paymaster in a working paper on ‘informal labour markets in Pakistan’ recently released by the State Bank of Pakistan. Nearly 48 per cent of surveyed firms within the informal sector were found to be paying their workers below the minimum wage, in comparison to only 17.5 per cent of the formal sector paying their workers below the minimum wage.
Informal employment lacks any form of contractual obligations, no legal protection in case of wage disputes, there are no safeguards to prevent termination of work without notice or due compensation. Informal workers also lack guaranteed social benefits such as pensions, sick pay or health insurance. The Home Based Women Workers Foundation, for instance, has recently estimated that around 1.2 million women work from their homes, but the formula of minimum wage is not applied on them and neither are they provided with basic healthcare by their employers, nor do they have any form of unionisation which can represent them. Multitudes of informal workers are similarly slogging away in agriculture, at brick kilns littered across the country, in fishing, mining and leather tanneries. Hundreds of thousands of poor families are trapped in bonded labour arrangements due to their indebtedness.
Our Senate Standing Committee of Law and Justice seems reluctant to ratify ILO conventions regarding rights of informal workers. This hesitation is understandable given the logistical and on-ground challenges. Tracking down informal workers, registering them and keeping track of the conditions they work is not easy. Informally employed workers are scattered and most are not even aware of their rights. The government needs to at least set up rules and mechanisms to monitor the plight of informal workers and to punish infringements, even if implementation takes a longer time. Unless some regulatory attempt is made, the informal sector will not rectify itself on its own.
Published in The Express Tribune, July 23rd, 2016.