Social distancing and protection

The emergency forced upon us by the Covid-19 outbreak has brought home, among other failings, the stark reality of inadequate, dispersed, ill-coordinated and inefficient arrangements for social protection. All kinds of zombie schemes being added every day leave no doubt that it is more patchwork than a systemic endeavour. The federal government’s package focuses on the poor and the daily wage earners. For the workers in the formal sector, the expectation is that the employers receiving tax relief and debt facilitation will not lay off their workers during the lockdown. Only the Sindh government went ahead to notify a ban on layoffs by businesses operating in its jurisdiction.

Such bans work only to some extent. Broadly, the employers were in compliance in the month of March. As the lockdown enters into April and may well go beyond, the employers have questioned the legality of the ban imposed under the Payment of Wages Act. They have come out with a long charter of demands. These demands expose the bits and pieces of whatever exists in the name of social protection. In support of these demands, they maintain that the Standing Orders Act allows them to take necessary measures including laying off their workers up to 14 days with half pay and to terminate them if the situation continues for an indefinite period.

They do not wish to be so unkind as to invoke the Standing Orders Act if, and it’s no small if, their new demands are met. Every factory, industrial and commercial establishment should be allowed to establish an Emergency Fund comprising of: (i) adjustment of employees’ leave balances for the current and next years’ leave entitlement, (ii) amount due to be paid to employees on account of bonus for the current year, (iii) amount distributable among employees on account of Workers’ Profit Participation Fund for the current year, (iv) amount of 2% of profit payable on account of Workers Welfare Fund (WWF), (v) amount payable to Sindh Employees Social Security Institution (SESSI) and Employees Old-Age Benefits Institution (EOBI) on account of their monthly contributions should be suspended for a year and the resulting amount to be transferred to the fund, and (vi) WWF has huge funds available with it which can be transferred to companies for utilisation of payment of wages. The last five years’ contribution by enterprises to the WWF be refunded to respective enterprises for utilisation in this fund.

The fund so accumulated may be used by enterprises for payment of workers’ wages for the next three months. In case the proposal for this fund is not acceptable, the government should allow the enterprises to lay off their workers for the period of April 2020 on 50% wages and the remaining 50% should be paid from the employers’ contribution to Sindh WWF. If the lockdown continues in the month of May, 100% wages be paid out of the WWF. In other words, the employers will bear a burden no more than half a month of wages. All the rest has to be chipped in by the workers themselves through various social protection windows. In the long list of adjustments, the employers do not factor in the benefits accruing to them from fiscal and monetary concessions announced by the federal government.

This state of affairs justifies our proposal of direct transfers to each Pakistani, instead of throwing over trillions of rupees into pockets burning no holes. In the long run, the country needs a single social protection authority focusing only on two things — pensions and unemployment benefits. Health and education have to be separate initiatives, delivered effectively to all, including workers.

Published in The Express Tribune, April 3^rd, 2020.

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