LABOUR POLICY
2002
MINISTRY OF LABOUR,
MANPOWER, AND OVERSEAS PAKISTANIS
BLOCK-B, PAK. SECRETARIAT
ISLAMABAD
Contents
Foreword 1
Background 8
Part I: Principles, Aims, and Objectives 11
Part II: Action Plan 18
Labour Policy_2002 1
FOREWORD
Since independence, four labor policies have been announced by the government in the years 1955, 1959, 1969, and 1972, which laid down the parameters for the growth of trade unionism; the protection of workers' rights; the settlement of industrial disputes; and the redress of workers' grievances. These policies also provided for compliance with international labor standards ratified by Pakistan.
Historically, the 1960s and the 1970s were a turbulent period in the history of Industrial Relations in Pakistan. Militant trade unions and equally intransigent managements were locked in endless disputes and conflicts over pay and working conditions. Strikes, go-slows, lockouts, and litigations were the most distinctive features of employer-employee relations. The concept of employers and employees working together in close cooperation to ensure productivity, profitability, and growth of businesses and security of employment was largely non-existent. There was no realization that job security and appropriate wages were critically dependent on profitability and continued competitiveness of businesses.
The atmosphere of mutual hostility and distrust, though considerably diminished, continues to bedevil industrial relations to this day. As a consequence, both the entrepreneur and labor, in fact the economy of the country as a whole, have suffered greatly. But, perhaps, labor has suffered most on account of increasing unemployment and declining real wages as both public and private sector businesses have increasingly resorted to cutbacks, relocation, closures, contract employment, and outsourcing in an effort to maintain profits and to counter pressure from trade unions. These difficulties have been compounded by exploding population and influx of Afghan refugees which have further aggravated unemployment and depressed the job market.
The progressive globalization of the economy is bringing forth even more formidable challenges and pressures. Successive governments, torn between conflicting desires for promoting welfare of the low-income classes and requirements of global competition, have had the unenviable task of balancing demands for better wages and decent working conditions on the one hand and maintaining business competitiveness on the other while at the same time ensuring increased revenues.
Today, however, a different scenario is emerging. Sobered by the negative experiences of adversarial industrial relations over the past decades, trade unions are increasingly discarding militancy while employers are recognizing the need and benefits of co-opting labor as partners-in-productivity. Both employers and trade unions are progressively getting involved in bilateral dialogue as there is a growing realization that the common interest of both employers and employees is best served by securing business profitability and growth. Enlightened elements within labor and employers' organizations have come together to form the Workers Employers Bilateral Council of Pakistan (WEBCOP) and issued a joint declaration to fully respect each other's rights. WEBCOP emphasizes the need for an organized and sustained dialogue between employer and labor organizations based on bilateralism where the government adopts the role of a facilitator.
The Constitution of the Islamic Republic of Pakistan and international labor standards render definite obligations upon the State for the realization of human rights for all citizens, equally for men and women, young and old, Muslims and non-Muslims. In acknowledgment of these obligations, a new Labor Policy has been formulated (as the first after 1972). This Policy will guide administrative, legal, and judicial actions of government, employers, and workers in realizing labor rights and their welfare along with promotion of social justice. The Government believes that such collective commitment to equity is necessary to achieve and sustain rapid economic growth in a globalized economy.
The Government's vision for a new Labor Policy focuses on dignity of labor, strengthening bilateralism, elimination of animosity and antagonism by fostering a trust-relationship between employer-employee and promoting social dialogue. The government is firmly of the view that both industrial growth and decent working conditions can be achieved only through peace and tranquility in the industrial sector. This is only possible if there is an awareness and understanding between workers and employers of their reciprocal rights and obligations with all-round commitment to higher productivity.
After an extensive tripartite dialogue and consultation, conducted over many months, a consensus has evolved regarding the future shape and course of industrial relations in Pakistan. In the light of this consensus, our Labor Policy has been developed within the following framework of Objectives and Initiatives:
1. Support to bilateral and tripartite mechanisms for policy formulation, self-regulation, and peaceful resolution of disputes.
2. Regulatory authority of government to be exercised only when bilateral mechanisms fail to resolve disputes.
3. Consolidation/simplification of labor laws.
4. Structural legislative changes to provide easy access to speedy justice in the labor sector.
5. Promotion of employees' social security and social insurance programs and improvement of labor welfare institutions namely; Workers Welfare Fund, Employees Old Age Benefit Institutions and Provincial Employees Social Security Institutions.
6. Progressive extension of labor laws and welfare measures to informal and unorganized sectors.
7. Special emphasis on workers' children education.
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8. Combating child and bonded labor.
In order to attain these objectives and build upon these initiatives, concerted action by workers, employers, and government is necessary. On its part, the government pledges to take prompt and comprehensive actions.
The government is both proud and grateful to have based this Policy on broad-based consultations with workers and employers, especially through the national Tripartite Labor Conference held in July 2001. Only a sustained collective effort by workers and employers will ensure that the future governments renew commitment to this Policy by continuing with time-bound actions for achieving major objectives of this Policy.
The contribution and effort of the team at the Ministry of Labor led by the Secretary, Mr. Farhat Hussain as well as the inspiration provided by the Late Mr. Omar Asghar Khan is deeply acknowledged.
(OWAIS AHMED GHANI)
Minister for Labor, Manpower & Overseas Pakistanis
Islamabad
23.9.2002
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Bilateralism is the core element of the new Labor Policy. The principles, objectives, and action program of the policy concentrate on the creation of a relationship of trust and cooperation between the employer and employee under the strategy of least intervention by the state. A visionary approach adopted in the Labor Policy is a focus on dignity of labor, a fair balance of bargaining power, and productivity-based work culture with fair and equitable distribution of gains and proceeds of the industry amongst employees, entrepreneurs, and the society at large.
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The Cabinet accorded approval to the Labor Policy 2002 in its meeting held on 21.09.2002 under the Chairmanship of the Chief Executive of Pakistan, General Pervez Musharraf.
BACKGROUND
A fairly elaborate labor market regulatory and institutional framework was evolved during the British Rule in India prior to the independence of 1947. In the post-independence period, this system was adopted by Pakistan to regulate industrial relations. The crucial area of concern for the Government was to provide a strong base for industrialization and economic development.
At the time of partition, the law on the statute book to regulate relations between employers and employees was the Industrial Dispute Act, 1947. This pre-partition Central Act, for the first time recognized that workers have rights other than those conferred by contract and/or the ordinary law of the master and servant. This Act held the field till the promulgation of the Industrial Dispute Ordinance 1959 (IDO) enforced by the first martial law regime. The next piece of legislation was the West Pakistan Industrial Disputes Ordinance 1968 that repealed the IDO. The said legislation was replaced within a short time by the Industrial Relations Ordinance 1969 (IRO).
Landmark changes in the industrial relations system were made consequent upon the announcement of the third Labor Policy in 1969. This policy resulted in the introduction of legislation guaranteeing freedom of association and the right to collective bargaining in accordance with ILO Conventions 87 and 98 ratified by Pakistan. A system of equitable distribution of gains was put in place in the form of enactment of laws relating to workers' welfare and the minimum wage of workers. Further reforms in the system of labor legislation were made as a result of the fourth Labor Policy of 1972, which envisaged workers' participation in the management, extension in the scope of labor laws, enactment of laws relating to employees' old-age benefits, workers' children education, introduction of statutory bonus and group insurance schemes, establishment of quasi-judicial Labor Policy_2002 9 bodies namely; National Industrial Relations Commission and the procedure for redress of workers' individual grievances.
It was generally perceived by employers that the Labor Policies of 1969 and 1972 were heavily tilted in favor of labor. Consequently, the industrial relations balance was disturbed. Employers were further aggrieved by the 1970s Nationalization Policy. Several issues that surfaced as a consequence of the changes were: the employers' demand for the power of hire and fire; the role of outsiders in trade unionism; low productivity; multiplicity of trade unionism and endless litigation between workers and employers due to unfair labor practices.
In the subsequent years, the need was keenly felt to reform industrial relations in order to restore investors' confidence by bringing balance and harmony in employer-employee relationship. A number of efforts were made by successive governments in this direction. Three tripartite labor conferences were held in the years 1977, 1980, and 1988 and two commissions namely; Labor Commission of 1978 and Labor Welfare Commission of 1987 were set up for suitable recommendations to address the issues. Also, two Task Forces, one on social security and the other on labor were formed in 199