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or some time now, the state and political elites in Pakistan have been discussing public-sector pension reforms. The proposal is to transition away from the current regime of an absolute entitlement towards a voluntary and contribution-based pension plan.
The rationale for these reforms is based on a fiscal narrative. It is contended that the federal and provincial governments spend almost as much on pension payments as on public-sector development initiatives. According to an op-ed written in 2023 by former KP finance minister, Taimur Khan Jhagra, the projected increase in the pension bill in years to come will be such that the governments simply would not have the money to pay it.
Numbers alone do not ever tell the whole story. How might one tell the story of the social protection of the elderly population in the context of the political economy of work in a debt-dependent and elite-captured economy?
Two overarching trends are evident. First, granted that the pension bill is huge, we need to break it down into the part that goes to the social protection needs of the elite civil and military cadres (BPS 17-22) and the part that goes to lower rungs (BPS 1-17). Based on the Asian Development Bank’s most recent statistics, the overwhelming bulk of the payment appears to go towards the elite cadres (at least 80 percent of pension payments). Second, with public-sector employment accounting for just about 7 percent of Pakistan’s total employment, public pensions neither accurately reflect the existing social protection landscape for the elderly population nor provide a sound basis to make a projection for today’s workforce.
Outside the relatively privileged segment of public-sector workers, questions of retirement, pension or social protection bring up an entirely different set of concerns and struggles. Informality is the name of the game. Some estimates put the non-agricultural informal sector employment around 83 percent.
Take the cases of Asghar* and Kausar* who started working in their teens, the former as a daily-wage labourer in the Old City of Lahore and the latter as household help in a suburban home in the city’s Defence Housing Authority area.
Hailing originally from a village in Narowal district, Asghar, now in his late 60s, spent about five decades of his life in Old Lahore. He has fond memories of the time when he was young and energetic, and his employer’s business was booming in the 1980s and 1990s. “Bao Ji would take good care of us,” he says. “If someone fell sick, Bao Ji would pay for the treatment. He would make sure to attend our weddings or send gifts through someone.”
Kausar, now in her mid-thirties, has already suffered a mini-stroke and undergone hernia surgery and a hysterectomy. The ensuing toll on her physical wellbeing has curtailed her ability to work for long hours. The reduction in working hours has directly correlated with her monthly earnings.
Originally from Hasilpur tehsil of Bahawalpur district, Kausar’s family has lived in Lahore for nearly two decades. She works as household help and her husband as a construction worker. Lacking kin-based political connections in Lahore, her treatment could neither be funded through social assistance benefits from the Benazir Income Support Programme nor the Ehsaas healthcare programme. Instead the treatment was paid for through family savings, loans and the support of Baji and Bhai, her employers.
Baji and Bhai, familiar kin terms for elder sister and brother, are frequently used by informally employed men and women for their employers or supervisors. Bao Ji is an expression of respect for men of the business-owning family. These expressions signify that work relations are more than mere employee-employer relations for hundreds and thousands of informally employed men and women like Asghar and Kausar. In the absence of any formal and legally backed entitlements, the informal workers in Pakistani cities rely upon employer support during non-routine occasions like illness, festivities and death.
An informal relationship, by definition, lacks legal entitlements. The troika of family, religion and market thus replaces the state as the premier social institution responsible for worker needs. When workers are in their prime years of productive adulthood and have maximum energy, they meet unforeseen or exceptional needs through charitable concerns or their reliance on informal inclusion into the employer’s extended kin network. Similarly, without a formalised retirement mechanism, like pension payments, the onus of care falls upon the employer’s generosity or the worker’s family. Workers often complement these options with market-based strategies like utilising their work experience and transitioning into supervisory-level work requiring less physical strength.
However, this ‘moral’ economy of care and support comes with its own set of vulnerabilities. In the case of an employer’s bankruptcy, as happened with Asghar, the workers must start from scratch. Searching for new jobs and cultivating relations afresh may or may not resemble their previous experiences. When their employer’s family-run goods transport agency went bankrupt in the late 1990s, the two dozen workers employed to run the business were left high and dry. Like most others, Asghar relied on his limited social network to find new employment.
Asghar is now in the seventh year of his retirement, a decision enabled by familial relations to fall back upon. A share in a small plot of agricultural land he jointly owned with his siblings provides a portion of his family’s supply of staples like wheat and rice. Asghar decided to retire when his three sons, raised by his wife as a stay-at-home mother in the village, grew up. One has joined the armed forces as a non-commissioned soldier; another has found a technician’s job in the Gulf region. Thus, lacking any formal pension entitlement, Asghar has passed the baton for the household’s sustenance to men in the next generation. With their daughter reaching adolescence and the elder son’s marriage, Asghar’s wife too has found a way to transition out of her rigorous work routine as a stay-at-home mother. The younger women of the household have now taken up the stay-at-home work responsibilities.
Her health troubles notwithstanding, Kausar has at least another couple of decades of work ahead of her. She seems to traverse a path similar to Asghar’s and many others in the informal economy. Her daughter, who has not yet reached adulthood, is already employed as a full-time household help. Her two elder sons are in the final year of their tailoring apprenticeship. They plan to set up a tailoring shop catering primarily to a low-income clientele in the katchi abadi adjacent to the DHA, where the family resides in a rented unit. The shop promises to be the only retirement plan for Kausar and her husband, who is in his early forties.
Relying upon the family for a retirement path can be tricky. Mand* was Asghar’s long time associate at the family-owned goods transport company, where they both spent the prime years of their adult lives working as movers. However, unlike Asghar, Mand lacked agrarian assets to fall back upon, and his male children could not take the burden of the family’s sustenance, so he continued working until he died in his early sixties.
Bushra*, a second-generation household helper in her late forties, struggles to put her sons on a path to stable work. The urgency of both men working has increased manifold since the untimely death of Bushra’s husband. One of the sons, trained as a barber, had a shop in katchi abadi adjacent to the Johar Town area of Lahore. However, rising rents due to the proximity to upscale residential development forced the family to move to an abadi tucked into the corridor of low-income residential neighbourhoods along Multan Road. A new place meant the loss of the social network and clientele cultivated in the older abadi. Unable to start the barber business afresh, the teenager started working as a helper at a nearby factory but couldn’t adjust to the new work routine and is currently unemployed.
With no formal entitlements or informal family-based mechanisms, the next best option for informal workers is to create a personalised working relationship. The relationships cultivated through work enable them to transition from more physically strenuous tasks and take up overseeing or managerial jobs. These transitions enable individualised retirement strategies. They also ensure that the work structure remains intact and is reproduced for the next generation.
Baba Ji*, in his late fifties, has spent all his adult life working as an elementary-level worker in the construction sector. He left his native village in Okara in his early teens and settled with a distant relative in the Chungi Amar Sidhu area of Lahore. Since then, he has moved from one contractor to the next. He seems to have finally settled down after his younger son found a factory job and his elder daughter got married a few years ago. After a few years of labour in the construction industry, Baba Ji’s son-in-law used work-based connections and meagre family assets to start a low-profile contracting business. He hired Baba Ji as an assistant to oversee subcontracted labour. This provided Baba Ji with a way out of the more physically strenuous work he had been doing. Still, he finds it increasingly difficult to continue working. “If my elder son also becomes a little responsible and starts contributing to the household income like my younger son, I will happily leave work altogether and just stay at home,” he says, adding that until that happens, he will have to continue to work as an assistant to his son-in-law.
Even though Bushra has not found much luck with family-based informal insurance mechanisms, she has also eased into a less physically strenuous set of tasks in her household help job. Bushra’s Baji has upgraded her work status and given her the cooking chore, besides supervising a younger woman who now does cleaning and laundry. “I must be here by the morning when Baji and Bhai jaan leave for work. From then onwards, I am responsible for the household. For me, this house comes before my own.”
Personalised relationships between employers and employees come at the cost of class-based solidarity among informal workers. The more workers rely upon such relationships for their welfare, the less likely they are to imagine the possibility of collective action for universalising social welfare entitlements.
The informalisation of the Pakistani economy has increased since the global turn towards neoliberal economic policies in the 1970s and 1980s. However, the seeds of the problem had been sown early due to the colonial character of the Pakistani state. This impacted the labour movement, too. At the height of labour activism and militancy in the 1960s, the labour movement was characterised by ethnic factionalism and galvanised around the charismatic authority of a few prominent working-class hero figures like Mirza Ibrahim of the Railway Workers Union and Bashir Bakhtiar of the WAPDA Workers Union. Further, major differences persisted on the political horizon among middle-class activists split among left-populist, ethno-nationalist, pro-China, and pro-Soviet positions.
Archival research by Kamran Asdar Ali and Anushay Malik highlights these historical facts. As a result of these cultural specificities, the labour movement in Pakistan could yield only piecemeal reforms on key social welfare issues like old-age pensions, etc. Rather than universalising welfare entitlements and fundamentally restructuring the post-colonial state’s institutional design, the net outcome of the 1960s labour movement was the institutionalisation of a class-based system of entitlements. There was one set of policies for the relatively privileged public-sector workers and another for private-sector workers whose welfare was tied to their employers and workplaces.
The old-age pensions for public-sector workers were to come out of the public exchequer entirely. The less privileged private-sector workforce was to be dealt with through a contribution-based scheme in which the employer and the employee both make monthly contributions to a fund managed by the relevant state authority, the Employees’ Old-Age Benefits Institution. Thus, class factionalism was built into the institutional design that came out of the country’s most prominent episode of labour militancy and activism.
Murtaza*, now in his late thirties, has spent most of his adult life working with one textile factory or the other. However, none of his jobs so far have come with welfare entitlements like a right to a pension fund. Like a majority of workers, Murtaza found piece-rate work through subcontractors who would take orders from big-name firms and exporters. These businesses are part of the formal economy but subcontracting allows them to shirk responsibility for piece-rate workers like Murtaza.
An EOBI official says that third-party contractors who employ 10 or more workers are required to register with the EOBI and make mandatory monthly contributions. However, he admits that the practice of under-reporting workforce is widespread among employers and subcontractors. He acknowledges that the EOBI has too small a force of inspectors to unearth and counter such practices.
A cursory look at the numbers makes it clear that the EOBI and its inspectors are not doing a very satisfactory job. In a country with a 70-million-strong labour force, the number of employers registered with the EOBI is around 150,000. Of those, only about a third are making regular monthly payments to the fund. Thus, according to the EOBI’s statistics, a mere 4.3 percent of the country’s elderly population receives EOBI-based pension payments. The beneficiaries include 447,079 pensioners, 231,497 survivors of deceased pensioners and 11,730 differently abled people.
Murtaza is among a minority of workers who have tried to organise their peers for permanent jobs, better wages and social security benefits as he moved from one employer to another. “Most of my employers had pocket unions run by their men. Anyone trying to organise an independent union would be sacked,” Murtaza reminisces. He remembers several episodes when he faced such consequences for his organisational work. He says the pocket unions enable employers to meet all legal requirements, including contributory pension payments to the EOBI for a small minority of their workforce. The rest continue to be employed contractually and without any entitlements.
After spending many years of job-related precarity and having been blacklisted by factories in the Quaid-i-Azam Industrial Estate for his organisational work, Murtaza has finally settled into a ‘good’ job in a textile mill away from Lahore. “I have realised that my career comes before all these rosy ideas about worker power and solidarity. I have seen many NGO leaders and workers make fortunes through activism in the name of labour welfare. The condition of workers like me has only worsened.” Faced with a situation in which self-interest appears at odds with their collective interest as part of the working class, many workers like Murtaza trade class-based solidarity with self-preservation.
Where workers are forced to opt for self-preservation over collective action, the labour movement itself stands divided on workers’ welfare concerns like the fate of the EOBI fund.
Pakistan Workers Federation, the country’s biggest federation of trade unions, is integrated into the global trade union movement through the International Labour Organisation’s endorsement. It has maintained a hard-line anti-devolution stance, reeking of the provincial biases that characterised the labour movement in its heyday. In an interview conducted in 2024, Chaudhry Saad, the PWF general secretary, maintained that the EOBI should remain with the federal government. “The Pakistan Peoples Party-led Sindh government wants the EOBI’s devolution only because it is interested in the assets owned by the Institute,” he said.
Smaller federations, like the National Trade Union Federation and the Home-Based Women Workers Federation, endorse devolution to improve the EOBI’s performance.
Partly because of these divisions in the labour movement and partly because of its Rs 375 billion strong asset portfolio, the ownership of the EOBI remains contested between the federation and the provinces. Meanwhile, the less financially attractive labour welfare institutions, including the Social Security Institution and the Workers Welfare Fund, have been devolved to provinces since the 18th Amendment.
HBWWF’s Zahra Khan, also a board member of the Social Security Institution in Sindh, acknowledges that some crucial issues need to be discussed and solved before proceeding with the devolution of the EOBI. For instance, the legal status of the mandatory contribution made by firms and employers who operate in more than one province should be worked out. “Once we agree on the widely acknowledged principle that devolution of powers is conducive to good governance, we can sit down and solve these issues,” she maintains.
As the tide turned against labour globally since the 1970s and 1980s, the informalisation and fragmentation of the Pakistani workforce has worsened this factionalised social welfare landscape. A key dimension in this regard is the cross-sectoral rise of home-based work. According to some estimates, such workers now constitute about 7 percent of the Pakistani labour force. An overwhelming majority of these workers are women. Efforts by activists like Zahra Khan have resulted in the drafting of provincial laws that define collective bargaining and welfare entitlements for home-based workers.
There is a long road between enactment and enforcement. “We have consolidated data for 3,000 workers and employers as part of our data collection process,” she says, adding that her federation is employing multiple strategies for workers’ welfare. A trade union of home-based workers, affiliated with the HBWWF, is simultaneously registering workers with the EOBI pension fund. As the EOBI does not yet recognise the self-employed as eligible for its pension fund benefits, the HBWWF has overcome the legal lacuna by showing the union as the employer for the first batch of eight workers. Meanwhile, since most home-based workers meet the BISP criteria for poverty-based cash assistance, Khan’s federation has also helped them overcome logistical hurdles in registering with the BISP. She says that besides the meagre state-based resources, the workers are constrained to fall back upon informal kinship-based mechanisms or join rotating savings and credit associations (commonly called committees) and NGO- and philanthropy-based initiatives.
As the current attempts at restructuring public-sector pensions show, the relatively privileged section of the workforce in the public sector (in particular, the lower cadre workers in BPS 1-16) also face the risk of losing the absolute entitlement to pensions and other forms of social welfare.
In principle, these reforms seek to replace the existing absolute right to a pension payment from the public exchequer with voluntary and contribution-based pension schemes. In the name of austerity, the reforms aim to free the state from its obligations towards the small minority of relatively privileged public-sector workers. The current efforts reflect the dark reality that has almost always haunted the low rungs of the public sector workforce below the elite officer cadre. Among these segments, job security and fringe benefits resulted from contentious collective action, including demonstrations, sit-ins and strikes. “The notion of a permanent government job came up due to efforts under the leadership of the founding chairman,” says All Pakistan Clerks Association Lahore chapter president Chaudhry Mukhtar Gujjar. However, he notes that those early victories remain under threat in one form or another. Of the 3.7 million low-wage public employees represented by the APCA across the country, about 2.2 million are regular workers. The remaining 1.5 million daily-wage workers lack pension and other social welfare entitlements, he says.
The APCA has joined forces with women health workers, young doctors, teachers and clerical workers to form a united front called the All Government Employees Grand Alliance. The alliance opposes “the anti-worker public-sector restructuring measures including pension reforms.” When asked if the alliance might consider a broader campaign, including private-sector workers’ welfare, the APCA Lahore president insisted that public officials could not become part of political movements. “We are strictly a non-political organisation. The scope of our efforts is restricted to protecting the welfare of low-pay public officials.”
Contrary to the fragmented landscape of workers and workers’ welfare, the private businesses that employ these workers are united and organised in the form of chambers of commerce and industry and employers’ associations or anjumans. The latter safeguard their interests at city, province and federal levels and influence economic policies ranging from taxation to export licences and quotas.
Labour organisers who have worked with the chambers of commerce and industry to promote workers’ welfare say that the chamber leadersh do not believe there is a problem that needs to be fixed in the first place. “They don’t even pay the obligatory minimum wage. In a recent meeting with the government officials, the Lahore chamber leaders advocated against the recent raise of minimum wage, citing the reduction in the inflation rate,” says a labour organiser, requesting anonymity.
Still, direct encounters between employers and employees often lead to a better appreciation of workers’ troubles among small- and mid-level businesses. However, as small- and medium-level players, these employers and managers cannot do much. “I empathise with my workers, but my business will go bankrupt if I abide by social security and pension laws. Do you like workers with jobs that at least pay a monthly wage or without jobs?” a textile subcontractor in Karachi’s Landhi industrial estate asked rhetorically. Similarly, a shop floor manager in Lahore’s wholesale hub in Shah Alam Market maintained that the economic conditions were worse for all, including workers and employers. “The workers get paid for the work done. That’s it. When they get old, they either become labour contractors or depend on their children.”
Thus, the business classes are unwilling or unable to restructure existing informal employment relations. The bulk of the surplus earned from worker-enabled business operations is kept by the employers. Many of them also evade the tax net. A pittance goes to the workers in the form of wages. The part of the surplus through which the employers extend the occasional monetary support to a handful of workers or the money that goes into charitable giving only establishes their status and reputation as considerate and generous men of means. What remains unstated in these instances is that the means that enable these men to be generous are acquired through a daylight robbery from the state and the workers.
At the height of labour activism in Western Europe and Tzarist Russia in the early Twentieth Century, communist revolutionaries like Vladimir Lenin and Rosa Luxemburg offered insightful critiques of the economism of the trade union movement. In their unique ways, they advocated against the separation of trade union activity from political struggles that define the character of the state and society. They contended that pro-worker reforms would remain endangered unless labour organisers keep one foot in trade union activity and the other in mainstream political life through working-class party politics. This, they said, would enable labour organisers and activists to have a bargaining role within existing institutions and in more significant national debates on those institutions’ design, structure and functions. The lesson remains relevant in the contemporary fragmented landscape of the Pakistani workforce and the labour movement.
* Names have been changed to protectidentities.
The author is a PhDcandidate in sociology at the University of Illinois. This essay wascommissioned by the Human Rights Commission of Pakistan