Growth of the informal sector and labour exploitation

 By Alauddin Masood

Privatisation, deindustrialisation, export-led growth, poverty, inflation, downsizing of state enterprises and rapid urbanisation has led to a phenomenal growth of the informal sector, over the past two decades, in most of the developing countries, including Pakistan.

Constituting some 65.8 per cent of the total work force, home-based workers, in particular women, who constitute a predominant number among workers in the informal sector, are one of the most exploited segments of the work force in Pakistan, according to Actionaid.

A Labour Force Survey in Pakistan, conducted during 2001-02, estimated the employment in the country's informal sector at 14.746 million against 12.318 million in 1996-99, representing a share of 66.5 per cent over non-agricultural employment and 38.5 per cent over total employment.

The industries that experienced the most rapid growth of employment in the informal sector over the period included manufacturing (2.2 per cent of average annual growth rate) and business services, including transport and communication, (2.3 per cent).

The growth in the informal sector has led to an accelerated growth in Home-Based Work (HBW) and HBW Force, predominantly comprising of women. In fact, more than three fourths of urban employment for women takes place in the informal sector due to the fact that an increasing volume of work is now being pushed out from the large-scale production units through sub-contracting home-based work.

The widespread displacement of office/factory work to homework has provided a more flexible, but also more exploited work force. Generally considered a residual sector, it was believed that the "formalisation" of informal sector would come in due time, but the prediction has, thus far, proved not to hold.

Further, the informal sector is highly widespread and heterogeneous and HBW highly unorganised and the workers engaged in it, in particular the women, the worst victims of exploitation by the sub-contractors. Often paid at piece rate, the income of home-based working women is too meager to even afford/buy the basic necessities of life. Further, their work is of casual nature and they have no information for which factory they are working. If they meet an accident during work, they do not get any compensation or facility. They work for 14 – 16 hours a day, but are deprived of the social security benefits, which are generally available to factory based workers. Though there is no specific data available to cover home-based workers, their work is usually in sectors like garments, bangle work, sack stitching, shoe stitching, carpet weaving, packing and football stitching.

Notwithstanding the fact that working women are making a significant contribution to the national economy neither their work is recognised nor home-based working women have the status of workers or their work is incorporated in the country's statistical data. In other words, home-based work by women contributes significantly in the overall economy of the country, but it remains highly unrecognised.

Further, the wages of Home-Based Workers, in particular the women, are low, working conditions are harsh; while employment benefits and any mechanism for social protection do not exist at all. On an average, working women in the informal sector earn less than half the weekly salaries of men. Due to growing inflation, unemployment, electricity, gas and flour crisis, the financial condition of these home based workers, who are playing a vital role in the country's development, is constantly getting worse. A 45-year old home based worker, Naghmana working for a garments factory said that she has nothing to do with the observance of international Labour Day or similar other days of this nature; I know one thing only that I can't afford any holiday, because I have to feed my family of six. I have no day-off, even on a Sunday or Friday.

The introduction of liberal investor-friendly polices has further weakened the role of workers and trade unions, denying them the right to collective bargaining, union membership or freedom of association, right to strike or form and join a trade union. The exemption from labour legislation allowed to export processing zones (EPZ), practically denying all rights to workers in those zones, has further added to the gravity of the problem and the woes of home-based workers in EPZs. In short, the rights of women, especially as workers, have undergone significant transformation, spurred by the onset of Neo-liberal economic policies in South Asia and the Macro Economic environment in the 1990s.

As a result of persistent struggle by the workers, the Government of Pakistan recognised home-based work in its labour policy 2002. However, no further action seems to have been taken to translate those policies in to law so far. Besides, Pakistan has yet to ratify ILO Convention 177, which recognises the rights of home-based workers for social security benefits, gratuity, medical facilities and increase in wages, and calls upon the states to give a legal cover to these rights.

Since women's bargaining and organising abilities are weak, their chances of empowering themselves are also low. However, skill and leadership training programmes initiated by ActionAid, CIDA, Women Workers Helpline and Labour Education Foundation and also women workers direct meetings with contractors and investors have, of late, brought about a little improvement in their wages.  Now, these pro-women emancipation organisations are advocating for social protection and signing/ratifying ILO Home-Based Convention C-177. In this regard, these organisations have also developed a Social Protection Bill, covering benefits like sickness, maternity, injury compensation, disablement pension/gratuity, death grant and survivor's pension for women working in the informal sector.

Recently, Prime Minister Yousuf Raza Gilani announced minimum wages for the workers in the formal sector. Justice demands that the benefit of the minimum wages should also be extended to the workers engaged in the informal sector or the wages of Home-Based Workers should be settled through collective bargaining.