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Thursday March 28, 2024

Protecting the labourers?

By Adnan Rafiq
April 20, 2020

Since the outbreak of the coronavirus pandemic, the mainstream discourse in Pakistan has been flooded with concern and sympathy for the labour class.

There hasn’t been a single speech by Prime Minister Imran Khan in which he has not mentioned the potential economic consequences of the pandemic for laborers. A number of short-term measures, such as a stimulus package for exporters, incentives for the construction industry, cash handouts for the poorest families through the Ehsaas Program and coordinated charity drives throughout the country have been announced.

Despite the pro-labour sentiments expressed by the political leadership, the measures announced thus far remain short term, one-off and do little to deal with the structural issues that make the labour class so vulnerable to disasters such as these.

And it seems that much worse is yet to come.

Economic projections the world over look bleak, with most countries bracing for the worst economic recession seen in almost a century. The economic costs of the health emergency and related containment measures have already surpassed the losses that triggered the 2008-09 financial crisis and the global economy is expected to contract by 3 percent in 2020.

Recently released reports by the World Bank and IMF project Pakistan’s economy to shrink by 1.5 percent. Inflation is expected to rise by 11.1 percent and unemployment to 5.1 percent. These shocks can obliterate any macroeconomic gains that the government was hoping for through the structural adjustment plan. Millions of people can slide under the poverty line facing both the disease and starvation.

The social implications of such a scenario can be even more troublesome. Countries confronted by such economic turmoil have seen social and political upheavals in the past. These can range from anarchy to mass revolutions to a plunge in fascism depending on the local milieu. Uncertain times such as these can give currency to fringe ideas as mainstream political and economic players struggle to cope with the situation.

The ruling elites need to think big and act fast.

The central question that must concern the rulers is providing mid- to long-term economic security to the most vulnerable in the society. Widening the social safety net can be a step forward in this regard, but it is not enough. The government needs to move decisively towards achieving two key objectives. First, it must ensure that the private sector provides better job security and protection to the staff it employs. Second, it must take responsibility for creating jobs through public sector interventions. Here is how both of these can be achieved:

The insecurity stems from the fact that the vast majority of labour in Pakistan is contracted through informal and often verbal agreements and arrangements. This informality is preferred by the employers because it helps keep the wages low and workers disposable. This means that in any such crisis, workers can be laid off without any protection irrespective of their length of service and any concern for their well being.

The government must subject all employment in the country to be administered through formal contracts drafted in accordance with the prevailing labour laws. It must also support, rather than suppress, the labour unions to ensure strict implementation of these laws.

Second, successive governments in Pakistan have traditionally sought to support industrialists through SROs, tax breaks and subsidies, as the sugar crisis report demonstrates. The underlying assumption here is that the higher profits earned by the rich will be invested back in the market fueling economic growth and creating jobs. Instead, what we see is that these are siphoned off abroad to purchase properties, spent on importing luxury goods or invested in unproductive sectors such as stock market and real estate to generate rental income.

The government needs to instead focus on initiating large-scale public works programs (PWPs) in the health, education, infrastructure and manufacturing sectors to create jobs. These can be funded by budget cuts in non-developmental expenses, increasing tax collection from the most affluent sections of the society and creating additional fiat currency. Many developed countries are already resorting to ‘quantitative easing’ to deal with the crisis.

These measures require close coordination between key stakeholders at the federal and provincial levels due to varying jurisdictions. The labour representatives must also be included, both in the consultation and implementation stages to ensure that the benefits of these initiatives reach the intended audience.

The myth of the ‘free’ market being sufficient, let alone more efficient, in dealing with economic or natural disasters should now be laid to rest. Also, it is about time elites realize, irrespective of how this pandemic pans out, that their affluent lifestyles are underwritten by the sweat and the blood of working people who create surplus value and deserve much better job security and working conditions.

The writer is a public policy analyst based in Islamabad.

Email: dr.adnanrafiq@outlook.com