Dr Aliya H. Khan is a labour economist with a PhD in Economics from University of Illinois and an MA from the University of Chicago. She is a Professor of Economics at the Quaid-i-Azam University, Islamabad and focuses on the teaching and research in Labor Economics. BR Research had an opportunity to sit with her in Islamabad and talk about the Labor market dynamics in light of CPEC, particularly, what major challenges in labor rights, labor laws and employment is the Pakistani labor force seeing in the next few years as CPEC investments come through, and where are the provincial and federal governments found lacking. Selected excerpts are produced below:
BR Research: You made some strong comments about CPEC as a speaker at PIDE's annual conference in December 2016. So we want to start from that before we go into the specifics.
Dr Aliya H. Khan: The CPEC is a wakeup call to give attention to some of the structural issues in our Labor market, such as the informal worker issue, issue of inducting more women into what is called the organised Labour force, or even observing the Labour standards that Pakistan has ratified in terms of international commitments, as well as its constitutional obligations.
The true return to investments in CPEC will only come if we focus on human resource development and human capital formation, such as what China actually did in terms of first controlling its population and then channelling its workforce into productive activities.
If we are going to be working so closely with China over the next ten to fifteen years, we should definitely make our Labour market dynamic by adopting the better features of the Chinese Labour market. I'm saying this because not all features of the Chinese Labour market are very admirable, in terms of their respect for human rights and Labour rights. I think it is going to be a very difficult time for Pakistani policymakers in terms of balancing the Labour rights versus the Labour employment generation issues.
BRR: What does the constitution say about Labour and what are the constitutional roles of the federal and provincial governments regarding the Labour market?
Dr Aliya: The first thing is that the constitution gives freedom to organise, which is basically trade union activity. This would go into a very long debate, but over the years, especially, after the setting in of the wave of globalisation and privatisation, there has been a move to make Labor laws more employer friendly rather than employee or worker friendly. And all this is done in the name of simplification, rationalisation and consolidation of Labor laws for reducing the cost of doing business.
The constitutional obligations in terms of freedom of association and non-discrimination in employment and provision of social security to all workers are not yet fulfilled. Neither have laws been effectively implemented in light of Pakistan's ratification of all the eight fundamental ILO conventions covering child Labor, bonded Labor, non-discrimination, minimum age at employment, etc.
That is why I feel this is a very challenging time. Whether we will be swept along with CPEC into the same mode of appeasing the employer in terms of reducing the cost of doing business, or whether there would be an improvement in the scenario of ensuring Labor rights along with promoting productive employment which benefits both workers and employers.
I would really advise the provinces to at least include these considerations in the setup of CPEC related special economic and export processing zones, because provinces are also now responsible for framing of Labor legislation post-eighteenth constitutional amendment in addition to the implementation of Labor laws, which had always been with the provinces.
BRR: You have been speaking about the need for a Labor market information system (LMIS), because we don't just need aggregate and macro numbers about percentage of men and women in certain sectors but we need to analyse some of the granular components of the Labor market. What would such a Labor market information system look like?
Dr Aliya: Since we haven't paid attention to this sector, it is going to be a revolutionary exercise in terms of getting some baseline Labor data, at least for the areas where mapping of the economic zones and export processing zones has been done. And that is not a bad way to start actually, to get the concerned Labor departments to start collecting information on a district-wise basis on the availability of the Labor force participants that are potentially available to supply Labor services into the economic and export processing zones.
Economic zones should not be engaging Labor through contractors from other areas and bringing them to work in those export processing and economic zones, because that would defeat the purpose of local human resource development. This is why a location-specific mapping of skill requirement needs to be done with regards to the industries that are going to be set up in those economic zones. Besides, the skills-supply data in that area should be broken down by gender. I think if we miss the golden opportunity on mainstreaming women into these economic and export processing zones, we would fail to achieve the true returns from the CPEC investments.
BRR: You earlier said "better features of Chinese Labor market". What are those?
Dr Aliya: There is a focus on the linkage between workplace discipline/environment and Labor productivity. In terms of the attention to skill up-gradation through training/re-training; and also better regulated working conditions, in terms of provision of certain basic features related to occupational health and safety measures - all of them feed directly into productivity.
Pakistani workers are generally not screened for occupation-related diseases in the event of illness, or days off work due to poor health. So, I think just in terms of maintaining a strong and productive Labor force, probably, in a very technical way, they would be paying more attention on the overall productive status of their workers than the employers do in Pakistan.
BRR: We have been hearing about productivity differences between Pakistan, India, Vietnam, China, but do we have datasets that talk about sectoral productivity? For instance, what is the productivity of textile workers, as against leather and foot wear workers, in a comparative regional sense, perhaps?
Dr Aliya: There are only case studies which PIDE or SDPI have done in the past. But the calculation of productivity on a sectoral basis, which was earlier done by the Planning Commission, that exercise is not going on at the moment.
BRR: Don't we need that if we want to capitalise on CPEC?
Dr Aliya: Of course! But this is what the whole confusion about the context of the Labor market in Pakistan is. Previously, the Labor policy and Labor rights issues were looked at by the Labor departments and work/research associated with employment issues encompassing productivity and the planning and forecasting of skills within the supply-demand framework used to be looked after by the Planning Commission. However, after devolution, the role of the federal Planning Commission has become very unclear in terms of this aspect. And the planning departments at the provincial levels are not tasked to do this. So, really no one is looking at this.
BRR: What is the structure of institutional arrangement so far as the Labor market is concerned in Pakistan? What are the advantages, disadvantages, failures, as against the institutional arrangement of Labor market best practices?
Dr Aliya: The whole Labor sector is very fragmented in terms of institutional arrangements. I wonder how Pakistan can have a comprehensive Technical Vocational Education and Training (TVET) delivery system if there is such a fragmentation in the delivery of TVET.
Take, for example, the case of vocational training and technical education of the potential work force: it is spread across three or four departments at the provincial level. The Labor department offers vocational training; the education department offers technical education. The vocational/technical training centers come under the Labor department, but the technical education institutions or polytechnics come under the education department. In some provinces, even the industries department has some training facilities, which adds yet another complexity. In addition, there are provincial TEVTAs as well.
In the context of female employment, the provincial women development departments are also working for skill-formation and they have their own small projects, like skills training for handicrafts, mainly with home-based workers. Thus, the issue of female Labor force participation does not get addressed comprehensively by the Labor departments in the provinces.
BRR: What about policy mandate, such as minimum wage?
Dr Aliya: Policy is the mandate of Labor departments at provincial level, since the federal government does not have this mandate anymore. But let me tell you something about minimum wage: there are significant gaps in its implementation.
I am a member of the Punjab Minimum Wages Board, which proposes revisions in minimum wage every year. But it cannot monitor it. The implementation and monitoring comes under Labor Welfare Directorate at provincial level. But there is no co-ordination between the Minimum Wages Board and the Labor Welfare Directorate; there is no systematically organised and digitised database of workers covered by the minimum wage by gender and industry. And as such there is no scope for gender analysis of minimum wage implementation.
A good and efficient Labor market information system should not only try to bring together the skill requirements and the supply of skills information, but it should also ideally track Labor welfare measures, including payment of minimum wages, occupational safety and health conditions, and other Labor rights such as freedom of association and their access to social security benefits.
BRR: You mentioned earlier in our conversation that CPEC is an opportunity to mainstream women into the workforce and that there is also a need to anticipate the skills that might be in demand. Keeping CPEC and female work force in mind, what are some of those cross-cutting sectors where female Labor force can work?
Dr Aliya: In that context, I think we have not tapped the potential of female employment promotion in light-engineering and high-tech sector. These are safe sectors in terms of being non-hazardous, such as making light-engineering and high tech products like cell phones, home appliances, etc.
BRR: Are Pakistani workers ready enough to really operate the Chinese way? Do they have sufficient level of discipline, or productivity?
Dr Aliya: That is what I am concerned about. If we are not fully prepared on the Labor skill development front for some of the CPEC projects in the planning stages, then we are not going to be ready for the operational stage for the next two or three years. Even if we start today, within two or three years we can make leaps in training the local Labor.
BRR: China is planning to set up a vocational training institute in Gwadar under CPEC, besides reportedly getting into a JV with National Vocational and Technical Training Commission (NAVTTC) in Islamabad. Do you think it would help?
Dr Aliya: This is what I have understood so far as well. However, NAVTTC isn't really into skill delivery; it's mainly into policy. They have a national skills policy document and they focus on TVET regulatory framework of standard setting, accreditation and certification. But they are not engaged in industrial workers' training. Right now, we are talking about the industrial workforce. The sort of machinery that will come, are there any local programs to train how to operate that machinery?
These are issues we academics have no answers to because I don't know what is going on in the planning stage. Has the government signed any MOU? I think the issue to raise is: what is the plan for our human resource development in the context of CPEC?
As a Labor economist, I strive to follow these issues very closely and I'm still not clear what the institutional arrangements are (for managing Labor for CPEC) in conjunction with the existing Labor-related institutional arrangements here. Are the Chinese going to revolutionise our TVET delivery system or are they going to just bring trained workers?
Copyright Business Recorder, 2017