State of the informal sector

Continuity of data collection and analysis is important to inform interventions to improve working conditions in the informal economy

State of the informal sector

On June 20, 1996, home-workers around the world received the good news that the International Labour Conference (ILC) had adopted the Home Work Convention. This convention (C-177) aims to promote and protect the rights of those who work at home and create products for an employer.

A fair remuneration, social protection, including occupational health, safety regulations and maternity benefits, the right to organise and freedom from discriminations were the main areas of consideration to be adopted by all member-nations through the formation of a national policy for home-based workers in their jurisdictions.

Home-based works represent a significant share of employment in many countries, especially in Asia, where two-thirds of the world’s 260 million home-based workers are located. Globally, 147 million of them (57 percent) are women, who undertake their income-earning activities alongside childcare and domestic responsibilities.

Home-based workers produce goods and services in or near their homes for local, domestic or global markets. Some work in the new economy (such as assembling micro-electronics or providing IT services); others in the old home industry (textiles, garments and weaving, for example). The term, “home-based work” is very broad. Most home-based workers do piece work for an employer who can be a subcontractor, agent or a middleman.

The self-employed home-based workers assume all the risks of being independent operators. They buy their own raw materials, supplies and equipment and pay utility and transport costs. They usually sell their goods and services locally. The sub-contracted home-based workers are contracted by individual entrepreneurs, factories and firms, often through an intermediary.

To cut costs and maximise profits, firms outsource production to those who work at their homes. Home-workers might be given the raw materials to work on; they have to cover many costs of production – workplace, equipment, electricity and supplies. They are paid less and late, usually after the products made by them have been sold.

The informal sector in Pakistan is estimated to employ over 20 million home-based workers, of which 12 million are women. There are no laws to protect home-based workers in Pakistan. The country has not ratified the ILO Convention C177. A UN Women report from 2016 indicates that home-based workers contributed almost Rs 400 billion through their wages to the economy, 65 percent of it came from women. This amount is nearly 3.8 percent of the GDP.

Mainstreaming home-based workers requires better definition and equality in the legal status, equality in treatment and wages, skills training and enhancement and improved access to credit, land ownership and assets.

Both the Ministry of Labour and Manpower and the Ministry of Women Development had formulated policies prior to their devolution in June 2011. After devolution, the policy drafts rest with the provinces.

The Punjab government notified some policies on home-based workers in 2017. Currently, it is working on a draft legislation. Once the bill is passed, the workers will get certain social security benefits. The Sindh Home-Based Workers Act was passed on May 9, 2018 and received the governor’s assent on May 23.

Concrete steps should be taken to advocate the registration of HBWs with social safety net schemes and other institutions to expand the coverage of the existing labour legislation to this category of workers. This will be in line with the provisions of the HBW policy in the Punjab which was approved in 2017.

Continuity of data collection and its analysis are important to inform actions that support implementation of the new policy.

In Pakistan, 80 percent of the working population has been engaged in the informal sector of the economy. Among the working women in the informal sector, around 80 percent are home-based workers. This makes them a huge proportion of the national economy. The HBWs usually belong to the poor, lower or lower middle-income backgrounds. They come from various age groups and have little or no education. However, they have the skills to meet the market demand.

The government of the Punjab has made the matter a priority. A Provincial Council for the HBWs comprising official and non-official members has been constituted with the mandate to formulate policy on HBWs and propose possible legislation for the provision of social protection and data collection at the provincial level. The provincial policy on home-based workers was formulated in 2015. Punjab Home Based Workers Act, 2021, has been introduced in the Punjab Assembly.

Common challenges for HBWs include irregular and/or cancelled work orders, rejected goods, delayed payments, unreliable supplies of raw materials and lack of basic infrastructure services.

The goals of the earlier (draft) national and provincial policies on home-based workers have included recognising and accepting the workers through legislative and administrative actions, according legal equality and focusing on their needs, concerns, and demands through an institutional approach of gender mainstreaming at all levels.

Mainstreaming home-based workers requires definition and equality in the legal status, equality in treatment and wages, skills training and enhancement, access to credit, land ownership and assets, meeting marketing channels and linkages and social protection.

The main issue, however, is whether the policy will be implemented in letter and spirit. There are numerous areas that require careful examination, such as union formation, labour inspection, registration, access to social protection, occupational safety and health and enforcement of minimum wages. In the post-18th Amendment situation, the provinces have promulgated their own industrial relations laws (IRLs).

Celebrating the silver jubilee of SAARC and 10 years of Kathmandu Declaration passed on October 20, 2000 on home-based workers, October 20 has been declared the Home-Based Workers Day. Since 2011, the day has been observed in South Asian countries, including Pakistan.

It is important also to have a Made by Women Home-Based Workers tag to recognise their contributions.

The writer is a freelance journalist and can be reached at

State of the informal sector