A new labour development index for Pakistan

Labour exploitation remains rampant in the world today. Marginalised people, including the poor, especially women, migrants and ethnic and religious minorities, provide the fodder for capitalists to make exorbitant profits. Debt bondage, which enables modern human slavery, or child labour, are the more extreme forms of labour exploitation. However, the lack of adequate remuneration, the denial of basic worker rights and exposure of employees to hazardous work environments are other more commonplace ways in which labourers are exploited around the world.

The exploitation of workers seems implicit to the way our global supply chains operate, which accrue profits at the top by squeezing workers at the bottom, who are kept in line by incrementally well-paid management hierarchies.

Government regulations, labour unions and the need to preserve a corporate brand image do place some constrains on business entities from exploiting labour in richer countries. Yet, economic migrants to the west, and to other rich states like the Gulf countries, still provide a steady supply of cheap labour for backbreaking jobs in construction, waste management and several other ‘low-skilled’ sectors. Moreover, processes such as offshoring and outsourcing have enabled many businesses to source their products from poorer countries with lax labour and environmental laws to enable profit maximisation.

However, it is not only multinational corporations which exploit workers within poorer countries. Industrialists and feudals within countries like our own are also very skilled at leveraging the lack of education, skills and livelihood opportunities to ruthlessly exploit workers.

Poor workers in a country like Pakistan are especially vulnerable as much of the economy is informal and hence not subjected to regulation. While there is some basic legislation which aims to avert bonded labour and restrict child labour, it is not implemented effectively. According to UNDP estimates, nearly 10% of Pakistani children between 10 and 15 years old are working to help their families make ends meet. Around 3 million people in the country are trapped in debt bondage. Most working women in the country are also engaged in marginalised and under-paying activities.

To develop a more comprehensive sense of labour issues within Pakistan, the UNDP-endorsed National Human Development Report (NHDR) constructed Pakistan’s first-ever Labour Development Index (LDI). The LDI calculates the employment-to-population ratio; the share of labour income; the premium labourers can obtain based on skills; and the human capital capabilities of the country’s workforce. A variant of this index also considers if workers are being provided ‘decent’ work opportunities which include reasonable work hours, adequate pay and workplace safety, and basic labour rights protection.

The labour situation in Pakistan seems to have improved over time based on NHDR calculations which compared the labour situation in the country between 2012 and 2018. The NHDR estimated a 16% increase in employment within the formal sector, compared to 7% in the informal sector, which is encouraging given that workers in the formal sector generally have more protection and better pay than those in the informal sector. Also, jobs in the agricultural sector, which traditionally provided jobs to the majority of the country’s workforce, was also seen to have experienced a 12% decline, which is also a part of the informal sector.

Despite this increasing trend towards formalisation, much still needs to be done. Consider, for instance, how almost 25 million labourers in the country were still not being paid the minimum wage in 2018. Around 13 million people were found to be employed as ‘contributing family workers’, who are not paid at all. Most Pakistani women are still being paid half of what men are paid for similar positions. Nearly 33 million people were estimated to be overworked, and around 51 million of them were working without the protection of labour laws.

Pakistan, thus, still needs much to formulate and implement more comprehensive laws which offer minimum wage, equal pay (to women) for equal work, in addition to compelling employers to provide social security and ensure decent working hours and occupational safety, in both formal and informal sectors.

Published in The Express Tribune, June 17^th, 2022.

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