Labour pangs
May 1 is celebrated as a day for Labour throughout the world, in Pakistan it has special significance because the daughter of the man who gave workers in Pakistan an awareness of its rights, Zulfikar Ali Bhutto, is now Prime Minister in her own right. There is no doubt that her government has inherited many of the frustrations that have engulfed labour over the past decade, which now threaten to submerge the new-found freedom under a fresh democracy if it is allowed to run riot, pun intended.
Pakistan has evolved one of the most comprehensive set of labour laws in the world with definitive accomplishment in the stated-for purposes inherent in its codification. For a third world country this is quite an achievement except that in its implementation there is much left to be desired on all sides. These labour laws are not only the principles governing the welfare and contentment of labour but also the parameters allowing entrepreneurs to analyze the risk of investment in any venture and then plan their further input into any field of enterprise.
We tend to go to extremes. In the late 70s, labour movement became a part of the political process against Ayub Khan’s era, GHERAO and JELAO brought industry to a virtual standstill, the labour had cause for resorting to such methods mainly because of the concentration of wealth in a few hands. Nationalisation post-1971 brought in newer-ills, foremost among them being that bureaucracy acquired a direct hand in siphoning off public funds through their entry into the broad spectrum of industry and commerce, in sheer contrast to its true aims. Zulfikar Ali Bhutto, with the help of his then closest aide J A Rahim, overnight created government conglomerates meant to bring organisation and succour mainly to the blue collar workers. That nationalisation failed was not due to lack of sincere intention, of that one can have no doubt, it failed as a commercial entity because (1) many more industrial concerns were included in the sweeping nationalisation than were actually necessary or feasible (2) because bureaucrats cannot run commercial entities and (3) corrupt bureaucrats acquired the taste of the high road of freedom of malfeasance. Ayn Rand’s book “Atlas Shrugged” describes the evils of socialistic tinkering of the economy to a T. Money that was going into the coffers of the industrialists ended up in the pockets of the so-called technocrats, who misused the privileges of office to the detriment of both the white-collar and blue-collar workers. Bureaucrats were overnight transferred to the offices of Chairmen, Managing Directors, Directors, General Managers, etc and they made more than full use of perquisites much beyond what the owners themselves would have done or allowed, resulting in great losses in units which were profit-making when privately owned. If these people were into petty thievery what other malfeasance must they have been engaged in commercial dealing? As these losses ate into the earnings of the workers, payrolls and the number of workers had to be slashed, thereby causing more damage to the labour class than the advantages nationalisation had envisaged in conception, particularly because nationalisation had embraced almost 70% of the country’s industry and commerce. One must stress that personal gain hardly ever benefited any party leader or worker, a new commercial class of bureaucrats was created who lived off the fat of the land, the PPP took the brunt of the blame, from time to time the bureaucrats were clever enough to involve some of them in their shady deals. This was patently unfair to PPP but this is one of the disadvantages of pursuing socialistic policies, even Russia and China have so discovered.
One can imagine the frustrations of the labour class when the Martial Law regime that followed was used as an unwitting but forceful tool by a small coterie of bureaucrats, businessmen and industrialists, the new elite, to maintain peace and harmony “in the interests of the economy” everytime the worker voiced even genuine grievances. One cannot believe that the broad mass of the Defence Services ever understood how they were used to make the worker lose his voice.
The cap on the enormous accumulated frustrations over the past decade has been kept on only because of the popularity and charisma of Ms Benazir. One fully expected the labour class to take to the streets immediately and even take law into their own hands, particularly in units like PIA, Pakistan Steel, Karachi Port Trust, etc where labour genuinely suffered at the hands of management. In retrospect it seems that Ms Benazir’s first speech promising succour to the labour and student unions was an intelligent pre-emptive move to gain time. The time has now come for Ms Benazir to redeem her pledges to the labour class while ensuring that a fine balance is maintained between the need to ameliorate their condition and the re-invigoration of the economy by encouraging entrepreneurs to invest time and money in new ventures in Pakistan. Any hint of impending trouble will send investment packing, about intentions of foreign investment less said the better, given the penchant of some bureaucrats close to the seat of power to dip into perceived honey, whether in dictatorship or democracy the attitude does not change. One of the common modus operandi of these suave but corrupt individuals is also to finesse/direct any muck that flies as a result onto the innocents elected, such are the devious practices of errant bureaucracy.
Labour’s demands are restricted to (1) adequate salary and benefits (2) good working conditions and (3) post-retirement benefits. By and large labour is satisfied with the salary and facilities if it keeps up with inflation. It is in translation to actual implementation that, except in all fairness, nationalised industries or those with foreign investment, labour rarely gets the spirit of the law of the land. This is also true for the working conditions.
Workers must get a minimum average salary. Thereafter, there must be a number of salary steps depending upon skill, expertise, experience, etc. It may be necessary to have different minimums depending upon the place of work e.g. Karachi where the cost of living is much higher than the rest of the country. As regards working conditions, these are atrocious, particularly in private enterprise, factory laws need to be strictly enforced to ensure that standards fit for human beings to work in are maintained. Again strict check is the responsibility of Government Departments, regrettably the inspections are seldom carried out if not the spirit of the inspections compromised altogether.
Two great achievements of the previous PPP regime in the Labour field have been the institution of Employees Social Security Institution (ESSI) and the Employees Old-Age Benefit Institution (EDBI). For the first time owner-management became compulsory participants in the welfare of their employees. An excellent scheme in theory, again in actual implementation it has suffered for lack of imagination, complicated by being soured by rampant corruption in the last decade. Almost no commercial establishment except in the nationalised sector or with foreign investment ever pays it correct dues. The system has been further subverted by the contract labour system, alright for services such as maintenance, security, catering etc but must be done away with in other areas throughout industry and commerce. Those who try to pay their full dues are judged to be mentally retarded by fellow businessmen and plain stupid by the personnel of the institutions who more often than not advise you ways and means to hide the number of your personnel so that the resultant “saving” can be “profitably” shared. Case in point, a private company had employed over 700 persons in ISLAMABAD under the noses of the Federal Government for over 8 years till very recently. PESSI dues were approximately calculated at Rs 49,000 monthly, Rs 588,000 annually with a cumulative total over 8 years of Rs 4.7 million and EOBI computed at Rs 35,000 monthly Rs 420,000 annually totalling Rs 3.4 million, a grand total of Rs 8.1 million, not counting penalties. This company has paid less than Rs 3.0 million. Who suffers? And where did the money go? Workers who are now retiring do not have any pension benefits, for the last 8 years they did not have any medical benefits. When brought to the attention of PESSI and EOBI officials no action was taken against the company. Without going into details of the methods employed, one can safely say that persistence with such institutions for collection of dues must be done away with immediately and new innovative methods instituted forthwith keeping in mind that private sector can play a positive role.
Every corporate unit must choose one insurance company to give all dues meant for social security and other contributions, (approximately 10% of the gross salary paid to each staff member) which will include social security, workers’ compensation, education cess and Group insurance. Similarly EOBI payments (5% of gross salary) may go straight into a National Pension Fund, the financial structure being modelled on something like NIT or ICP, etc. The list of staff members and their dependants must be supplied in triplicate showing their salaries. Each staff member must be given a National Worker Number (NWN). The insurance company and the National Pension Fund will keep one copy, return two duly attested (including original) for the payment received back to the company. When making tax returns, original copies must be submitted as proof of actual salaries paid. The selected insurance company must provide for complete medical cover for the staff and their dependants at selected points. Similarly the Pension Fund accounts for individuals post-retirement. The ESSI and EOBI institutions should be cut down to a regulatory staff only to ensure that the process the insurance company and National Pension Fund do not get into any shenanigans, the process is kept smooth and to keep tabs about transfers made in the rolls when the employees change jobs, the NWN coming handy. Without the original copy of payments made (the lists of staff member and their dependants), income tax should disallow expenditures shown against staff salaries. By adding National ID Card Number and Income Tax Numbers, the Income Tax can also add such personnel to their rolls who should be income tax payers.
One can talk about how the Insurance Companies and Pension Funds can force-multiply the money collected and how manifold benefits can accrue out of re-investment in industry and commerce but we are limited by space to discuss only those ideas which are badly needed for labour welfare and contentment. For example, one can talk about investment by the National Pension Fund in housing schemes which directly benefits labour.
The Government is due to announce a policy package. Sincere intentions is the essence of economic growth alongwith peace and tranquillity. Except for salary all other benefits have to be privatised and innovated to ensure that Labour gets their labour’s worth. Ms Benazir has to take great care in labour management, centifrugal forces like militancy may destroy industrial peace and wreck any hope of economic emancipation (or for that matter, democracy). Innovative schemes to augment labour welfare activity must be instituted in various categories as aforementioned thereby removing a bone of contention between labour and management.
When industrialists and businessmen become targets of mayhem and sabotage, who does this eventually hurt? The cycle of poverty that ensues stops at the doorstep of the worker! MCB is case in point where only the other day, the labour union, within a fortnight of having won the elections for CBA beat up one of the Zonal Managers of the Bank in Karachi while threatening the others with due consequences, circa 1987 they had thrown rotten eggs at then President of the Bank. These activities ultimately harm the workers as the conservative backlash tends to take the leftist tendencies to the right extreme. The PM has the inherent ability to bring sanity into the field of commerce and industry. One should have no doubt that the alternative is massive exodus of capital from enterprise, a sure recipe for economic disaster.
Economic apocalypse is the last thing a populist Ms Benazir can afford, in fact what the country can afford. Nobody in his right mind can wish Ms Benazir ill, rather anyone who loves this country would pray that her efforts at economic amelioration must succeed. The labour policy package being announced today will have far-reaching consequences for the economy either way, depending very much on the contents.
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