1

Pakistan

Labour Market Profile

2014

This Labour Market Profile is a yearly updated report that provides a broad overview of the labour

market's situation and development. The report is based on the latest data available and following

trends. Each section has also accesses to the sources' links that can be used to go more in-depth on

selected themes. This is a revised version.

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The Islamic Republic of Pakistan – Labour Market Profile 2014

Executive Summary

The Islamic Republic of Pakistan has been stuck in a low economic growth trap, affected by natural disasters, increased sectarian violence, continued law and order situation badly affected by war on terror, and an impact of the global financial crisis from 2007-2009. A range of governance and business environment indicators suggest that the country needs improvements in governance to unleash the growth potential and development.

The 18th constitutional amendment of 2010 devolved the responsibilities of labour legislation, enforcement, policies and programmes to the provinces. It has turned out an ambiguous regulatory environment. Among others, disabling legislation and repressive practices have made it more difficult for trade unions, e.g. collective bargaining has been affected. Overall, changing work patterns and new forms of employment are making the employed more vulnerable. Only 56% of employees have regular work, 27% are engaged in casual work, and 16% do ‘piece rate’ work. Thus, dismantling of the labour protections accompanying greater labour market flexibility with a consequent rise in irregular work are the emerging labour market realities.

Engaging in policy dialogue is a dimension that is increasingly attributed to, and taken up by, trade unions. It is especially in the wake of liberalization, privatization, and deregulation. However, trade unions have a reduced space in the formulation of labour and other related policies. Although the situation is aggravated further by multiplicity of unions, there are indications towards improve forging unity within the trade union movement.

Social budgets have been reduced along with slim down the government and privatizing some public institutions as part of an implementation of a structural adjustment program since 2008. There has been controversy among workers over the federal government’s decision to maintain control of the Workers Welfare Fund and Employees Old Age Benefits Institution. Moreover, there is a disproportionate share of social protection

expenditure benefit the non-poor: Around 15% of all the social protection expenditure goes to the poor. A lack of targeting the poor is a major concern in all programs in this sector. The minimum wage for an unskilled worker was raised by the Federal Government to 12,000 rupees (US$118) from the 1

st July 2014. Several sectors of the labor

force, including those in the informal sector, domestic services and agricultural workers, are not covered by the minimum wage laws. Health and safety standards are insufficient in all sectors. Unemployment is estimated at 5.1%. Youth unemployment has been on a decline from 13% in 2000 to 8% in 2012. Especially youth women have experienced an extraordinary decrease of unemployment from 29% to 11% in that period. This fails to capture the true picture, because much of the economy is informal and underemployment remains high. In practice, trade union rights are also often violated and four cases were registered in 2013 by the International Trade Union Congress (ITUC). The International Labour Organization (ILO) has three active cases and two follow-up cases in the Committee of Freedom of Association. The demographic structure can be characterized as a 'time-bomb'. A burgeoning urbanizing population, between the ages of 10 to 25, enters the labour market and expecting to find decent jobs, but often they are not available or their education and training has not provided them with the appropriate skills. In terms of Global Gender Gap Index, Pakistan is ranking 135 out of 136 countries. Relatively few women (20%) participate in the labour market compared with men (80%). Women, who do, usually find employment in agriculture, manufacturing, and public administration. Women tend to work as contributing family workers, whereas salaried jobs tend to go to men.

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Contents

Trade Unions ......................................................................................................................................... 4

Trade Unions in Pakistan ............................................................................................................................... 5

Employers’ Organisations ....................................................................................................................... 7

Central Tripartite Structures ................................................................................................................... 7

National Labour Legislation .................................................................................................................... 8

ILO Conventions ..................................................................................................................................... 9

Trade Union Rights Violations .............................................................................................................. 10

Working Conditions.............................................................................................................................. 10

Workforce ........................................................................................................................................... 11

Sectoral employment .................................................................................................................................. 13

Migration ..................................................................................................................................................... 14

Informal Economy ....................................................................................................................................... 14

Child Labour ................................................................................................................................................. 14

Gender ......................................................................................................................................................... 15

Youth ........................................................................................................................................................... 15

Characteristics of the Working Age Population ..................................................................................... 16

Vocational training ...................................................................................................................................... 17

Social Protection .................................................................................................................................. 18

General Economic Performance ............................................................................................................ 19

Trade ................................................................................................................................................... 20

Trade agreements ....................................................................................................................................... 20

Export Processing Zones (EPZ) ..................................................................................................................... 20

References ........................................................................................................................................... 21

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Trade Unions

Trade unions in Pakistan (2013) Number of trade unions (collective bargaining status)

1,905

Dues (standard) N/A

Members of trade unions 1,800,000

Trade union members share of labour force 2.8 %

Trade union members to waged workers 8.3 %

Female member share of trade unions N/A

Members of affiliated trade unions from the informal economy (PWF)

131,286

Number of CBAs (Sindh, Karachi, and Hyderabad)

101

Workers covered by CBAs N/A

Share of workers covered by CBA N/A

Labour force (2012) 63,817,000

The trade union movement in Pakistan has always been divided and fragmented along ethnic, sectarian, linguistic, and regional lines. The country inherited the tradition of tri-partism from the British India and the concept was readily recognized and adopted in Pakistan after independence. On average, membership has stabilized at 135 members per union, down from nearly 2,000 per union immediately after independence.

1

Most unions function independently of government and political party influence. Labor leaders have raised concerns about the use of “yellow unions” by employers to prevent effective unionization. Trade union membership was 400,000 in 1951, which increased to 1 million in 2001, and to 1.8 million in 2012. It is estimated that the trade union density of the labour force is 2.8%, while it is 8.3% of waged workers. There are around 7,204 unions out of which 1,905 have collective bargaining agent status. It has also been noted that around 131,286 workers from the informal economy operate as members of affiliated trade unions in collaboration with the Pakistan Workers Federation. This report has registered 25 federations and briefly outlines the status of the largest trade union centres (<100,000 memberships): Pakistan Workers Federation (PWF)

2

PWF was formed in 2005 as a merger between the national trade union centres All Pakistan Federation of Trade Unions (APFTU), All Pakistan Federation of

Labour (APFOL) and Pakistan National Federation of Trade Unions (PNFTU). According to data, members have been decreased from 880,000 in 2012 to 815,000 in 2014. PWF is a national federation, along with regional federations, for each of the regions. It is affiliated with ITUC and has permanent committees for organizing, credentials, education, trade union rights, legal and dispute settlement, economic and social policy, women youth and a special committee. PWF organises private sector workers within most of the service and industry sectors. PWF is an independent national trade union centre without political affiliations. The major administrative role rests with the general secretary. Currently, Mr. M. Zahoor Awan is the general secretary.

All Pakistan Federation of United Trade Unions

APFUTU is a national trade union center and was formed in 1992. It has an estimated a membership of 510,000. The APFUTU is affiliated with the World Federation of Trade Unions. The organization is indepandent and is working for Child Labour, Bonded Labour, and Women rights. Muttahida Labour Federation (MLF)

3

MLF was formed in 1988 as a merger of five regional federations. It has 140 affiliated unions and 141,000 members. Though the membership is low, MLF is considered an important trade union center. It organizes workers in the sectors of mines, fertilizer, cement, textiles, oil, engineering and other industries. MLF does not have political affiliations. All Pakistan Trade Union Congress (APTUC)

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APTUC is independent of the government or any political group. More than eight sectors are associated with APTUC such as mixed industries, transport, employees in public service, white-collar workers, education, working women, health care, agriculture, textile, and garment. The organization has 110,000 members. National Labour Federation Pakistan (NLF)

NLF was formed in 2003. It has 103 affiliated unions and 100,000 members. It organizes workers within the sectors of telecommunication, shipyard, municipal and local bodies, transport, rice mills, metal, glass bangles, fertilizer, sugar, beverages, wood and engineering etc. NLF is considered to be the labour wing of the political party fundamentalist party - Jamaat-e-Islami.

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Trade Unions in Pakistan5

Members, Dues, Collective Bargaining Agreements (CBA) and Occupational Safety and Health committees

Trade Union / Trade Union Centre

Affiliation To national trade union

centre

Total Members

Female Members

Dues Number of CBAs

Workers covered by CBAs

Number of OSH com-mittees at

workplaces

Trade Union Centres

PWF Pakistan Workers' Federation 814,760 - - - - - APFUTU All Pakistan Federation of United Trade Unions

510,000 - - - - -

MLF Muttahida Labour Federation 141,480 - - - - - APTUC All Pakistan Trade Union Congress 110,000 - - - - - NLF National Labour Federation Pakistan 100,311 - - - - - NTUF National Trade Union Federation Pakistan

46,983 - - - - -

NLF General Federation of Trade Unions - Socialist Workers' Union

27,000 - - - - -

PNTLGWF Pakistan National Textile, Leather, Garments and General Workers Federation

12,520 - - - - -

QLF Quaid-I-Azam Labour Federation of Pakistan

9,179 - - - - -

APTUF All Pakistan Trade Union Federation

9,032 - - - - -

WDMF Watan Dost Mazdoor Federation 6,686 - - - - - PTUF Pakistan Trade Union Federation 5,466 - - - - - ULF United Labour Federation 4,742 - - - - - APTUC All Pakistan Trade Union Congress 1,742 - - - - - APGSTA All Pakistan Government School Teachers' Associations

- - - - - -

PTOC Pakistan Teachers' Organization's Council

- - - - - -

Industrial / Sectoral Federations

Pakistan Federation of Building & Wood Workers (PFBWW) RWP

13,759 - - - - -

Pakistan Oil, Gas & Mineral Workers Federation,

8,792 - - - - -

All Pakistan Local Government Workers Federation, Lahore

7,054 - - - - -

Pakistan Sugar Mills Workers Federation, Hyderabad

6,795 - - - - -

HBL Employees Federation, Karachi 5,371 - - - - - Cement Union Federation of Pakistan, Thatta

3,184 - - - - -

Pakistan Construction Federation, Karachi 3,000 - - - - - Federation of Trade Union of Fauji Foundation, Karachi

2,546 - - - - -

Pakistan Mines & Industrial Trade Union Federation, Hub Chowki Lasbella

2,338 - - - - -

State Life Insurance Employees Federation of Pakistan, Karachi

2,145 - - - - -

Pakistan Mines Workers Federation, Quetta

1,541 - - - - -

Ittehad Labour Federation Carpet Industries, Lahore

1,368 - - - - -

Uni Lever Employees Federation of Pakistan, Karachi

1,217 - - - - -

National Federation of Food, Beverage and Tobac Workers, Karachi

1,205 - - - - -

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Pakistan Hotel, Restaurant, Club, Tourism, Catering and Allied Workers Federation, Karachi

1,139 - - - - -

All Pakistan PMDC Employees Workers & Mines Federation, Islamabad

1,108 - - - - -

Employees Federation of CDA, Islamabad 978 - - - - - National Federation of Grindlays Bank Employees Unions, Grindlays Bank Staff Union, Lahore

863 - - - - -

ABL Officers/Executive Federation of Pakistan, Rawalpindi

502 - - - - -

Standard Chartered Bank Employees Federation, Karachi

279 - - - - -

Pakistan Central Mines Labour Federation, (PCMLF) Quetta

199 - - - - -

All Pakistan Trade Union Organisation 279 - - - - - Pakistan Labour Federation 199 - - - - -

15 largest unions affiliated to PWF

National Teacher Organization of Pakistan KARACHI

PWF 207,170 - - - - -

All Pakistan Akhbar Ferosh Federation ISLAMABAD

PWF 120,842 - - - - -

Pakistan Women Teachers Council KARACHI

PWF 65,500 - - - - -

Govt. & National Ized School Teachers Association KARACHI

PWF 48,000 - - - - -

United Teachers Technical Association LAHORE

PWF 34,200 - - - - -

Federal Teachers Association ISLAMABAD PWF 30,800 - - - - - United women teachers association JHANG

PWF 16,950 - - - - -

Mazdoor Union Escorts Mater Works Limited LAHORE

PWF 15,200 - - - - -

Kohistan Mines Workers Federation CHOA SADEN SHAH

PWF 15,000 - - - - -

Servant of Education Society Employees Union KARACHI

PWF 15,000 - - - - -

CDA Mazdoor Union , ISLAMABAD PWF 14,280 - - - - - Agriculture Workers Union CBA QUETTA PWF 12,500 - - - - - Bhawalpur Labour federation BAHAWALPUR

PWF 12,350 - - - - -

Pakistan WAPDA Hydro Electric Central Labour Union QUETTA

PWF 10,000 - - - - -

All Pakistan OGDCL Mazdoor Ittehad Union ISLAMABAD

PWF 9,280 - - - - -

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Employers’ Organisations

Employers’ Federation of Pakistan (EFP)6

The history of employers’ organizations in Pakistan dates back to 1830. EFP was founded in 1950. The organization is a member of the International Organization of Employers (IOE). EFP membership is open to all industrial and commercial establishments employing 20 or more employees as well as to registered trade bodies. Currently, the EFP has 537 industrial and commercial establishments, both large and small, and 14 trade bodies as its members. These trade bodies have a membership of 36,685 entities.

The mission is to strive for Industrial Peace, Harmony, Poverty Reduction and Business Promotion and pursue Policies and Legislation conducive to Investment, Economic Growth, Employment Generation, Decent Wages and keeping peace with socio-economic development of Country. Protect and Promote Employers’ Interests through effective and meaningful participation in consultation at National and International level and provide assistance and guidance to the members through effective communication.

Central Tripartite Structures

National Industrial Relations Commission7

The Commission is composed of 10 members including its chairman – all appointed by the government; two of the members are appointed from workers and employers by the government on the recommendation of the chairman. It deals with labour issues which are trans-provincial and in the Islamabad Capital Territory. These include industrial disputes, registration of trade unions, collective bargaining agreements, unfair labour practices, advice to the government etc.

Mediation and arbitration

Industrial disputes are governed by the Industrial Relations Act

8 - both national and provincial. An

individual grievance is first decided by the employer and the worker can appeal the decision to the National Industrial Relations Commission. Collective industrial disputes are first attempted to be settled by a Works Council, afterwards the parties may notice strike or lockout and a Conciliator is appointed by the National Industrial Relations Commission to attempt to mediate the dispute. If mediation fails the Conciliator shall try to persuade the parties to refer the dispute to arbitration.

Pakistan Tripartite Labour Conferences (PTLC)

9

In earlier years after independence, PTLCs were held at regular intervals every year or alternate years. These tripartite national level forums were

instrumental in reaching consensus on ratification of ILO Conventions; enactment of new labour legislation and amendment in existing legislations; and in formulating national views on agenda items before International Labour Conference meetings etc. The PTLC, however, is not a statutory body and with the imposition of military rule in 1958 and at intervals in subsequent years, the Conferences lost their importance. Even in the era of civilian governments, the PTLCs met only sporadically and rarely. The institution has recently been activated: The first ever draft provincial Policy on Occupational Safety and Health (OSH) was presented in September 2014 in a tripartite consultation with employers, workers, and Civil society organizations. Three tripartite Consultative Sessions were organized in Sukkur, Hyderabad and Karachi to make this document more practical.

10

Other bi/tripartite organs

- Employees' Old-Age Benefits Institution - Employees’ Social Security Institutions in the

provinces - Workers Welfare Board - Workers Welfare Fund - Workers Employers Bilateral Council of Pakistan

(WEBCOP) To some extent there has been a dismantling of labour protections and with greater labour market flexibility. It has created rising irregular work as an emerging

8

labour market reality in Pakistan. Layoffs, redundancies, dismissals, and job relocations is also a dimension to the concerns.

11 On the other hand, there

are some improvements: The draft labour policy of Punjab; draft social protection policy of Khyber Pakhtunkhwa province; changes in the the Punjab

Industrial Relations Act 2010 (PIRA) section limiting the right to organise to workers of establishments employing 50 or more workers; and current process of labour law reform in Sindh.

National Labour Legislation

Constitution12

The federal Constitution, which was restored in 2003, and last amended in 2010, guarantees the freedom of association and the right to join and form unions. It prohibits forced labour and child labour under 14 working under hazardous conditions. The State shall secure humane conditions of work, ensuring that children and women are not employed in vocations unsuited to their age or sex, equitable adjustment of rights between employers and employees, social security and maternity benefits. Local government are encouraged to institute representation of workers. The 18th constitutional amendment aimed of decentralising political power and empowering the country’s four provinces by transferring federal-level resources and responsibilities, including industrial relations to provincial governments. The 18th constitutional amendment of 2010 devolved the responsibilities of labour legislation, enforcement, policies and programmes to the provinces. It has been observed that there lacks a federal coordination role and provided no minimum standards for acceptable labor practices. ILO matters, including ratifications, reporting and standards’ compliance, have been entrusted to the federal ministry for overseas Pakistanis and human resource development. The effective enforcement of treaty requirements would be difficult in this still ambiguous regulatory environment. All the federal laws have either been adapted or under improvements by each province. The decentralization process has made it somewhat more difficult for the trade unions because the labour law has not yet been fully implemented in the provincial laws and thus confronting non-existing or antiquated provincial labour laws.

13

Factories Act

The Factories Act from 1934, last amended in 1997 regulates Occupational Safety and Health standards, working hours, time off and child workers.

14 It applies

to factories employing ten or more workers. Workers, who are not covered by the Factories Act, can be covered by the Mines Act, and those employed in shops and commercial establishments, are covered by the West Pakistan Shops and Establishments Ordinance.

15

Industrial Relations Act (IRA)

16

The Act from 2012 was adopted to update industrial relations with the Constitutional amendment of 2010. With a few exceptions it covers all workers. It regulates trade unions, workers participation and industrial disputes. It also defines unfair labour practices and establishes the National Industrial Relations Commission. However, the IRA 2012 addresses only trans-provincial and Islamabad Capital Territory (ICT) unions. Most of the nation’s labor force was not covered by any federal labor regulations of any kind. In addition, the IRA limits strikes and lockouts, e.g. sections of the IRA and the provincial (BIRA, KPIRA, PIRA and SIRA), a go-slow appears to be an unfair labour practice, according to ITUC.

17

Special Economic Zones Act

18

The Special Economic Zones Act from 2012 provides for the establishment and operation of Special Economic Zones (SEZ) in Pakistan, including that the Federal or Regional Governments may establish SEZ. In the South Asian region, Pakistan is one of the few countries that cover all sorts of contingencies recognized by ILO conventions. Several other legislations exist that regulate and sets standards and restrictions for the labour market.

19 The Federally

Administered Tribal Areas (Fata) is governed through a separate law, i.e. labour laws, as well as all others, apply to the federally administered tribal areas.

9

ILO Conventions

Ratified ILO Conventions20

Subject and/or right Convention Ratification date

Fundamental Conventions

Freedom of association and collective bargaining

C087 - Freedom of Association and Protection of the Right to Organise, 1948 1951

C098 - Right to Organise and Collective Bargaining Convention, 1949 1952

Elimination of all forms of forced labour

C029 - Forced Labour Convention, 1930 1957

C105 - Abolition of Forced Labour Convention, 1957 1960

Effective abolition of child labour

C138 - Minimum Age Convention, 1973 2006

C182 - Worst Forms of Child Labour Convention, 1999 2001

Elimination of discri-mination in employment

C100 - Equal Remuneration Convention, 1951 2001

C111 - Discrimination (Employment and Occupation) Convention, 1958 1961

Governance Conventions

Labour inspection C081 - Labour Inspection Convention, 1947 1953

C129 - Labour Inspection (Agriculture) Convention, 1969 Not ratified

Employment policy C122 - Employment Policy Convention, 1964 Not ratified

Tripartism C144 - Tripartite Consultation (International Labour Standards) Convention, 1976 1994

Up-to-date Conventions

Working time C014 - Weekly Rest (Industry) Convention, 1921 1923 C106 - Weekly Rest (Commerce and Offices) Convention, 1957 1960

Social Security C118 - Equality of Treatment (Social Security) Convention, 1962 1969

Seafarers C185 - Seafarers' Identity Documents Convention (Revised), 2003 2006

Employment policy and promotion

C159 - Vocational Rehabilitation and Employment (Disabled Persons) Convention, 1983

1994

Fundamental Conventions are the eight most important ILO conventions that cover four fundamental principles and rights at work. Equivalent to basic human rights at work.

Governance Conventions are four conventions that the ILO has designated as important to building national institutions and capacities that serve to promote employment. In other words, conventions that promotes a well-regulated and well-functioning labour market.

In addition, there are 71 conventions, which ILO considers “up-to-date" and actively promotes.

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Trade Union Rights Violations

According to the International Trade Union Confederation (ITUC)

21, trade union rights are not fully

guaranteed by law at the federal or provincial level. In practice, trade union rights are also often violated and four cases were registered in 2013: i) anti-union discrimination when union leaders were attacked during negotiation over wages, benefits and job security reached a deadlock; ii) dismissal for strike action when more than 400 young doctors who had participated in a strike to protest about criminal cases lodged against colleagues, and it was refused to reinstate 200 doctors despite written orders from the health authorities; iii) barriers to the recognition of collective bargaining agents as mining company refused to recognize union; and iv) undue interference by authorities or employers during the course of a strike when police intervention in strike and refusal to bargain. The U.S. Country Reports on Human Rights Practices

22

also pointed out several legal problems of Pakistan’s structure on the federation level. Trans-provincial labour laws are ambiguous and authority of labour related areas are transferred to the provinces. The concurrent legislative list having six exclusive labour

and employment related entries was deleted through the constitutional amendment as previously mentioned. Enforcement of labour laws remains weak, which is mainly due to lack of resources and political will. Moreover, workers from state institutions as well as export processing zones and public sector workers are prohibited from collective bargaining and striking. Labor groups reported the law was not applied. Violence and other freedom of association problems persisted. ILO has three active cases and two follow-up cases in the Committee of Freedom of Association. They concern various allegations against employers and the government, such as anti-union activities, harassment and violence against trade union members.

ILO Complaints Procedure23

Freedom of Association cases (2013)

Active 3

Follow-up 2

Closed 31

Working Conditions

Wages and earnings Monthly average and legal minimum wages

Source Current rupees

Current US$

Average wage (2011)

Global Wage Database24

9,715 113

Minimum wage (2014/15)

The Express Tribune25

12,000 118

Minimum wage for a 19-year old worker or an apprentice (2014) Doing

Business26

4,227 42

Ratio minimum wage to value added per worker (2014)

0.24

Growth of real average wage (2000-2011) Global Wage

Database26

29 %

Growth of real minimum wage (2000-2011)

100 %

Ratio of minimum wage to value added per worker denotes the minimum wage share of labour productivity. Reported as ratio of minimum wage to value added per worker in the Doing Business Report.26

The minimum wage was raised by the Federal Government to PKR 12,000 (US$118) for Islamabad in July 2014. Actually PKR 11,000 was announced as the minimum monthly wage, in line with the preceding federal budget. However, the provincial finance department issued an amendment notification to increase the figure by PKR 1,000. The raise could not be implemented due to non-amendment of the ordinance. Thus, the Employees Old-Age Benefits Institution (EOBI) is not in a position to collect contributions from the employee/insured persons for the purpose of payments in different pensions. As per October 2014, provincial authorities in Punjab and Khyber-Pakhtunkhwa have enhanced the minimum wages to PKR 12,000 and PKR 15,000 (US$148) per month, respectively, whereas the governments of Sindh and Balochistan have initiated the process for increase of minimum wages. Notwithstanding, several sectors of the labor force,

11

including those in the informal sector, domestic servants, and agricultural workers, are not covered by minimum wage laws. Both the minimum wage and average wage have seen substantial increases in real terms since 2000, with the real minimum wage doubling since 2000.

24

According to the U.S. Country Reports on Human Rights Practices,

27 worker regulations do not apply to

agricultural workers, workers in factories with fewer than 10 employees, domestic workers, or contractors. Since the government has not enforced effectively the labour laws, and has demonstrated to be inapplicability, has given employers in many sectors relative impunity with regard to working conditions, treatment, work hours, and pay. The majority of factory workers were employed as contract labor with no fringe benefits beyond basic wages and no long-term job security, even if they remained with the same employer for years. Factory managers were often unable to ascertain the identity of fire or other work-related accident victims because these individuals generally did not appear in official records.

Provincial governments are responsible for enforcing the labour standards and their enforcement differs: Balochistan and KP allowed surprise inspections; the Sindh have policies against surprise inspections of work places and with an ineffective enforcement; Punjab operates with a self-declaration system whereby factory owners post-declarations about workplace safety, health and wage issues in their factories. Regarding the latter, restrictions have been withdrawn by the provincial government. It has been registered that many workers remain unaware of their rights. It is particularly in the informal economy. Given the serious restrictions on labor inspections and the impact of limited resources and corruption, inspections and concomitant penalties were insufficient to deter violations of labor laws. Health and safety standards are insufficient in all sectors. Working conditions in mines have a serious lack of adherence to safety and health protocols, e.g. workers cannot remove themselves from dangerous working conditions without risking loss of employment. Informal sector employees face multiple precarious situations, particularly in less visible areas such as domestic work. There were no official statistics available on workplace fatalities and accidents during 2013.

Workforce

The total population in Pakistan is 179 million people out of which 64 million cover the labour force. The demographic composition can be characterized as a 'time-bomb', with a burgeoning, urbanizing youth population who will enter the labour market, expecting to find jobs, but often only to find that their

education and training has not provided them with the appropriate skills. Pakistan has a very large gender gap in employment rates: One out of five (22%) of women are in employment while four out of five (80%) men are in active employment.

Employment rates (%)28

(2013), Age and Sex distribution

Sex Age Employment

rate

Male & female

Total 15+ 52 %

Youth 15-24 41 %

Adult 25+ 56 %

Male Total 15+ 80 %

Youth 15-24 62 %

Adult 25+ 88 %

Female Total 15+ 22 %

Youth 15-24 19 %

Adult 25+ 24 %

80

62

88

22

19

24

52

41

56

00 20 40 60 80 100

15+

15-24

25+

Male and female Female Male

12

Asia has seen a strong growth in the middle class during the last decade. Pakistan especially has a larger lower middle class than the average for South Asia, but it has grown slower: In South Asia 18% lived for US$2-4 a day and 3.9% for US$4-20 in 1999. In 2008 23% lived for US$2-4 a day and 5.7% for US$4-20. In Pakistan 28% lived for US$2-4 a day and 5.6% for US$4-20 in 1998. In 2007 33% lived for US$2-4 a day and 6.8% for US$4-20. The dollars are in purchasing power parity.

29

Pakistan has considerably fewer working poor than the South Asia's average. There are slightly more working poor females (22%) than men (19%).

Working Poor30

Age 15+

Share of workers

in total employment

1.25 US$

a day 2 US$ a day

Pakistan (2005)

Both 19 % 57 %

Male 19 % 55 %

Female 22 % 62 %

Pakistan (2007) Both 18% 57%

South Asia (2005) 38 % 73 %

South Asia (2012) 24 % 61 %

Working poor measures employed people living for less than US$1.25 and US$2 a day, as proportion of total employment in that group

Unemployment and underemployment

Unemployment, youth unemployment, and underemployment (2012)

31

Un-

employment

Youth Unemployment

(15-24 age)

Under-employment

(2000)

Total 5.1% 8.2% 2.6%

Male 4.9% 7.3% 2.3%

Female 8.9% 11.2% 4.1%

Unemployment is relatively low at 5.1%. Unemployment is more common among women and youth. The unemployment rate in urban areas (7.2%) was higher than in rural areas (4.8%) in 2012-2013. This is mainly due to rural urban migration, which is cause of increasing urban population whereas job opportunities are not increasing accordingly. Industrial development has not yet reached the position to address the issues of unemployment on account of dismal performance in the past.

32

At an overall rate of 2.6%, time-related underemployment is very low in Pakistan. Usually underemployment is reported as those who involuntarily work below 40 hours per week. The measure for Pakistan is those who work less than 35 hours. The concept of underemployment does sometimes also include those who are employed below their skill-level. When unemployment is not an option where a person can survive, work of some sort has to be found, often casual and informal work. Unemployment should therefore be understood in relation to the strength of social safety nets, the prevalence of informal employment and how much of informal employment is underemployment due to few formal employment possibilities.

33

13

Sectoral employment

It is estimated that 45% of Pakistanis work in agriculture, and contributing with 24% of GDP. The manufacturing sector is significant both in terms of employment and contribution to GDP. This reflects the large textile production in Pakistan. The labour market is very gender segmented. Women have very low employment rates, as already showed. Around 75% of employed women operate in the agriculture sector in comparison with 37% of men. Outside agriculture, women mostly find employment in the Manufacturing sector and the Public Administration and other services (i.e. Community, Social and Personal Services sector). The service sector is the main contributor of GDP with 54%. It is noteworthy that the industry sector lost its upturn in 2005, where is reached 27% of GDP, and is placed with 22% of GDP in 2012. Textiles are expected

to recover from existing weak growth as they benefit from Generalized Scheme of Preferences Plus status granted by the European Union from January 2014. Improved manufacturing performance will stimulate retail and trade activity.

36 (See also the Trade section).

Sectors Share (% of GDP)

37

23 24 24 24 27 27

21 21 22 20 21 21 22

51 52 53 53 51 51

56 56 55 56 55 53 54

26 24 23 23 22 21 23 23 23 24 24

26 24

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Industry Services Agriculture

Employment (2008)34

& GDP share (2012)35

Sector & Sex distribution – (Graph without Agriculture)

Sector Male

employment Female

employment GDP share per sector

Mining and quarrying 56,000 1,000 3.3 %

Manufacturing 5,196,000 1,181,000 14.4 %

Electricity, gas and water 341,000 2,000 2.3 %

Construction 3,052,000 36,000 2.0 %

Trade, restaurants and hotels

6,999,000 179,000 20.6 %

Transport and communication

2,661,000 20,000 10.1 %

Finance, real estate and business services

669,000 23,000 8.0 %

Public administration and other services

5,638,000 1,068,000 14.8 %

Agriculture 14,404,000 7,515,000 24.4 %

14.8%

8.0%

10.1%

2.0%

2.3%

14.4%

3.3%

0% 4% 8% 12% 16%

0 2,000,000 4,000,000 6,000,000 8,000,000Male Female GDP share by Sector

14

Migration

Many people migrate out of Pakistan. The net migration rate shows that one out of 530 inhabitants

leave the country than entering it. It is more than the

South Asia's average. The trend is declining slightly, though. Pakistan also receives more remittances relative to the regional average. The top three destinations for migrants are India, Saudi Arabia, and the United States Emirates.

38

The government is encouraging overseas employment. The Bureau of Emigration and Overseas Employment had registered 456,893 Pakistani’s working overseas.

39

But, Pakistanis going abroad for work has probably increased to over 600,000 annually.

Migration40

Net migration (2008-2012)

Pakistan - 1,634,420

Net migration to average population per year (2008-2012)

Pakistan - 1 : 530

inhabitants

South Asia - 1 : 1,135

Inhabitants

Personal transfers i.e. remittances received, % of GDP (2012)

Pakistan 6.2 %

South Asia 4.7 %

Informal Economy

In terms of non-agricultural employment, 74% are estimated to be employed in the informal economy. The informal sector has the same share for the last three surveyed years. There is expected a slightly increasing female formal employment, which peaked in 2010-2011 of 29%.

41

Most informal employment is in the agricultural sector. Depending on the status in employment own-account workers and contributing family workers also make up most of the informal economy, respectively constituting 34% and 29% of the employment, respectively. Women are more commonly family workers, whereas men are more commonly own-account workers.

42 The informal economy is

dominated by precarious low paying and poorly protected jobs.

Formal and informal sector -distribution of non-agriculture workers (%)

43

Note: The Labour Force Survey was not published in 2011/12.

Child Labour

The last national child labour survey is from 1996. Based on a UNICEF survey 2010 of the province Balochistan, which comprises 5% of the population and is sparsely populated and more rural, the child labour is highest in rural areas (19%) than urban (12%). It has been estimated that around 11 million are child labourers.

44

Children in urban areas are often employed as domestic servants. Child trafficking continues to be a problem, e.g. children are kidnapped, rented, or sold for work in agriculture, domestic service, and begging and trafficked into commercial exploitation.

Pakistan lacks sufficient legal protections for working children. While provincial government institutions drafted legislation to protect children from the worst forms of child labor in response to a government-wide decentralization effort, only one province passed such

legislation while the Federal law remains in effect in the remaining provinces. Labor inspection is carried out at the provincial level. They do not enforce child labor laws in agricultural settings.

45

Working children Proportion of all children in age group

Region Year Type Proportion

Balochistan (age 5-14)46

2010 Child labourers 17.3 %

Asia and the Pacific47 (age 5-17)

2008

Children in employment

20.4 %

Child labourers 13.3 %

Hazardous work 5.6 %

Children in employment include all children who conduct some kind of work, whereas child labourers are a narrower term without mild forms of work. Hazardous work is the worst from of child labour as defined in ILO C182.

20

40

60

80

2007/08 2008/09 2009/10 2010/11 2012/13Male - formal Male - informalFemale - formal Female - informal

15

Gender

In terms of the Global Gender Gap Index, which is gender-based gaps rather than the actual levels of available resources and opportunities, Pakistan is ranking 135 out of 136 countries; and thus as the lowest performer among Asian and Pacific countries.

48

ILO research has demonstrated that women entrepreneurs are mostly in the micro-enterprise sector and are practically invisible in the large and medium enterprise categories. Gender-based legal, economic or socio-cultural barriers and inequalities prevent them from expanding their businesses. The areas where women are more disadvantaged than men are in their property rights, access to finance, markets, education and networks business support.

49

As noted elsewhere in this report: 21% of women are employed in comparison with 80% of men, and unlike men most are employed in agriculture. The employed men are also about twice as likely to be in waged and salaried employment. Women are slightly more likely to be unemployed and underemployed. In addition, women have much less education than men, and fewer girls enrol in schools. The gender difference in child labour is comparably small.

Female in Management and Ownership (2007)

Note: There are no data from Pakistan on firms with female top manager.

The low participation of women on the labour market has been reported as 6% of firms had female participation in ownership compared to 15% for the average in South Asia, and that 1.2% of full time employees was women, compared to South Asia at 16%.

50

Youth

Pakistan’s youth population (15-24 ages) was estimated as 21% of the population in 2013. Youth unemployment has been very high, but decreased and staying stable since 2006. Females have been under a remarkable slow down of unemployment from close to 30% in 2000 and reaching 11% in 2012. Men have also been on a decrease from 11% to 7%. Share of youth unemployed in total unemployed has been estimated as 44% in 2012. Only the Punjab province has an approved youth policy (2012), though the Sindh province has a draft youth policy (2012) and the other regions and territories are engaged in consultation and drafting processes. As a member of the Commonwealth of Nations, Pakistan is a signatory of The Commonwealth Plan of Action for Youth Empowerment (PAYE) 2006-2015.

51

Trade union federations, such as PWF, have carried out activities to create employment opportunities for young men and women as well as to create awareness about the role of trade unions among the youth of Pakistan.

Unemployment youth trend (% of youth labor force ages 15-24 years)

52

Pakistan Muslim League (PML-N) recently launched a Youth Business Loan Scheme with an aim to cover 100,000 youth. However, questions have been raised if the governments will be able to tackle the targeting of the schemes as well as the sustainability since loan default and write-off is a common practice. In addition, they are usually limited to the urban centers and powerful rural elite.

53

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Firms with female top manager Firms with female participationin ownership

Pakistan South Asia Lower middle income

5.0

10.0

15.0

20.0

25.0

30.0

2000200120022003200420052006200720082009201020112012

Youth female Youth male Youth total

16

Characteristics of the Working Age Population

Pakistan’s population is divided between the more than 47% who have never been to school, and those who have an education, where most have progressed into secondary schools and many have completed secondary education and continued to universities. The gender difference is large, with women having 30% less education than the total. Women are underrepresented in all education categories, especially with more women in the "no schooling" category. The graph above shows the educational

attainment of all Pakistani above 25 years and gives a glance of the human capital of the labour force. Fewer Pakistani enrol into primary, secondary and tertiary education, than the average for South Asian countries. Though fewer girls enrol in education, the gender difference becomes smaller for higher education, and almost disappears for enrolment into universities.

Enrolment in Primary, Secondary and Tertiary schools (2000-2011)56

Total and Female, Pakistan and South Asia

Net enrolment is the ratio of children of official school age, who are enrolled in school to the population of the corresponding official school age. Gross enrolment is the ratio of total enrolment, regardless of age, to the population of the corresponding official school age. Gross primary enrolment is therefore sometimes higher than 100 %.

40%

50%

60%

70%

80%

90%

100%

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9

201

0

201

1

Net primary school enrolment

0%

10%

20%

30%

40%

50%

60%

200

0

200

1

200

2

200

3

200

4

200

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0

201

1

Net secondary school enrolment

0%

3%

6%

9%

12%

15%

18%

200

0

200

1

200

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1

Gross tertiary school enrolment Pakistan ,Totalenrolment

Pakistan ,Femaleenrolment

South Asia ,Totalenrolment

South Asia ,Femaleenrolment

Highest level attained and years of schooling in the population54

(2010), Population 25+, Total and Female

Highest Level Attained Total Female

No Schooling 47.3 % 63 %

Primary Begun 3.0 % 1.9 %

Completed 14.3 % 11.6 %

Secondary Begun 10.1 % 6.3 %

Completed 19 % 13 %

Tertiary Begun 1.2 % 0.6 %

Completed 5.2 % 3.6 %

Average year of total schooling 4.9 years 3.4 years

Educational Gini Coefficient 0.57 0.70

Primary, secondary and tertiary is the internationally defined distinction of education. In Denmark these corresponds to grundskole, gymnasium & university.

The educational Gini Coefficient is similar to the Gini Coefficient, but instead of measuring the distribution of income in a population, it measures the distribution of education measured as years of schooling among the population.55

0% 20% 40% 60% 80% 100%

Total

Female

No Schooling Primary - Begun Primary - CompletedSecondary - Begun Secondary - Completed Tertiary - BegunTertiary - Completed

17

Vocational training

Vocational Training57

Pupils in vocational training (2012)

Pakistan 376,337

Ratio of pupils in vocational student to all pupils in secondary education

Pakistan 3.9 %

South Asia 1.3 %

Ratio of pupils in vocational training out of 15-24 year olds

Pakistan 1.0 %

South Asia 0.5 %

The calculations of ratios cover for Pakistan the period 2008-2012, while the period is 2007-2009 for the South Asian region.

Trend of pupils in vocational training to all pupils in secondary education (%)

58

The government has operated with the National Skills Strategy 2009-2013 and has recognized that the country has fallen behind on international and regional levels of technical and vocational education

and training (TVET). Recently, skills development became a political priority.

59

In 2012, 376,337 were enrolled in vocational training across 1,522 TVET institutes in the country, out of which 288 are in the private sector. The former Medium Term Development Framework (MTDF) 2005-2010 sat an annual training target of 950,000 appropriately skilled workers, out of which 700,000 are expected to be trained in public-sector training institutes and 250,000 by private-sector training providers. Thus, as the tables in this section show, the goals were no reached. Enrollment in vocational education is even decreasing. On the other hand, significantly more students are enrolled into vocational training in Pakistan than the South Asian's average. In the South Asian region the incidence of in-service training is very low. Among the four larger South Asian economies, Pakistan has the lowest incidence of in-service training, i.e. at 8%. Major reasons for low in-service training in Pakistan are due to low demand for training, high turnover rate of workers, and limited financial resources.

60 Other data shows that only 4.5%

of formal firms are offering formal training.61

0%

1%

2%

3%

4%

5%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pakistan South Asia

18

Social Protection

Public spending on social protection schemes62

(2010)

Public social protection expenditure, excl. health

Pakistani Rupee 196 billion

US$ 2.3 billion

% of GDP 1.3 %

per capita 13 US$

% of government expenditure

13 %

Public health care % of GDP 0.4 %

Health social protection coverage

% of population 27 %

Trends in government expenditure in health

% changes per year (2007-2011)

-3.5 %

Benefits, coverage and contributions to pension schemes

63

(2009)

Social benefits for the active age % of GDP 0.03 %

Pensionable age receiving an old age pension (age 60+)

Proportion of total

2.3 %

Old age effective coverage as proportion of programs

Contributory N/a

Active contributors to a pension scheme

15-64 years 3.1 %

In Pakistan the pension and social security coverage is limited to the formal sector workers. Workers from the informal economy fall outside the requirements usually administered through public and private institutions. Social budgets have been reduced along with slimming down the government, and privatizing some public institutions as part of an implementation of a structural adjustment program since 2008. It has affected the labour market; e.g. employment is more generated in the informal economy which reduces the coverage of pension and social security schemes.

64 It

has been registered that public expenditure on health has decreased of 3.5% in the period 2007-2011. The Employees' Old-Age Benefits Institution (EOBI) provides old-age, disability and survivor pensions and an old age grant for private employees in firms of five or more workers, excluding family and self-employed workers. The EOBI makes available old-age pensions for private employees in firms of five or more workers, excluding family and self-employed workers. The institution has a little more than 5.1 million person registered as insured. According to the labour force survey 2010/11, there were around 7.7 million employed in the non-agricultural formal sector, and since there are around 3 million public employees in

Pakistan, the EOBI likely covers all formal workers. If the 7.7 million formal and public workers are covered by pension schemes, this only amounts to 14% of the employed labour force, still higher than the 1.5% reported in the ILO Social Security Inquiry.

65 On the

other hand, around 63% of public sector employees receive pensions. Pakistan has several retirement pension schemes for public sector employees, depending on whether they are employed in the federal government, provincial government, armed forces or autonomous and semi-autonomous organisations.

66 According to ILO’s Social

Protection Floor databank, the pension rates are extremely low: Around 2.3% of the total population is receiving an old age pension.

Employees, except family labourers and self-employed are entitled to work injury, disability, medical and survivors benefits. Benefits are paid as a lump-sum, except for non-permanent disability. Employers pay 6% of payroll to the Employee’s Social Security Institutions (ESSI) in each province, which pay the benefits.

67 A Voluntary Pension System (VPS) was established in 2005 and launched in 2007, it is open for self-employed. Pakistan has also a number of non-contributory social assistance schemes: Bait-ul-Maal food and income transfer program, Child Support Program, Punjab Female School Stipend and the Benazir Income Support Program (BISP) that aims at covering 3.5 million families.

68 There is also a state-

based option for Zakat and Ushr, the Islamic founded social welfare. The funds are directed into various programs such as educational and medical assistance.

66 Zakat, which is the main contributor to

the system, requires Sunni-Muslims, who can opt out of the state based system, pay 2.5% of their financial assets per year.

69

There are also two major labor market programs: i) the People’s Works Program, which created 228,000 jobs in the period 2008-2010; and ii) the National Internship program that is designed to benefit young unemployed postgraduates and graduates all over the country. The latter has reached 22,800 beneficiaries, and was almost equally distributed among male and female.

19

General Economic Performance

Key Facts70

(2013 est.)

GDP GDP

per capita (PPP)

GDP real growth

HDI (2012)71

Gini Index (2008)

237 billion US$

3,100 US$

3.6 %

0.515 30.6

176 of 229 countries

147 of 187 countries

119 of 136 countries

The Human Development Index (HDI) measures the average of a long and healthy life, access to knowledge, and a decent standard of living. This Gini Index is measured if income were distributed with perfect 'equality', the index would be zero; if income were distributed with perfect 'inequality', the index would be 100. In terms of the ranking, the first country has the highest inequality, while the number 136 has the highest equality.

Doing business72

Control of corruption

Government effectiveness

Rule of Law

128 of 189 countries

-0.74 (2007) -0.46 (2007) -0.88 (2007)

-1.06 (2012) -0.79 (2012) -0.91 (2012)

A high ranking on the Ease of Doing Business Index means the regulatory environment is more conducive to the start-up and operation of a local firm.73 The selected Governance Indicators cover the years 2007 and 2012, and ranking from ‐2.5 to 2.5; i.e. negative tendencies below the zero mean and unit standard deviation, score negative measurements.74

Pakistan has been stuck in a low-income, low-growth trap. The economic growth has averaging about 3.5% per year from 2008 to 2013. Some key challenges that affect the economy are political instability, sectarian violence, recurring floods, growing poverty and a growing population. Especially the growing violence has compromising the stability of the country. The government embarked a stabilizing program of fiscal and structural reform in 2008, supported by the International Monetary Fund (IMF). Reducing poverty has been impressive: Poverty headcount ratio at US$1.25 a day (Purchasing Power Parity, PPP) was 21% in 2008 and reduced to 12.7% in 2011. The Gini Index has a relative good medium rating, but there has not been an increase in the Human Development Index. Pakistan’s inflation has risen fast over the last decade, peaking with 18% in 2009, and inflation is projected to stay at 10%-15%.

75 In GDP per capita Pakistan is falling behind the average of developing countries in South Asia. This is largely due to the growth of China, and the neighbour India has also overtaken Pakistan, and the gap is

projected to widen. Capital formation is behind the rest of South Asia, and has fallen in recent years, indicating that less investment is made in infrastructure and productive equipment. The Doing Business indicator ranks Pakistan medium as 128 out of 189 countries. The country scores very low on the three governance indicators: Control of Corruption, Government Effectiveness, and Rule of Law; and have been on a negative trend.

GDP per Capita (PPP), trend and forecast75

Inflation, trend and forecast76

Gross fixed capital formation (% of GDP)77

0

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Pakistan Developing Asia

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13 13

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35

2000200120022003200420052006200720082009201020112012

Pakistan South Asia

20

Trade

Trade and Foreign Direct Investment

78

2013 (est.)

Exports Imports FDI flow79

(average 2008-12) FDI Stock

25 billion US$

39 billion US$

2.4 billion US$

24 billion US$

11 % of GDP 17 % of GDP 1.0 % of GDP 10 % of GDP

With an export of 11% of GDP and an import of 17%, trade plays a relatively lower role in the economy of Pakistan. The labour intensive production of textiles and garments are the dominant export sector. A majority of these products are exported to the United States and European Union. Though the export sector is somewhat diversified, few other manufacturing industries, except textiles and garments, exist. It has left the country vulnerable to shifts in world demand. Due to Pakistan’s and India’s longstanding rivalry, direct trade between the two countries had been blocked for many years. Recently, trade relations have begun to thaw and restrictions are being eased.

80

Investor concerns related to governance, energy, security, and a slow-down in the global economy have affected foreign investment in Pakistan. A small current account surplus in fiscal year 2011 turned into deficit in 2012-2013 due to higher prices for imported oil and lower prices for exported cotton.

Trade agreements

Pakistan benefits from the United States’ Generalised System of Preferences (GSP). GSP is a unilateral trade benefit from the U.S. government, allowing duty and quota free access for some product. A country can be removed if it is violating or do not take steps to uphold the ILO Core Labour Standards. Each country is reviewed annually, by the U.S. government. Pakistan is one of the largest exporters under the U.S. GSP arrangement, with around US$131 million exported within the scheme.

81

Starting in 2014, Pakistan is a beneficiary of the EU’s unilateral GSP+ incentive arrangement, which allows duty and quota free access for some products. To be granted and continue to be granted GSP+, a country must ratify and effectively implement conventions within human rights, environmental and the eight ILO

Core Conventions. The European Parliament and European Council will examine each beneficiary country every two years.

82

A major reason for the introduction of GSP+ was that EU lost a case at the WTO in 2004 for giving Pakistan GSP trade benefits with criteria’s that did not apply to all countries.

83 EU then introduced the GSP+ with a

general criterion on vulnerability of export composition, which Pakistan did not fit within. The GSP+ legislation has been reformed in 2012 expanding the vulnerability criteria, which now fits the composition of Pakistan’s export sector.

Export Processing Zones (EPZ)

The Export Processing Zone Authority governs the ten EPZs in Pakistan. The first were established in 1980. The Special Economic Zones Act was endorsed in 2012, providing for the establishment and operation of Special Economic Zones (SEZ) and the Federal or Regional Governments may establish SEZ. According to an ILO survey from 2007,

84 the SPZs employed around

888,000 workers, exporting for around US$8 billion, mainly to the U.S., the EU and the South-East Asia; and producing products such as electronics, chemicals, garments, leather etc. Workers in EPZs are denied the right to organize.

Pakistan's main share of exports (2012)85

Pakistan's main export markets (2013)86

House Linens;

10%

Rice; 7.6%

Non-Retail Pure Cotton Yarn; 7.5%

Refined Petroleum;

6.0%

Non-Knit Men's Suits; 3.8%

Heavy Pure

Woven Cotton;

3.8%

Light Pure Woven Cotton;

3.3%

Others; 58%

EU; 20%

US; 13%

UAE; 9% Afghanistan;

8% China; 11%

Saudi Arabien; 3%

Others; 36%

21

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22

45

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