GSP+ and labour rights in Pakistan

July 03, 2022

The GSP+ arrangement has acted as a “useful instrument” for labour rights promotion in the country

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akistan was granted the GSP+ status by the European Union in December 2013. Thus, its terms have been applicable since January 2014. It has been eight and a half years. Generally, the facility expires in 18 months.

Under the EU’s GSP+ scheme, there are zero duties for 66 percent tariff lines for countries that ratify and effectively implement core international human rights (7 conventions), labour rights (8 conventions), environment protection (8 conventions) and good governance (4 conventions) conventions. Currently, this scheme has eight beneficiaries. The GSP+ arrangement is limited to the countries considered vulnerable due to a lack of diversification and insufficient integration within the international trading system.

The current EU GSP regulation, i.e., the 2012 Regulation (No 978/2012), expires at the end of 2023. A new regulation has already been proposed. The draft regulation (to be applicable from 2024-34) adds six new conventions, including the ILO’s Labour Inspection Convention (No 81) and Tripartite Consultations Convention (No 144). Under the new regulation, the GSP+ aspirants must submit a plan of action to effectively implement the 33 conventions.

In addition, it amends the GSP reporting period, from two to three years, to streamline and better synchronise with monitoring reports of international bodies and organisations. Instead of a mere extension, Pakistan shall have to reapply for the GSP+ and ensure compliance with tougher conditions to regain preferential access to the EU market.

It is also time to assess the country’s implementation of core labour standards during the last eight and half years through empirical evidence instead of merely using qualitative opinions and anecdotal evidence. The article showcases Labour Force Survey data and legal reform data to indicate progress or regress over the years.

Just before the grant of GSP+ status in 2013, Pakistan’s exports to the EU were 3.56 billion euros. In 2021, the total exports to the EU had increased to 6.64 billion euros, of which the majority were textile exports. This indicates an increase of 86 percent in overall exports to the EU. European Union has always been a major trading partner for Pakistan and 28 percent of Pakistani exports are directed to the EU. Hence, GSP+ has played a crucial role in sustaining stable export earnings.

The fundamental labour rights or core labour standards, which must be protected to retain GSP+ status, include the right to freedom of association and collective bargaining; elimination of all forms of forced or compulsory labour; effective abolition of child labour; and elimination of discrimination in respect of employment and occupation. Monitoring compliance with these conventions is not easy. For example, the Labour Force Survey, the major document in the country on the assessment of the labour market, does not provide data on forced labour and freedom of association.

The updated data on exercise of trade union rights (number of trade unions, membership, collective bargaining agent status, strikes and lockouts) is unavailable. A 2018 ILO study put the total number of trade unions at 7,096 and their total membership at 1.4 million. The trade union density, as a percentage of the entire labour force (71.76 million), is 2 percent.

Considering that the industrial relations legislation applies only to the formal sector workers, we suggest calculating trade union density as a percentage of the formal sector workforce, which then rises to 12 percent. While trade union federations have expressed concerns about the findings of this study, it is a fact that trade unions and their federations do not regularly submit annual returns to the Labour Departments and the National Industrial Relations Commission; hence claims of their membership are only anecdotal.

There is no direct data collection on instances of forced and compulsory labour in the country. However, some studies indicate that forced labour exists mainly in brick kilns, agriculture and to some extent in domestic work. Data from the Hari Welfare Association suggests that more than 10,000 bonded labourers were released through court orders during 2013-21 in Sindh.

One-third of these freed bonded labourers are children. While the number of released workers indicates the scope of the problem and its pervasiveness in agricultural Sindh, it also shows that courts are working and giving necessary relief to the workers. The point of concern, however, is that no convictions were made under the Sindh Bonded Labour System Abolition Act 2015.

While legislation has either been enacted anew (as in Sindh, Khyber Pakhtunkhwa and Balochistan) or strengthened (as in the Punjab), the implementation is rather patchy since district vigilance committees, provided for under the legislation, are not operational in most districts.

An earlier study by the Centre for Labour Research (2019) had indicated that the incidence of child labour had dropped from 3.93 million in 2015 to 3.74 million in 2018. The child labour surveys are in progress at the provincial level, and results must be available by the mid of 2023. Due to the Covid-19 pandemic and rising cost of living, child labour numbers are likely to have increased.

The gender wage gap, an indicator of how much less women earn compared to men, declined from 42 percent in 2014 to 18 percent in 2021. The average nominal wage for female workers for all these years between 2013-21 was consistently below the notified minimum wage. The latest LFS (2020-21) shows that the average nominal wage for female workers was above the announced minimum wage of Rs 17,500 per month. Both statistics show improvement.

This did not happen in data alone. In their newly enacted legislation on payment of wages, the provincial governments, especially in Khyber Pakhtunkhwa, Sindh and Balochistan, require equal pay for work of equal value. Sindh and Balochistan have enacted new maternity benefits legislation requiring 16 and 14 weeks of maternity leave, respectively. Both provide paid nursing breaks until a child ages 12 months. Sindh and Khyber Pakhtunkwa have enacted necessary legislation on reproductive health rights prohibiting discrimination on the grounds of pregnancy and motherhood.

Labour force participation rate (LFPR), an indicator of the relative size of the supply of labour currently available for the production of goods and services in an economy, was 44.9 percent in 2021, compared with 45.70 in 2013. It is a cause of concern that female labour force participation (21.5 percent) in Pakistan is comparable only with the countries of the MENA region.

Similarly, the employment-to-population ratio (EPR), the demand for labour in the country, is 20 percent for female workers and 75.4 percent for male workers. The EPR for women workers has also dropped from 22 percent in 2013 to 20 percent in 2021. Therefore, the government must take necessary steps to improve male and female labour force participation (FLFP) and demand for the country’s workforce.

Through a legislative reform, Sindh, Khyber Pakhtunkhwa and Balochistan have made the FLFP easier by allowing women to work during night hours while requiring employers to provide transportation services. In addition, the legislation on anti-harassment was strengthened in 2022, covering all types of workers, including gig workers.

Occupational accidents have decreased from 4.3 percent in 2013 to 2.7 percent in 2021. In lay terms, on average, every 25th worker used to face occupational accidents or injuries in 2013. This average is now every 37th worker, which is an improvement. The provinces of Sindh, the Punjab and Khyber Pakhtunkhwa have enacted necessary legislation on occupational safety and health and are implementing it.

The share of agriculture in total employment has dropped from 43.71 percent in 2013 to 37.4 percent in 2021. Agriculture and fisheries workers have been allowed to unionise in Sindh (2013) and Balochistan (2015). Sindh also enacted legislation to protect women agriculture workers in 2019, extending the labour protections to female workers in agriculture.

While no reliable data is available on the number of trade unions formed in the agriculture sector following these reforms, it is time the government raised awareness about these and provided necessary institutional support to the workers, striving to form and join trade unions in the sector.

The formal sector now employs 27.5 percent of the non-agricultural labour force; its share was 26.4 percent in 2013. Regarding absolute figures, instead of 8.32 million workers in 2013, now 11.58 million workers enjoy the protections afforded by the labour legislation. The total labour force is 71.76 million workers.

While the informal sector does not include agriculture sector workers, it is relevant to look at the unregulated sector, which does not enjoy the labour law protections (combination of informal sector plus agriculture sector). The unregulated sector has also declined from 85 percent of the total labour force in 2013 to 82.78 percent in 2021.

There has been visible improvement, though millions still fall outside the jurisdiction of labour law. It is time the government extended the scope of labour legislation to the informal sector and enforced such legislation for the marginalised groups, especially domestic workers, home-based workers, digital labour platform workers, construction workers and agriculture workers.

Wage and salary employees, one of the four classifications of employment status in the labour force, have increased from 38.86 percent in 2013 to 42 percent in 2021. This shows the results of the formalisation of the informal economy through protective legislation such as Terms of Employment (Standing Orders) in Khyber Pakhtunkhwa, Sindh and Balochistan, effectively dealing with the casualisation of the workforce and limiting the term of a contract for contract workers. Similarly, provinces have enacted legislation on home-based work (Sindh, Khyber Pakhtunkhwa and Balochistan), domestic work (the Punjab) and agriculture work (Sindh).

Vulnerable employment, a combination of own account and contributing family workers, has reduced from 59.90 percent in 2013 to 56.60 percent in 2021. Vulnerable workers are less likely to have formal work arrangements leading to a lack of decent working conditions, adequate social security and representation by trade unions and similar organisations. Vulnerable employment generally encompasses inadequate earnings, low productivity and challenging working conditions.

While there is a lot of improvement in terms of legislation, the same is not apparent in actual changes in working conditions. There are a couple of reasons for that. First, there is always a lag between the enactment of legislation and tangible change in the situation on the ground. The lag period is protracted due to a lack of implementation rules for the newly enacted legislation. For legislation enacted from 2013 onward, rules are still under preparation in Khyber Pakhtunkhwa and were framed in Sindh in 2021. Second, the labour inspection system plays a vital role in implementing legislation.

The number of labour inspectors (filled-in posts) has increased from 334 in 2015 to 530 in 2019. There is one labour inspector for every 21,685 formal sector workers. Considering the overall 67.25 million employed workers, there is one labour inspector for every 126,000 workers in the country.

The GSP+ arrangement has been as a “useful instrument” to improve labour rights in the country, as is visible through the enactment of necessary legislation and Labour Force Survey data.

However, while the first ten years focused more on the legislative reform side, the next ten years, hoping that Pakistan is granted access again from 2024 onward, should focus on the implementation and enforcement of this legislation along with the reform plan already envisaged under the National Labour Protection Framework. Pakistan also needs to start implementing the National Action Plan on Business and Human Rights (2021) and the National Gender Policy Framework (2022).

The labour inspection system needs an overhaul while encouraging citizen and worker-generated data on workplace compliance with the labour legislation. While hiring more inspectors is also helpful, the local government system and trade unions at workplaces need to be used effectively to ensure compliance.

Balochistan is the first province in the country to have prohibited the victimisation of workers for filing complaints or giving evidence to the Labour Department. This needs to be replicated elsewhere. Pakistan Bureau of Statistics must be engaged as a critical partner.

Data on core labour standards and other working conditions must be collected through LFS annually, primarily on bonded labour and trade union density. While provincial governments are initiating reforms in their sphere, the federal government must do progressive legislation for Islamabad Capital Territory (ICT), which has the country’s most regressive and outdated labour laws.


The writer is the founder of the Centre for Labour Research, Pakistan. He has co-authored Islamic Labour Code, based on the teachings of the Quran and Sunnah. He can be reached at ia72cornell.edu



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