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December 14th, 2011 WW Staff | NikeLeaks Cables: Asia
 

Pakistan: PAKISTAN EXPORTERS SEEK TO IMPROVE LABOR CONDITIONS WHILE UNIONS STRUGGLE FOR BASIC RIGHTS

     
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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
 
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