Proposal to register more than 51m informal workers in Pakistan

ISLAMABAD: The Labor Welfare and Social Protection Expert Group (LWSPEG) has recommended to the PTI led government that Poverty Alleviation and Social Safety Division (PASS) should be mandated to devise a mechanism for registering more than 51 million informal workers in Pakistan.

It recommended to register them with NADRA with the provision to initiate contributory pension and provide them medical coverage with the help of insurance companies. In the aftermath of Covid-19 pandemic, the need arises to develop a database of informal workers, so that the government can take care of them in case of any emergency situation in the future. The LWSPEG recommendations to implement the Mazdoor Ka Ehsas (MKE) programme stated that all informal workers belonging to agriculture and non agriculture should be registered in Pakistan.

According to the most recent national Labour Force Survey 2017-18, there are 61.7 million employed workers in Pakistan, of whom 23.8 million are agricultural workers and 37.9 million are non agricultural workers. Of the country's 37.9 million non-agricultural workers, 27.3 million (72%) work in the informal sector. Only 10.6 million non agricultural workers (28%) are employed in the formal sector.

In terms of distribution of Pakistan's 27.3 million informal sector workers by industry, 8.88 million work in the wholesale and retail trade sector, 6.22 million in the manufacturing sector, 4.43 million in construction, 4.37 million in social services' sectors, and 3.14 million in the transport, storage and communication sectors.

Information on the occupational classification of self employed workers reveals that most work as real estate agents and property managers; hairdressers; stall and market sales persons; street food sellers; shopkeepers; shop supervisors; welders and flame cutters; motor vehicle mechanics and repairers; bicycle repairers; electrical mechanics and fitters; butchers, fishmongers and related food preparers; cabinet-makers and related workers; tailors, dressmakers, furriers and hatters; sewing and embroidery-related workers; motorcycle drivers; car, taxi and van drivers; drivers of animal-drawn vehicles; and street vendors who sell items other than food.

At present, there are over 100 labour laws in Pakistan, at both the federal and provincial levels. The most relevant laws which regulate social security and protection for workers – and which could be invoked to ensure social protection for informal sector workers without amendments – include: The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 and its provincial variants, which define the minimum service conditions for workers. The overarching West Pakistan Shops and Establishment Ordinance, 1969 is applicable to almost all remunerated activities (business, trades and professions) or any work connected with or incidental to such activities. As such, it applies to factories, shops, residential hotels, restaurants, eateries, theaters, private dispensaries, maternity homes, societies, charitable and other trusts, among others. Therefore, under Section 1(4) (c), the application of Standing Orders may be extended to a broader range of commercial and industrial establishments than originally intimated in the 1969 ordinance.

Another challenge is the fact that informal sector workers are not recognized by Pakistan's current labour regulatory and institutional framework. Therefore, they have not been covered by labour laws, institutions and policies. Despite this challenge, the Expert Group agrees that it is feasible for the Federal Government to implement schemes that aim at universal coverage of social protection for workers, without discrimination in terms of the type, nature or sector of their work. This is the most appropriate option to cover the whole community of workers, encompassing both the formal and informal sectors of the economy.

The expert group member and Labor economist Dr Lubna Shahnaz told this scribe that the real challenge for the group members centered on addressing the issue of unprotected workers’ segments working in informal economy, in the presence of limited fiscal space and without putting any additional burden on existing federal and provincial institutions engaged in delivery of social security to the workers. This was also compounded by the fact that the large majority of micro, small and medium businesses in the country are not well documented. The self-employed constitute a large share of the informal economy workers, who have no employer to make contributions on their behalf. Therefore, there was a need to think of a social protection solution, which was contributory in nature, but affordable and reachable for informal economy workers by using existing targeting and delivery mechanisms. The whole process was tripartite type in nature, she added.

To pilot this approach, the federal government may begin with the universal registration of workers in the federally-administered Islamabad Capital Territory (ICT) and the provinces, without exception. Across the board, there is an acute shortage of human resources and funds, a lack of capacity building for available and new officers, limited provision of necessary facilities, a lack of field offices and insufficient transport resources. These capacity gaps severely inhibit the capacity of provincial labour departments to implement labour laws within their jurisdictions.

Therefore, it is necessary to ensure effective programme design, based on actuarial studies, and wider communications measures in order to prompt a large number of workers to opt for these packages.

Essentially being a welfare-oriented initiative, the PASS Divisions should establish a Mazdoor ka Ehsaas Unit (MKE Unit) to continuously work for the welfare of informal sector workers, agriculture sector workers as well as workers in the formal sector who are not protected by current social security measures.

The MKE Unit should negotiate with relevant stakeholders and develop a set of affordable packages for health services, occupational injury compensation, life insurance and old age benefits for all workers. In tandem, the MKE Unit should develop a database of all workers in collaboration with the National Database and Registration Authority (NADRA).

The contributions of informal sector workers may be supported through innovative financing arrangements – such as corporate social responsibility (CSR) contributions or contributions of the Pakistani diaspora abroad - or through an endowment fund, to be managed by the MKE Unit. The MKE Unit may explore different financing options, such as CSR based collaborations with potential donors.