VZCZCXRO8240
RR RUEHLH RUEHPW
DE RUEHIL #4888/01 3201211
ZNR UUUUU ZZH
R 161211Z NOV 07
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 3263
INFO RUEHC/DEPT OF LABOR WASHDC
RUCPDOC/USDOC WASHDC
RUEHNE/AMEMBASSY NEW DELHI 2249
RUEHLH/AMCONSUL LAHORE 4076
RUEHKP/AMCONSUL KARACHI 8083
RUEHPW/AMCONSUL PESHAWAR 2606

UNCLAS SECTION 01 OF 02 ISLAMABAD 004888 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAID ECON ELAB EINV ETRD SOCI PK
SUBJECT: SIALKOT ENTREPRENEURS DISCUSS SKILLED LABOR SHORTAGES, 
STATUS OF CHILD LABOR MONITORING 
 
REF: ISLAMABAD 1178, 06 ISLAMABAD 22157 
 
¶1. (SBU) SUMMARY: In a recent visit to the eastern Pakistani export 
center of Sialkot, Economic and USAID officers discussed the status 
of child labor monitoring and human resource development with 
private sector leaders.  Our contacts were generally upbeat in their 
assessment of business conditions, but cited government inattention 
to human resources and infrastructure as particularly troublesome. 
The Sialkot private sector continues to take the lead in both 
arenas, planning additional training centers and inaugurating the 
country's first privately financed commercial airport.  Our contacts 
believe that despite Nike's 2006 pull out of Sialkot on child labor 
concerns, factories are in compliance with international child labor 
standards.  However, nine months after the "Sialkot Initiative" 
pledged to expand independent monitoring of labor conditions, little 
has been done.  END SUMMARY. 
 
¶2. (SBU) EconOff and USAIDOff traveled to Sialkot, the center of 
Pakistan's export-oriented surgical tool, apparel and sporting goods 
industries November 1-2.  Roughly 70 percent of the world's 
hand-stitched soccer balls are produced in and around the city. 
While most industries report continued growth in export earnings, 
our contacts see inadequate skilled labor as a threat to the city's 
future prosperity.   Raja Ashfaq, CEO of surgical tool maker New 
Mark Industries, believes that his firm will be unable to compete 
internationally in the next five to ten years unless the public and 
private sectors address the lack of skilled labor.  Waseem Abbas, 
Vice Chairman of the Surgical Instruments Manufacturers Association 
(SIMAP), opined that government training facilities and apprentice 
programs do not adequately meet private sector needs.  SIMAP and 
other business associations plan to start their own training 
centers, independent of government funds. 
 
¶3. (SBU) Private sector leadership is not restricted to vocational 
training.  Local entrepreneurs have taken the lead in the city's 
development, following inadequate government attention to Sialkot's 
infrastructure.  Participating Sialkot entrepreneurs contribute 0.5 
percent of their of their export earnings to the Sialkot Development 
Fund, which has funded road improvements, the creation of a dry 
port, and the country's first privately financed commercial airport. 
 Despite the private sector's success, SIMAP Vice Chairman Abbas is 
concerned that the national and provincial governments now see 
Sialkot as "self sufficient" and will allocate fewer financial and 
other resources to vocational training center and infrastructure 
development. 
 
INDEPENDENT MONITORING OF CHILD LABOR 
------------------------------------- 
 
¶4. (SBU) All of our contacts in the sporting goods and surgical 
tools industries believe that child labor violations do not occur in 
large factories in Sialkot.  They did admit that violations had 
occurred in the past, particularly in subcontracted at-home soccer 
ball stitching centers.  Most export-oriented production factories 
have put into place extensive internal child labor screening 
procedures at the request of their international clients. In 
addition, the ILO set up an Independent Monitoring Association for 
Child Labor (IMAC) in 2002 to monitor and work against child labor 
in the sporting goods industry. The association is funded by 
participating members, all soccer ball manufacturers located in and 
around Sialkot. Despite IMAC's 2007 "Sialkot Initiative" to expand 
the association's mandate to monitor all labor conditions in 
multiple industries, little has been done. 
 
¶5. (SBU) IMAC representatives and factory managers reported to 
EconOff that nine months later, most of the "Sialkot Initiative" 
proposals have not been implemented.  While monitors do report on 
working conditions other than the presence of child laborers, IMAC's 
members are still restricted to soccer ball manufacturers.  IMAC CEO 
Nasir Dogar reported that other industries have not shown interest 
in joining the association.  Several factory owners, including those 
at surgical tool maker Tecno Instruments, professed ignorance to 
IMAC's existence. 
 
¶6. (SBU) IMAC CEO Dogar faults the Government of Pakistan (GOP) for 
not encouraging other industry groups to "buy in" to the monitoring 
program.  He described the GOP's monitoring efforts as an 
"uncredible deterrent," fielding only four monitors to inspect the 
region's more than 5,000 stitching centers.  Dogar suggested that 
additional financial support by the ILO, coupled with increased GOP 
interest in the program, would be helpful in expanding IMAC's 
monitoring mandate. 
 
¶7. (SBU) Increased scrutiny of child labor conditions in Sialkot's 
sporting goods industry came after Nike's 2006 decision to cease 
 
ISLAMABAD 00004888  002 OF 002 
 
 
doing business with a Sailkot-based supplier of soccer balls due to 
child labor concerns. The Sialkot area had been closely monitored 
and certified by the International Labor Organization (ILO) and 
UNICEF as free of major child labor violations for several years 
prior to this incident.  In response to Nike's 2006 pullout, the ILO 
called for an independent investigation of IMAC's functioning. 
 
¶8. (SBU) Although IMAC received a passing grade by the ILO 
assessment team, it was evident to the ILO that the issues 
surrounding Nike's pullout of Sialkot could not be addressed under 
IMAC's previous mandate.  The ILO convened a stakeholders workshop 
in Islamabad in February 2007 to discuss expanding the Association's 
area of focus.  Conference participants produced the "Sialkot 
Initiative" aimed at enlarging IMAC's program scope beyond child 
labor to address all core international labor standards. 
Stakeholders agreed to seek increased government inspections and the 
expansion of IMAC's oversight to include industries other than 
soccer ball manufacturing. 
 
COMMENT 
------- 
 
¶9. (SBU) COMMENT: All of our contacts were unanimous in their 
assessment that the GOP is ineffective at both providing skills 
training and enforcing labor laws.  In Sialkot, the private sector 
took the initiative in infrastructure development and independent 
labor monitoring because it was in its self interest to do so. 
Convincing international buyers that child labor is a thing of the 
past benefits the bottom line.  Without active government monitoring 
of labor law compliance, there is an increased risk that factories 
with substandard labor conditions could go unnoticed. 
 
¶10. (SBU) Post supports any assistance that can be provided to the 
ILO and IMAC to ensure that the "Sialkot Initiative" reforms succeed 
in transforming IMAC from a strictly child labor-oriented 
association to a national model for broad based, private sector-led 
labor initiatives.  We will continue to press the GOP to copy the 
Sialkot initiative on a national scale as one means to make 
Pakistan's exports more competitive.  END COMMENT. 
 
PATTERSON