How can we protect contract and informal workers in Pakistan?

Submitted by dfabbri on Fri, 05/24/2019 - 10:12

dawn/news (23.05.2019) Social protection has to move away from schemes for formal workers towards accommodating more dynamic work patterns.

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For the next four decades, at least three million people are expected to enter Pakistan’s workforce each year. By 2050, the country may end up with as many as 181 million people needing jobs.

Not only will these people need jobs, but also access to a safety net that protects their livelihood and ensures resilience in the face of adversities like natural calamities, economic downturns and internal conflicts.

Against a global average of 11.2 per cent, Pakistan spends just under 2pc of its GDP on social protection.

Pakistan also has the lowest affiliation to pension schemes in the world. As a share of the labour force, active contributors to a pension scheme were last recorded at 5.4pc, much lower than the South Asian average of 13.7pc.

There has been virtually no change in social insurance participation and coverage in the country for decades. In fact, the percentage of workers covered hovers around single digits in all of Pakistan, Bangladesh, India, Indonesia and Nigeria that collectively account for about a third of the world’s population.

Provision of social protection is complicated not just by the mere size of the population but also the extent of informality. With a total population surpassing 200 million, Pakistan has the 10th largest workforce in the world. Over two-thirds of this workforce is engaged in informal work.

Lack of access to social protection is so pervasive across the unregulated sector that it has come to define informal employment. Think of the food stands lined across busy markets, the vendors selling balloons and toys, the rickshaw drivers, street-side cobblers, home-based stitchers, embroiders, domestic workers and now Uber and Careem drivers.

Related: How do you pay for a programme like PTI's Ehsas?

They are all part of a global informal workforce that has now crossed the two billion mark. Yet their economic contributions remain unacknowledged and they continue to have limited access to social protection — no insurance against illness or disability, unemployment, pregnancy or old age.

In recognition of this, Prime Minister Imran Khan has launched the Ehsas initiative aimed at developing social protection measures for workers in the informal sector.

The government also plans to extend registration of social insurance schemes like the Employees Old-Age Benefits Institution (EOBI) to such workers. Pakistan already has a voluntary pension scheme and EOBI has been allowing self-registration since a decade.

However, for such policies to work and for social protection programmes to be effectively designed to cater to informal workers, the magnitude and dynamics of the informal economy need to be understood.

Until recently, not much was known about the worldwide informal economy and employment. Information about Pakistan’s unregulated economy is still limited.

Given what we already know, what can we say about the challenges in extending social protection to the informal sector? What are the key deficiencies of social protection systems and Pakistan’s approach towards social protection for the informal sector?

Pakistan’s informal economy

Overall, this sector contributes one-third to the GDP, according to the World Bank's latest Global Economic Prospects. Up to 72pc of the jobs outside agriculture are in the informal sector. Of this, three-fourths are taken up by women. Moreover, the share of informal work in Pakistan has persisted without any clear upward or downward trend.