How to protect informal workers

The government should also focus on the welfare of workers in the informal sector

According to the Labour Force Survey (LFS) 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 percent) work in the informal sector. Only 10.6 million non-agricultural workers (28 percent) are employed in the formal sector.

For the formal sector, workers are provided with appointments or contracts, termination letters and social security in the form of free health services, housing, transportation, occupational injury benefits and financial aid. It is important to remember that informal sector workers are not eligible for these benefits, which leaves them highly vulnerable.

Similarly, workers in the formal sector who are not covered by any social security or social protection — such as casual workers or daily wage labourers — are also vulnerable. Conservative estimates suggest that as few as 8 percent of workers in Pakistan have some form of social security coverage. Prophet Muhammad (peace be upon him) was the first to stand for the rights of workers and social protection.

Steps have been taken by Ehsaas Programme called, Mazdoor ka Ehsaas, that lay down the foundations of a sustainable future to address the needs of the informal economy workers. These initiatives are multi-dimensional frameworks to achieve poverty alleviation and social security through legal and administrative measures.

Within this programme for the informal sector, there are three target groups for the most vulnerable: firstly, an incentive for daily wage and self-employed workers. Secondly, there are daily domestic workers which form a significant segment of the vulnerable women who work in rural areas under informal settings. Thirdly, women in rural areas who perform household responsibilities. However, to formalise better implementation of these particular considerations, recommendations lay down a foundation for public policy discourse and programmatic measures.

The government should aim to enhance the EOBI pension up to at least minimum wage level by introducing the pension premium scheme for the informal sector, such as concentrating on low-cost housing.

The government should take initiatives to include workers from the informal sectors of the economy in various social protection nets, including marriage and death grants, education, Haj schemes for workers, etc. Pakistan is an important member of the ILO. Workers in the agriculture sector should receive social protection and employment injury scheme. Brick kiln workers should get labour contracts.

Unfortunately, only a small percentage of businesses and workers from the informal sector are registered with the relevant department. For instance, in Balochistan, there are about 52 coal mines but only nearly 25 are registered. Who will pay for the informal workers?

During the Covid-19 pandemic, $600 million financing from the International Development Association (IDA) for the Crisis-Resilient Social Protection Programme (CRISP), was approved by the World Bank that aimed to support the national poverty alleviation programme to protect vulnerable households and increase resilience to economic shocks.

Social protection expansion required doubling the annual budget for the federal safety net. The short-term effects of the Covid-19 pandemic are complex and unclear, it is likely that long-term effects on informal employment will be considerable, potentially affecting economic polarisation.

Meanwhile, in Pakistan social protection was provided to the informal sector in the form of a cash transfers programme. This was possible through digital means. It involved a data analysis mechanism to prepare lists and SMS receiving gateways, utilised to deliver emergency cash. While at the same time, lack of social security for urban workers is part of the challenge which still requires initial steps that could help re-equip Pakistan’s socio-economic pattern.

An appropriate registration process is needed in welfare schemes to ensure distribution of payments among informal workers through the creation of a bank account.

Research is needed to digitalise the system so that there’s less human interaction which will help to maintain the beneficiaries’ database and the development of the informal sector in regular safety nets. Communication strategy and outreach play an important role in the implementation programmes.

The writer is Advocacy and Communication Associate, SDPI, Pakistan.

She tweets @kzahrahaq

How to protect informal workers