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GSP+ and labour rights

Though implementation of labour laws is still a challenge, GSP+ has played a crucial role in sustaining stable export earnings

GSP+ and labour rights

“While no proof exists, anecdotal evidence suggests that GSP+ has been an important incentive for all actors to further promote compliance with ILO standards.” This was a key sentence in EU’s 2016 assessment of implementation of core labour standards in Pakistan after grant of GSP+ status.

Pakistan was granted GSP+ status by the European Union in December 2013, thus applicable from January 2014 onward. It has been five years, nearly half a decade, and it is reasonable to assess the implementation of core labour standards in the country through empirical evidence instead of merely using qualitative opinions and anecdotal evidence. This empirical evidence comes from Labour Force Surveys. The comparison is done with the results of LFS 2013-14 and LFS 2017-18, launched in January 2019.

So, what is GSP+? It is a unilateral trade preference scheme by the EU which allows Pakistan to export more than 6,000 tariff lines, including textiles and clothing without paying any duty to the European Union. Other than Pakistan, there are 7 beneficiaries of GSP+ scheme which include Sri Lanka and Philippines, other than Pakistan. The duty free access helped Pakistani products compete with the products originating from competitor countries like Bangladesh, Cambodia, Myanmar and Vietnam.

Just prior to the grant of status in 2013, Pakistan’s exports to the EU were 4.5 billion Euros. Of these, textile exports accounted for 3.15 billion Euros. In 2018, the total exports to EU increased to 6.8 billion Euros of which 5.2 billion Euros were for textile exports. This indicates an increase of 52 percent for overall exports to EU while 67 percent increase for textile exports. European Union has always been a major trade partner for Pakistan. Currently, 36 percent of Pakistani exports are directed to the EU. Thus, GSP+ has played a crucial role in sustaining stable export earnings.

The fundamental labour rights or core labour standards, which must be protected to retain GSP+ status, include the right to freedom of association and collective bargaining; elimination of all forms of forced or compulsory labour; effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation. Monitoring compliance with these conventions is not easier. Labour Force Survey, the major document in the country on assessment of labour market, does not provide data on forced labour and freedom of association.

There is no direct collection of data on instances of forced and compulsory labour in the country. Some studies indicate that forced labour exists mainly in brick kilns, agriculture and to a certain extent in domestic work.

Just prior to the grant of status in 2013, Pakistan’s exports to the EU were 4.5 billion Euros. Of these, textile exports accounted for 3.15 billion Euros. In 2018, the total exports to EU increased to 6.8 billion Euros.

Similarly, the updated data on trade union rights (number of trade unions, their membership, collective bargaining agent status, strikes and lockouts) is not readily available. A 2018 ILO study determined the total number of trade unions at 7,096 and their total membership at 1.4 million. However, many trade union federations have expressed concerns on the findings of this study.

Labour Force Survey, however, helps in estimating instances of child labour as well as gender pay gap. Child labour, estimated using ILO global methodology, has decreased from 4.02 million in 2014 to 3.73 million in 2018. The gender wage gap, an indicator of how less women earn compared to men, has reduced from 42 percent in 2014 to 40 percent in 2018. Both the statistics show improvement.

Incidence of occupational accidents has decreased from 4.3 percent to 3.7 percent. Still, on average, every 25th worker faces occupational accident or injury in the country. Share of agriculture in total employment has reduced from 43.5 percent to 38.5 percent. Formal sector now employs 28 percent of the non-agricultural labour force; earlier it was 26.4 percent. In terms of absolute figures, instead of 8.4 million workers in 2014, now 10.6 million workers enjoy the protections afforded by the labour legislation. The actual labour force is 65 million workers.

The percentage of workers without formal contract has worsened from 72 percent to 74 percent. Similarly, female labour force participation has rather decreased from already low 22.2 percent to 20 percent. Those trapped in the modern forms of slavery have increased from 2.12 million to 3.19 million.

While textile sector is the main beneficiary of GSP+, it is imperative to look at the LFS data for the sector. Nearly 5 million workers are directly engaged in the textile production sector. LFS data shows that 57 percent of the workers in the textile sector receive less than minimum wage of 15,000 rupees. The ratio is 93 percent for female workers. The percentage of those working without any formal contract is 86 percent in textile sector. The percentage further aggravates to 97 percent for female workers. The gender wage gap is 70 percent in the textile sector which means that for every 100 rupees earned by men, women earn only 30 rupees doing the same work. The percentage of regularly paid wage employees is 36 percent in the textile sector. For women workers in textile, the percentage drops to 5 percent!

While there is a lot of improvement in terms of legislation, the same is not seen in actual changes in working conditions. There are a couple of reasons for that. First, there is always a lag between enactment of a legislation and actual change in the situation on the ground. The lag period is protracted due to a lack of implementation rules for the newly enacted legislation. For legislation enacted in 2013 onward, rules are still under preparation in Khyber Pakhtunkhwa and Sindh.

Second, labour inspection system plays an important role in implementing legislation. While no clear statistic is available on the number of labour inspectors in the country, figure ranges between 500-600. There is one labour inspector (considering 500 inspectors in total) for every 17,000 formal sector workers. If we consider the overall 61 million employed workforce, there is one labour inspector for every 122,000 workers in the country!

As identified in the first EU report on GSP+, the arrangement has acted as “useful instrument” to improve labour rights in the country. While the first five years focused more on the legislative side, the next 5 years, considering that the current GSP regulation is applicable till 2023, should focus on implementation.

Labour inspection system needs an overhaul while encouraging citizen and worker generated data on workplace compliance with the labour legislation. Instead of hiring more inspectors, the local government system as well trade unions at workplaces need to be used effectively to ensure compliance. To analyse progress, more robust data is needed. For that purpose, Pakistan Bureau of Statistics must be engaged as a key partner and data on core labour standards and other working conditions must be collected through LFS on annual basis.

Iftikhar Ahmad

Iftikhar
The founder of the Institute for Labour Rights (The Whistlers). He can be reached at [email protected]

One comment

  • There is one typo in the article: there is one labour inspector for every 21,000 formal sector workers instead of 17,000 workers.

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