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UNCLAS SECTION 01 OF 03 ISLAMABAD 004358 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ELAB ECON EIND ETRD PHUM KTEX SOCI PK
SUBJECT:  PAKISTAN EXPORTERS SEEK TO IMPROVE LABOR CONDITIONS WHILE 
UNIONS STRUGGLE FOR BASIC RIGHTS 
 
REF:  ISLAMABAD 1178 
 
¶1.  Summary:  While Pakistan has ratified 35 of the International 
Labor Organization's 185 Conventions on Labor Rights, including all 
eight core Conventions concerning the most basic worker rights, 
working conditions are still poor, and the labor movement has a long 
way to go to become relevant here.  Although the largest civil 
society group in Pakistan, labor unions lack the capacity to push 
for more than just basic worker rights.  Interestingly, employers 
may be the ones to improve working conditions.  A few promising 
programs are being initiated by progressive employers, primarily 
exporters, to improve worker rights compliance.  Exporters view 
enforcement of worker rights as necessary to maintain market share 
in a competitive international marketplace.  Nike's pullout of Saga 
Sports in Sialkot is a prime example of this tendency.  End 
summary. 
 
CONVENTIONS RATIFIED, BUT NO ENFORCEMENT 
---------------------------------------- 
 
¶2.  Pakistan has ratified only 35 of the 185 International Labor 
Organization (ILO) Conventions, including the eight core conventions 
that contain the rights to organize, to engage in collective 
bargaining, to equality at work, and the abolition of child and 
forced labor.  However, the ratification of these Conventions has 
not secured labor rights for the majority of Pakistan's workers. 
Enforcement is lacking and inspection regimes are viewed as corrupt. 
 When unions try to form, organizers are fired from their jobs 
without recourse. 
 
LEGISLATION NOT HELPING 
----------------------- 
 
¶3.  Despite the relatively few conventions ratified, Pakistan's 
labor legislation is relatively good compared to some of its 
neighbors.  However, the current trend is toward limiting workers' 
rights. The Finance Act of 2006, which was passed to establish the 
federal budget, included language that allowed for a longer working 
day, no compulsory holiday closures, and eliminated overtime pay for 
contract workers. In 2002, a new Industrial Relations Ordinance 
(IRO) was put into place which curbed workers' right to unionize and 
right to collective bargaining.  Solidarity Center, along with other 
labor organizations, fear the Draft Employment and Services Bill, 
which is being finalized in the Ministry of Labor before being sent 
to the Cabinet for review, will further codify the changes made in 
the Finance Act. 
 
¶4.  The provincial governments are also restricting labor rights. 
The Punjab Industrial Policy eliminated labor inspections and 
replaced them with a self-declaration system whereby employers 
themselves certify that they are abiding by all labor rules and 
regulations.  The province of Sindh joined in banning labor 
inspections and touted it as a "pro-business" move.  Sindh also 
banned teachers' associations.  This ban was later overturned by the 
Sindh High Court, but the ban reflects the lack of appetite for 
protecting labor rights in the provinces. 
 
¶5.  In addition, the labor inspection regime is notoriously corrupt. 
 Aleema Khan, Founder of the Pakistan Compliance Initiative (PCI), 
stated that many inspectors do not even tour the factories they were 
sent to inspect.  Rather, they meet in closed-door sessions with the 
factory owners to negotiate the payment for a clean inspection 
report.  Even employers in compliance must pay or risk receiving an 
unfavorable report.  (Note:  Pakistan ranks 138 out of 180 countries 
on Transparency International's Corruption Perceptions Index.  End 
Note.) 
 
¶6.  However, many observers believe that Pakistan has some of the 
best industrial relations and social welfare laws in South Asia 
despite recent legislative changes limiting worker rights.  Zahoor 
Awan, Deputy Secretary General of the Pakistan Workers Federation 
(PWF) commented the problem is a disconnect between the law and its 
enforcement.  Inspections are infrequent (if at all) and fines, if 
imposed, are usually minimal.  Awan's view is that the cost of 
compliance is often greater than the cost of paying fines for a 
labor law violation. 
 
SOME IN GOP ALSO CONCERNED 
-------------------------- 
 
¶7.  Dr. Sabur Ghayur, Chair of the Policy Planning Cell in the 
Ministry of Labor, Manpower and Overseas Pakistanis, is working on 
 
ISLAMABAD 00004358  002 OF 003 
 
 
policies addressing some of these issues.  He explained that the 
current system of labor laws and inspections is inefficient, 
mismanaged and corrupt.  There are numerous complicated and 
redundant laws that need to be simplified.  He wants to narrow it 
down to about five to six laws and anticipates an 18 month timeframe 
for this process.  Ghayur understands the need for Pakistan's labor 
laws to be in line with ILO standards in order for Pakistan to 
remain competitive in the world of global outsourcing and that 
transparent enforcement of the law is of utmost importance.  He also 
commented on how the U.S. had previously assisted on policy design 
back in the 1980s and early 1990s and suggested such assistance 
would be helpful again. 
 
CURRENT STATUS OF LABOR MOVEMENT IN PAKISTAN 
-------------------------------------------- 
 
¶8.  According to Greg Schulze, Country Director for the Solidarity 
Center in Islamabad, just under two million workers, or about three 
percent of the work force, belong to a union, compared to eight 
percent of the private sector work force in the U.S.  Union workers 
tend to be better educated than non-union workers.  While non-union 
laborers tend to be largely illiterate, 60 percent of union workers 
can read and write, however they still lack the training needed to 
organize effectively.  There is very little professional capacity, 
with unions having one strong leader, but no lower-level personnel 
to follow through with initiatives, or to groom for future 
leadership roles. 
 
¶9.  Union workers in Pakistan fall into two categories - those who 
fall under collective bargaining agreements and those who do not.  A 
growing number of them do not fall under an agreement.  Before 
employees can vote on whether or not to unionize, the union 
organizers at the place of employment must register with the 
National Labor Relations Council (NLRC).  Once they register, the 
NLRC often contacts the place of employment to notify the owners of 
the union's plans.  The organizers are then fired before a vote can 
be called.  Under current law, there is no recourse for the fired 
employees. 
 
¶10.  To date, unions have focused on enforcing existing rights and 
have avoided political action.  The majority of factories do not 
follow the law, and with the corrupt inspection system (or 
self-validation as in Punjab), there is no need to. The stronger 
unions have been able to ensure minimum wage payments and limited 
the number of working hours, but have not had the ability to push 
for better working conditions not already mandated by law. 
 
¶11. There have been a few signs of increased political activities. 
The Jamaat-e-Islami (JI), a conservative religious party, attempted 
to take over one of the largest unions in the country at the Water 
and Power Development Authority (WAPDA).  The Pakistan Muslim League 
(PML) attempted its own take over of WAPDA.  Both were unsuccessful. 
 
 
¶12.  The Solidarity Center is also working to strengthen female 
participation and leadership in unions.  More women are entering the 
work force.  The labor force participation rate for women has 
increased from 13.7 percent in 2000 to 18.9 percent in 2006 (the 
last year for which statistics are available), and that growth is in 
the industrial and trade sectors, not agriculture. 
 
EXPORTERS SEE NEED FOR A CHANGE 
------------------------------- 
 
¶13.  Although unions are struggling to improve working conditions, 
two business-led initiatives are gaining momentum in changing how 
employers view labor rights.  One is Workers Employers Bilateral 
Council of Pakistan (WEBCOP), established in 2000 by employers and 
labor leaders to promote cooperation, trust and confidence between 
workers and employers with a view to accelerate industrial 
development and social progress through decent work.  WEBCOP 
provides a bi-partite institution framework for voluntary mediation, 
conciliation and arbitration of industrial disputes. Currently, 
WEBCOP is approaching various Chambers of Commerce in order to reach 
employers to show them that labor rights are not a cost but a 
benefit to business.  Its philosophy is that better treatment of 
workers leads to greater productivity, which in turn leads to 
greater competitiveness. 
 
¶14.  The second business-led initiative is the Pakistan Compliance 
Initiative (PCI).  Its mission is to generate a competitive 
advantage for Pakistani exporters by promoting a transparent system 
 
ISLAMABAD 00004358  003 OF 003 
 
 
of verified compliance with recognized ethical business standards 
with active support of government and civil society.  Essentially, 
PCI is promoting corporate social responsibility and supply chain 
integrity for Pakistan's largest export industry - textiles. 
 
¶15.  Both of the above initiatives have been spurred further by the 
Nike pullout from Saga Sports in Sialkot (reftel).  Nike inspectors 
at the Saga Sports manufacturing center noted late wages, 
unregistered workers, and homework, which cannot be monitored or 
regulated.  Nike tried negotiations, but believed it could not work 
with Saga and terminated the contract.  This was a wake-up call for 
employers around Pakistan who provide manufacturing for 
international brands:  child labor was not the only concern for 
these buyers - workers' rights were, too. 
 
¶16.   Previously, manufacturers believed child labor was the only 
concern of international brands.  In 1999, Sialkot, the center of 
the soccer ball manufacturing industry, worked with ILO, UNICEF and 
Save the Children, UK in creating the Independent Monitoring Against 
Child Labor (IMAC) organization.  IMAC was responsible for 
inspecting soccer ball manufactures for possible child labor 
violations.  Saga Sports received a clean bill of health on this 
front. Nike's pullout prompted ILO to hold a tri-partite conference 
on the issue of worker rights, which changed IMAC's mandate and 
prompted the Sialkot Chamber of Commerce to work to make Sialkot a 
Center of Excellence in Manufacturing based on worker rights 
compliance. 
 
COMMENT 
------- 
 
¶17.  While labor conditions in Pakistan are still poor, and 
improving worker rights is low on the political agenda, labor unions 
are still Pakistan's largest civil society group.  They need to be 
strengthened and trained on organizing and managing effectively. 
Post has designed an International Visitors Program bringing 
together labor, management and government to show how all three can 
work together to promote better labor standards.  In addition, 
efforts by ILO and Solidarity Center need to be supported. 
 
¶18.  There are other bright spots on the horizon as well.  After the 
Nike pullout from Saga Sports in Sialkot, export-driven 
manufacturers saw a need for a change in labor relations.  Post 
believes it is important to take advantage of this paradigm shift. 
As part of this, Pakistan needs to focus on worker rights and 
training in order to increase its competitiveness an outsourcing 
center for international brands.  Funding for initiatives such as 
WEBCOP and PCI are an important way to support improved labor 
conditions. End Comment. 
 
Patterson