EOBI: a poverty manufacturing factory

Millions of workers in Pakistan find themselves sinking in bottomless pits of poverty, illegal wages and inhuman working conditions. We may be the only country in the world whose 50% of the workforce is paid less than minimum legal wage and 90% is deprived of old-age benefits. The Employees Old-age Benefits Institution (EOBI) has only 9 million workers (out of approximately 75 million formal and informal workforce) registered on its roll. This simply means that approximately 66 million workers, not registered under EOBI pension scheme, will become dependent on families or charity as they enter their twilight years. This article proposes a number of specific actions that could transform the poverty manufacturing EOBI to a prosperity generating institution.

EOBI ought to be declared a universal and mandatory scheme, applicable to every citizen of Pakistan above the age of 18 years, regardless of the employer or the nature of job — industrial, agricultural, commercial, domestic, permanent, regular, temporary or contractual. The existing EOBI, a bureaucratic institution of colonial mindset, needs to be radically restructured, completely digitised and directly linked to NADRA’s database. The new EOBI organisation must develop an online database that reflects the name, CNIC, phone number, status of EOBI registration and monthly EOBI contribution for every adult citizen of Pakistan.

The EOBI monthly contribution rate ought to be standardised across Pakistan. A suggested rate is 6% of the minimum wage, of which 5% should be contributed by the employer and 1% by the state. Every formal and informal sector employer ought to make EOBI contribution for every employee, whether engaged on daily, weekly or monthly basis. The employer’s share of EOBI contribution, based on a minimum wage of Rs20,000 i.e. Rs1,000 pm, Rs250 per week or Rs40 per day be widely advertised and pegged to changes in minimum wage.

Every worker must receive an automatic SMS, each time an EOBI deposit is made in his/her account to confirm the latest amount deposited as well as the grand total. The employers’ payment method ought to be significantly simplified, and made possible through easy mobile phone money transfer systems involving no transfer fee. Kenya’s highly successful M-pesa mobile phone money transfer scheme is something that Pakistan could learn much from.

The current EOBI pension of Rs8,500 pm can only be termed ludicrous. This must be pegged to at least 75% value of the applicable minimum legal wage and be raised as and when the minimum wage is revised. On reaching the age of sixty years every worker should be given a choice to either opt for drawing the normal monthly pension or to accept the lumpsum amount accumulated during his/her entire service. In case the worker opts for the lumpsum amount, it must be immediately deposited in the individual’s bank account, without any bureaucratic hassles or runarounds.

Even a restructured EOBI will soon run aground unless it develops an in-built checking and monitoring system. Such a system must have at least four basic functions: a) to ensure that EOBI is deposited for every adult citizen of Pakistan on a regular basis regardless of the nature of job or the employer; b) any employer failing to contribute or not contributing to EOBI for 100% employees is swiftly taken to task; c) individuals reaching the age of sixty begin to receive pensions automatically without any additional documentation or affidavits; and d) an EOBI helpline is set up to immediately respond to any worker whose EOBI contribution is not made or delayed by the employer.

It is imperative for Pakistan to provide a decent pension to every senior citizen. This essentially calls for a highly efficient, digitised and data-based organisation. Any Pakistani leader, with a modicum of sanity and humanity, could simply implement the above EOBI programme and leave lasting footprints of qualitative changes in the lives of 75 million workers of Pakistan.

Published in The Express Tribune, May 25^th, 2022.

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