The facilities of KEPZ with regard to the exemption from labor laws has resulted in a bee-line to set up more labor-intensive industries in the Zone. The KEPZ has also been the harbinger of future Special Industries Zones as envisaged by the present government. Any move to introduce existing labor laws, some of which are archaic may lead to a decline in industrial activity in the KEPZ and will not only put a damper on industrialization of SIZs but will also send negative signals to potential investors.

B) The workers of the Special Industrial Zones must enjoy the rights available to their counterparts in the industrial undertakings in other industrial estates.

There is an urgent need to tackle the unemployment issue. The SIZs are excellent sources of providing employment to a large number of skilled and unskilled workforce. The charm of exemption from labor laws has elicited a favorable response from potential domestic and foreign investors. This should be cultivated and no steps be taken to renege from this pledge that the SIZs will be immune from the present labor laws.

C) No exemption from the Labor Laws be granted to the export processing units.

This is a very serious statement and it negates the very essence of the present government’s commitment to increase exports. An influx of more export-oriented units could be the panacea to alleviate the server balance of payments deficits and since most of the EPUs are labor-intensive, an upsurge in labor employment and increased production can be envisioned. The exporters should be allowed to effectively compete in a highly volatile world trade environment. Front loading of a worker’s salary with the benefits and facilities given thru and labor laws coupled with the frustrations from and harassment by various agencies and departments tend to divert the attention of the exporters who should concentrate on premium quality and extensive marketing of the products.

D) The Director of International Labor Organization Mr. Michael Hansenne, has taken a serious view of non-observance of its Conventions by Pakistan and the Government will become the target of severe criticism at all international forums. The human rights activists will challenge and criticize the Government for its failure to abide by its international commitments.

Pakistan is one of those countries that have ratified most of the Conventions of the ILO. There is no cause for alarm regarding any severe criticism by ILO because there are many countries where these labor laws are either non-existent or are lenient and soft. Moreover such ILO complains regarding any such non-compliances are routine affairs and are generally ignored. The contention that human rights activists will also criticize the policy also does not hold ground. If a survey of conditions in many existing industries is made, a true picture will evolve. Most of these companies are working on a contract system where the worker is getting a salary based on production and without front loading and where there is non-application of the present labor laws. Furthermore the present system is working in KEPZ and there has been non hue and cry from any serious quarters. In fact, when the Commerce Minister announced this policy, no voice was raised by ILO, Amnesty International, Human Rights Association of Pakistan etc.

E) The International Confederation of Free Trade Unions, may put an embargo on lifting of Pakistani passengers and goods by the members of its affiliated trade unions at all international air and sea ports.

This is just a wild apprehension and has no locus stand. Even People’s Republic of China has an efficient contract system and inspite of this there has been a continuing increase in China’s exports to the USA, the bastion of free speech and democracy. Moreover there has been a tremendous increase in US companies’ investment in China. The ICFTU, therefore, does not merit any weight.

F) It would be an arduous task to quantify those industrial units that have actually exported atleast 70 percent of their products in order to benefit from the Government decisions. There is always the possibility of corruption and falsification of records.

This is another hackneyed argument forwarded by bureaucracy that the private sector will resort to fraud and corruption. There are ample ways to determine whether the unit’s output is exported or sold locally. Furthermore, the various Trade Associations can be asked to assist in a survey to ascertain this factor. More importantly this system will also ensue in an approach towards the "organized" sector because the entrepreneur will have to prove is production capacity and will therefore, move away from the "Unorganized" sector which may have been catering to his production requirements.

G) The workers of most of the existing industrial undertakings, which may be declared as EPUs have unions or are enjoying the right to form trade unions. They are also entitled to various benefits under the Social Security Ordinance, the Employees Old-Age Benefits Act and a number of other laws. Implementation of the decision concerning the exemption of EPUs will amount to the withdrawal of all such rights and benefits. Such a step may be resisted by the workers and the industrial peace might be put in jeopardy. The workers may not agree to forego the rights available to them and a massive movement may be launched by the trade union leaders.

This point may cause difficulties in some units. However there have been innumerable cases where an existing system was discontinued and a contract system was introduced. A comparable study will inevitably show that a worker is more concerned with a current paycheck rather than accrued benefits. Furthermore, a worker has the right to change employers, a right very conveniently denied to the employer. Therefore, a worker will tend to work a place that provides him/her the maximum emoluments. A change in the working environment thru an official notification will compel the worker to adopt to the new working conditions. The case of workers of privatized units can be quoted as a reference.

H) The decision of the Government will amount to the Introduction of a two-track policy in the country, one for the export-oriented industrial units and the special industrial zones and the other for the remaining industrial undertakings. There will be cases where the Government will have to ensure application of different laws in adjacent industrial units. Such a step will be discriminatory in nature and will create inequalities among the workers even in units separated by a common boundary wall.

This is a valid point and there could be discrimination. However even in the present day of affairs a two-tier system operates to some extent. There are unionized units and there are non-unionized units. A contract system is in force in some units and even both systems are in operation in the same unit. Since the emphasis is on exports, therefore, a non-exporting unit may have to bear some disadvantage.

B) The concept of job security has led to a decline in productivity culminating in an addition of redundant labor force decrease in efficiency, and stagnation in quality improvement. The right to manage as demanded by employers will ensure a better efficient and willing worker.

C) There is always emphasis on the already employed worker. All benefits and privileges are geared towards this category. The consideration should also be on the zero-wage worker and all efforts be made to provide meaningful employment to the ZWW. This concept has never been properly agitated by the Unions as well as the Ministry of Labor. Thus, the cost per worker has risen dramatically.

D) There is a marked increase in the corruption syndrome. The strict and in certain cases draconian laws have induced employers to opt for deviations from compliance of these laws. These are further aggravated by the indiscriminate use by officials of penal and implementation clauses to cow down the employer. Thus the Doctrine of Necessity is unwillingly applied by the employer resulting in the unwanted element of corruption albeit in certain cases.

E) The recent announcement by the Bharat government to make the Rupee fully convertible has added to the anxiety of the Pakistany exporters. The world recession and the highly competitive approach of other exporting nations should also be seriously examined. The framework being prepared to rationalize duty drawbacks should also be taken as a factor. All these necessitate the need for a revamping of the export strategy. This policy of exemption from labor laws for EPUs is a pragmatic, praiseworthy, and functional approach. There should be no delay in its notification and eventual implementation.

F) Finally, the very fact that a need to introduce the policy of exemption from labor laws for EPUs arose is in itself sufficient proof that the present labor laws are defective, harsh, inequitable, obsolete, anti-industry, and require a thorough re-appraisal if the processes of rapid industrialization the inflow of foreign investment and an upsurge in exports are to be a reality. There is now a need for TRADE AND NOT AID. There is now a need to look positively towards the 21st century. There is now the need to build a progressive Pakistan. These are what the planners should be aiming for and not monkey-wrenching a sound policy with criticisms and complains.
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April 04, 1993