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The cost of labour

How and why the rights of workers are compromised with impunity?

The cost of labour
Workers take to street for their rights.

The recent protests and the social media campaign against local apparel brand-Khaadi for allegedly violating labour laws and firing its workers just for demanding minimum wages were well received by the people. These ultimately brought both the parties to the talking table. The management of Khaadi, that was earlier not even ready to own these employees nor willing to accept that it has manufacturing units along with retail outlets, agreed to most of the rightful demands of the workers.

An agreement was signed in which the management had agreed to accept workers’ rightful demands. The workers claimed they had not made any unjust demand and simply asked for whatever is in the country’s existing labour laws. They pointed out that their right to get minimum wages, social security cover, appointment letters, old age benefits, protection against occupational hazards etc was enshrined in the law but very few enjoyed these privileges.

This is just one isolated incident that caught public attention and evoked a response that the brand management found extremely damaging for their image. This fear forced them to change their stance and do some damage control by accommodating their workers.

But if one looks at the overall situation, one finds the rights of workers compromised almost everywhere with impunity. In highly competitive markets with input costs increasing every passing day, it is a fact that businesses try to save on the cost of labour to stay competitive. This is the only input cost that they can bring down while they are helpless when it comes to the cost of electricity, raw material, taxation etc.

The scope of labour laws, workers’ rights and the state’s role in making the world of work conducive for workers is too vast to be covered in just one write-up. So, the focus of this piece will be on the irregularities in appointments and terms of appointments, terminations, space for trade unions in the current scheme of things and the loopholes in laws that the businesses benefit from.

In highly competitive markets with input costs increasing every passing day, it is a fact that businesses try to save on the cost of labour to stay competitive. This is the only input cost that they can bring down while they are helpless when it comes to the cost of electricity, raw material, taxation etc.

Khalid Mahmood, Director Labour Education Foundation (LEF) — an organisation working for labour rights — shares that the violation of laws starts from the very first day of a worker’s employment. In many cases, he says, the workers are not given the appointment letters so that they cannot approach the labour courts for relief if any action is taken against them. “The labour courts cannot accommodate cases unless there is an irrefutable evidence to prove that the applicant(s) are employees of the organisations being made respondent(s).”

Mahmood says if workers of an organisation, with credentials to prove their employment status, appear in a labour court and testify that the workers without appointment letters are their colleagues, their statement is accepted. “But this does not happen often as the testifying workers fear reprisal from their employers if they become a party against them.”

In Pakistan, the main law governing termination of employment is the Industrial and Commercial Employment (Standing Orders), 1968. The Industrial Relations Act, 2012, Provincial Industrial Relations Acts and the Shops and Establishments Ordinance, 1969 are few other relevant laws. In the post-devolution scenario, provinces have adopted these laws without making any significant changes.

The Standing Orders Ordinance, mentioned above, requires every employer to provide every worker an employment contract, showing terms and conditions of his/her service. An employer is also responsible to provide a contract at the time of transfer or promotion. Furthermore, either party may terminate an employment contract after giving one-month notice prior to contract termination. If one-month notice is not served, a worker must be paid one-month wages in lieu of notice. The employer must mention the charges in the notice and the employee be given a chance to defend himself.

As only the permanent workers are required to give or be served notice before terminating employment contract, organisations prefer to have temporary and contract workers. Temporary workers, badlis (alternate employee working in place of an absent permanent worker or probationer) and probationers are not entitled to any notice (or in pay in lieu thereof) if their services are to be terminated. It is also a practice that workers are given contracts less than nine months in duration because they become permanent workers by law if they do continuous service for this period. The Khaadi management had also taken its plea that it did not run manufacturing units and had outsourced certain operations but later on it had to change its stance in face of ever-mounting pressure.

Under the law, termination can happen due to resignation, redundancy, permanent serious illness, inefficiency to perform one’s job and financial and economic needs of the establishment. But to ensure these excuses are not used as weapons against workers, the role of workers’ unions becomes too important as they try to ensure nothing wrong is being done.

Khalid Mahmood of LEF says though there was public pressure, it is a fact that talks with Khaadi management were carried out by the National Trade Union Federation (NTUF) — an umbrella body of different trade unions all over the country. “So, the role of trade unions is crucial.” He says what happens is that whenever the workers of a business unit want to form a union, the services of the workers applying to be part of it are terminated. One cause of this is that when an application is submitted with the registrar, the registrar’s office confirms from the management whether these people are their employees and in a way warns them about the move. To avoid this, he says, the Khaadi workers trying to form a union obtained a stay against terminations. “There shall be a ready database to confirm this and confirmation must not be sought from employers.”

Karamat Ali, Executive Director Pakistan Institute for Labour Education and Research (PILER), says Khaadi is not an exception as many textile brand manufacturers provide third-party employment to workers and pay far less than official minimum wages to them. This, he says, also helps employers deny other benefits such as social security cover, paid leaves, bonuses etc to these workers. Employees provided by third-party are the responsibility of the contractors who seek their services when and where required mostly on project basis. Daily wagers may also fall under this category.

Naseem Chaudhry, an office-bearer of Pakistan Workers’ Federation (PWF), points out that due to an inadequate labour inspection system and perennial shortage of labour inspectors, factory owners, business concerns etc are able to violate labour laws. He says the strength of labour departments in provinces is almost the same for the last many decades though the area of jurisdiction under them has increased manifold.

He says it is very easy for a labour inspector to enter an establishment and ask for the employment letter of each and every person working there but this hardly happens.

Chaudhry says the culture of pocket unions has also compromised the interest of workers. The employers, he says, form unions in collusion with some workers of their choice just to stop genuine workers from associating and struggling for their rights. He is also not satisfied with the role of labour courts, saying these fall under the administrative control of the provincial labour departments and are not independent.

Shahzada Irfan Ahmed

shahzada irfan
The author is a staff reporter and can be reached at shahzada.irfan@gmail.com

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