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May 1, 2016

Labour welfare


May 1, 2016

May Day or Labour Day is celebrated in remembrance of the workers who went on strike and were killed by the Chicago police on May 3 and 4, 1886. The newly formed American Federation of Labour had resorted to a nationwide strike on May 1, 1886, demanding an eight-hour work day.

The strikes were being watched by the world; acceptance of demands by American employers would establish a standard for the rest of the world to follow. This is what resulted in the world labour movement adopting May Day as its international holiday.

On this day, seminars are held all over Pakistan, in which representatives of the government and of the labour federations applaud the sacrifice of workers in a distant land, 130 years ago, to achieve realistic working hours. The day has become a simple annual ritual, which passes without any solid commitment from the government to at least ensure compliance with the labour laws made for the welfare of workers.

The government is required to constantly monitor the performance of the Employees Old-Age Benefits Act, 1976 and the Provincial Employees Social Security Ordinance, 1965. Taking advantage of the government’s apathy towards supervising these welfare schemes, the respective institutions made responsible for managing them effectively deprive the workers of their due rights, thus bringing more distress in their lives.

After the devolution of the labour laws through the 18th Amendment in April, 2010, a total mess has been made of the management of the Employees Old-Age Benefits Act, 1976. Under this law, a monthly contribution from the employers is payable to the Employees Old-Age Benefits Institution (EOBI). The minimum wage, as fixed in the Minimum Wages for Unskilled Workers Ordinance, 1969, was last revised to Rs6,000 per month, effective July 1, 2008, and has not been increased thereafter.

After the devolution, respective provinces increased the minimum wage, under the Minimum Wages Ordinance, 1961 to Rs8,000 in July 2012, Rs10,000 in July 2013, Rs12,000 in July 2014 and Rs13,000 in July 2015. Some progressive employers started paying a contribution of their own, at six percent of the above minimum wage, including a five percent employers’ contribution and a 1 percent employees’ contribution, without being asked to do so by the EOBI.

However the majority of the employers continued to pay the contribution at either the minimum wage of Rs6,000 or Rs8,000 per month. The employers who increased their rate of contribution to Rs8,000 had followed the written direction of the EOBI.

Recently the federal government has amended the ordinance of 1969 by increasing all the minimum wages, with retrospective effect, in order to help the EOBI to claim the arrears of the contributions. Soon thereafter, the EOBI issued notices to registered employers in Pakistan to increase their contributions accordingly. Aggrieved by these notices, groups of employers in Lahore, Multan and Karachi approached the high courts of Lahore and Sindh, obtaining stay orders, which have been quite validly granted since after the devolution, the federal government only made the amendment in the ordinance of 1969 valid for the Islamabad capital territory.

In view of these legal intricacies, various employers are paying the EOBI contributions at different rates of Rs6,000, Rs8,000 and Rs13,000 per month. The EOBI calculates the monthly pension at Rs8,000, to the detriment of employees with exceptionally long service, who get almost the same pension (Rs5,250 per month) as others with a much shorter length of service.

The purpose of the Sindh Employees Social Security Ordinance, 1965 is to provide benefits to certain employees or their dependents in the event of sickness, maternity, employment-related injury or death. Companies that are covered have to pay to the institution (SESSI) established under the ordinance a monthly contribution on behalf of each secured employee, at the rate of six percent of their salary, not less than Rs13,000, which is the minimum wage, subject to the maximum amount of Rs15,000, which is the current wage ceiling under the ordinance.

Some benefits, such as sickness, maternity, death and injury grants and the disablement pension, are linked with the concerned employee’s last drawn salary, with a maximum of Rs15,000 per month. The payment rates of these benefits range from 75 percent to 100 percent of the respective salaries. The disablement pension is paid at a minimum of Rs300 per month and a maximum of 75 percent of the last salary, depending upon the degree of disablement. It is payable for life, if it continues for five years and ceases upon the death of the recipient.

The wage ceiling under this law was increased from Rs5,000 to Rs10,000, effective July 1, 2008, and to Rs15,000, effective October 28, 2013. It is unfortunate that despite making such hefty increases in the rate at which the employers have to pay the monthly contributions, SESSI continues to pay the aforementioned benefits to eligible employees at the rate of Rs5,000 – the wage ceiling that had become non-operational in July 2008 – in flagrant violation of the law.

Section 37 (2) of the ordinance provides that when the husband of a secured woman dies, she shall be entitled to receive an iddat benefit equal to the daily rate of wages during the period of her iddat, which is 130 days. In view of the foregoing facts, SESSI only pays Rs5,000 per month to a secured woman undergoing iddat.

Based on contributions by the employers, the eligible workers’ children must be provided books and stationary by the Sindh Workers Welfare Board, under the Workers’ Children (Education) Ordinance, 1972. These items have not been provided to the children for the last two years for unknown reasons.

Information technology has reached a stage whereby companies all over the world have switched over to paperless operations for efficiency and convenience. Our hackneyed labour laws still require employers to maintain registers of employment and remuneration, registers of leave and many such ridiculous documents.

It would be worthwhile if the government resolved to work towards bringing improvements in the labour welfare schemes and the systems of statutory compliance, in the interest of both the major stakeholders; ie the workers and the employers of industrial, commercial and other enterprises, before May Day 2017.

The writer is an industrial relations professional.

Email: [email protected]

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