Informal employment refers to employment, which occurs outside the formal legal and regulatory environment, or which fails to give workers minimum set of social protections. This is the view in the analysis published by the International Labour Organisation, Geneva, survey titled "Globalisation Economic Policy and Employment - Poverty General Implications".
Till this date, neither the professional labour leaders in this country nor any of the officials in the government in power have realised that the workers of the informal sectors in this country, hitherto beyond the scope of the existing legislation on social security, nor are they entitled to gratuity or any other protection under the EOBI, Workers Welfare Funds, nor are they covered under the Industrial Relations Law or by the Social Security Law to extend to the unorganised sector social justice.
In this respect it is essential to mention that in neighbouring India, a National Commission for Enterprises in the Unorganised Sector was established in 2004 which has come up with the recommendations and suggested a remedy to meet this sector. This Commission has recommended the enactment of the "Unorganised Sector Workers Social Security Bill 2005' in India. It describes various measures of social security for workers in the informal sectors of the Indian economy. Since we claim to be the government led by a party which believes in the emancipation of labour in this country, it would be worthwhile to examine, as to how far social security law be extended to the unorganised sector workers in this country.
The High Price Consumer Index is not necessary or sufficient condition for achieving social security in the unorganised sector. Persons employed in the informal sector will comprise of those persons who during the given reference period are employed in at least one production unit of an informal sector irrespective of their status in employment and whether it is their main or secondary job. This is also the view of the International Labour Office, who in its 15th International Conference on Labour Statistician have adopted some resolution in which this aspect of the matter has been covered. Production Units of informal sectors are a form of unincorporated enterprises owned by households for which no complete set of accounts are available which would permit clear distinction of production activities of the enterprises from other activities of their owners and the identification of any flows of income and capital between enterprises and the owners. Presently, the workers in the informal sectors have little or no security of employment or income. Their earning tend to be very low and fluctuate more than those of workers in the organised sector. For example incapacity may leave the workers of the unorganised sectors and his family without any income to survive. Workers in the informal economy is often intrinsically hazardous and the fact that it takes place in an unregulated environment makes it still more so. This has been recognised in a recent Report No VI prepared after International Labour Conference 87th Session ILO at Geneva in the year 2001. Neither legislature nor any trade union leader in this country have undertaken any research on this aspect of the matter but some attempt has been made in the neighbouring countries where they have concluded that the preponderance of the informal economy compounds problems of extension of social security in several different ways. Firstly different segments of the informal workforce have different needs in which the immediate needs take precedence over the long-term needs. Secondly, lack of organisation amongst the informal workers can lead to absence of a voice and demand and lastly delivery and administrative costs tend to strain the weak government structures. Recognising the situation of the workers in the informal sector, the government of India has taken the initiative and appointed a National Commission for Enterprises in the Unorganised Sectors in the year 2004. This Commission has submitted its recommendations in May 2006 and even suggested the Draft Bill. This Draft Bill is termed as the "Unorganised Sectors Workers Social Security Bill 2005." The bill provides for the National Social Security Scheme for the informal sectors. The present government if sincere in helping the cause of the workers of this country should make efforts through the Pakistani High Commission in New Delhi to obtain a copy of the Report of the said commission as also the copy of the Bill submitted. And to examine it, through research scholars not only in the Ministry of Labour at Islamabad but by all the four Provincial Ministries of Labour so as to find out as to how far the Bill and the recommendations of this National Commission can be taken advantage of and adopted keeping in view the peculiar nature of our society in Pakistan. It is imperative that the unorganised sectors should be first defined as all unincorporated private enterprises who are engaged in the production and sale of goods and services invariably operate upon on proprietary or partnership basis the employed less than 10 persons. There have been also the findings of the report of the Social Security for the Unorganised Sectors in India. No doubt, this is a difficult task. Recently, a former Finance Minister of Pakistan in a television show had revealed that the entire retail sector of Pakistani economy only gives income tax between Rs 6 to 7 crores. The retail business is flourishing in Pakistan, yet the retail business contributes peanuts in the economy of this country.
It is necessary to place on record that an Indian Bill, which has been placed for approval in the Parliament that seeks to encompass 90 percent of the current work force in the unorganised sectors within the definition and has proposed to cover 300 million workers within the period of five years. This coverage includes benefits in terms of health, maternity benefits, disablement benefits, old age security and even life insurance. This would seek to alleviate sufferings of the people who are not adequately hedged from shocks related to sickness, death, old age and various other infirmities. In India, benefits recommended include health care of the workers and family in the form of benefits to cover hospitalisation, survivor benefits in the event of accidental death of the main breadwinner and the maternity benefits for self and spouse as the case may be. It also refers to life insurance old age security in the form of monthly pension to those workers who are below the poverty line households and also includes provident funds for workers belonging to the above poverty line households.
The National Minimum Social Security should be based on the insurance model for health and life insurance and the entire claim should be based on contributions both from the workers, employers and the government. In India, it has been proposed that this contribution should be at the rate of Rs 1 per day or Rs 365 by each party per year. Since the majority of the Unorganised Sectors in Pakistan did not have directly identifiability employers or even in some cases they are self-employed, it is for the government to pay contribution of the employers in such cases.
Social Security measures should be primarily public policy, instrumental for the direct sustenance of the living standards of workers and citizens in the industrialised countries absorbing over half of the total government's expenditure. In order words, the basic idea of social security should be to use the social commission to prevent deprivation and vulnerability. Foreign Research Scholars have suggested two approaches of social security in this behalf. One being growth-mediated security, meaning a strategy to promote economic growth. Secondly, support-led security meaning a method adopted by resorting directly to wide-ranging public support in the domain, such as income re-distributed health care education and social assistance so as to remove destitution without waiting for transformation in the level of general affluence. Success may have to be based on discriminating use of national resources, efficiency and public services and a redistribution bias in their delivery.
There is a difference between the above two approaches. It is necessary to elaborate interconnections and contrasts in the two methods to be pursued. It is necessary to recognise that the distinction invariably is not a question of activism versus disengagement by the provincial governments. Various countries, which have pursued the strategy growth mediated security have often been extremely active in bringing about economic growth in disseminating its fruit. Real source of contrast lies in the fact that various countries have suggested use of strategy support-led security and have not waited to grow rich before resorting to large-scale public support to guarantee certain basic capabilities.
No doubt, critics may point to the low-income developing state of Pakistan as a problem in enacting such a Bill. However, it need not be overemphasised that there may be other problems in which preparation of the bill and its features all have to be catered to. Secondly, there may be a situation where some lobby may criticise the Bill but the social security measures undertaken by other developing countries as a whole. It is keeping in view the peculiarity of the unorganised sectors in Pakistan that the aforementioned Bill is being suggested.
No doubt, social security is the gradual process which is inextricable tried to the levels of development, industrialisation and informality. There may be critics who may be sceptible of the chance of success of such legislation keeping in view the low level of income of Pakistan economy. Others may even criticise as to the extent of the level of such a bill, keeping in view the present level of development. Developing countries like Pakistan ought not to aspire for universal coverage of their population. No doubt historically social security system that are widespread in developing countries are the outcome and the cause of improved living condition and productivity levels in those countries. We can learn a lesson from the developing world through their industrial society for social protection and the need to grow indigenously on its own. We should not be expected to transplant such a scheme into the country or region which may lack the necessary environment for nurturing and sustaining such institutions. In countries such as Germany and the US, the coverage of social security has, no doubt, increased gradually. Some foreign economists suggest that growth leads to social security and not other way around. However, it goes without saying that economic growth need not necessarily leads to increased social security. Informal employment can frequently lead to growth more rapidly than formal employment sectors both during the economic turndown and during the period of relatively rapid growth. However, studies in other countries have shown that even in countries with strength rate of growth informal sectors has grown simultaneously. If economic growth does not achieve increased security and on the contrary reduces coverage of the existing social security legislation, government action must follow measures aimed at compensation for inequality by economic development for all. There should be a very clear vision of economic growth.
It will not be correct to compare a developing country like Pakistan with countries such as Japan, China, Germany and the US and to arrive at a conclusion that since they did not have a social security programme when they were developing, the existing developing world should follow their examples. We should not overlook the fact that already the developing countries have not faced the problems of population, presently being faced by the developing countries specially Pakistan. Some claim our present population is 180 million. The President of this country, however, in his address claimed that the population of Pakistan is 200 million. In the developing countries the share of the informal workforce is exceptionally large. This is true in Pakistan also. In Latin America, Africa, South Asia most of the increase in the urban force has taken place in the informal economy. In Pakistan, if agriculture is included, then almost 93 percent of the workers are found in the informal economy and this proportion is increased over the last few years due to total stagnation in the economy and development in this country. It will be therefore brutal to expect that 93 percent of the workforce to fend itself, especially when this sector has the least income level and lacks organisation amongst them leading to absence of a voice. All this is due primarily to the fact that all these years, all government in this country took absolutely no notice to ensure the extension of the Labour Laws to the informal sectors of the economy of Pakistan.
Pakistan may be a low-income economy. It may be growing. The recent survey titled "Trade Union and the Informal Sectors" by Global Labour Institute reveals that the informal sectors are about 11 percent in Ireland and New Zealand, 19 percent in Germany and 20 percent in Italy. This, if compared with Pakistan, is merely nominal keeping in view the peculiarity of the economy of this country coupled with the characteristics of the unorganised sectors. Promising social security to 93 percent of the work force is an achievable dream.
If there is a will to give protection to the unorganised sector in Pakistan, then it is high time that the legislature to come forward. Legislatures in this country at the time of elections invariably come up with slogans that they are contesting the election for the welfare of the poor people of this country. Let these slogans not remained hollow but be converted into reality. The people of Pakistan expect their legislators to stand up to the claims and extend social security to the informal sector. It is unfortunate that almost all the political parties of this country have a labour wing, yet none have ever thought of the informal sector workers of this country.
(The writer is an advocate of Supreme Court)