The efficiency and equity factors
Quite a few journalist friends mention, almost casually, and far too often, that they or some fellow journalists, often full time employees
of spected media houses, have not been paid their salaries for the last three months or salary payments are three to four months behind. Sometimes these things are reported in some of the papers too, but often not. Since the news is about reporters of news, it does not make it to the papers often.
Timely salary payment is not the only issue that is reported. Employees get fired suddenly, sometimes groups of them, and often without any notice and due process. There are usually no severance payments made. All of this in an industry that has grown significantly in the last couple of decades and where most organisations are fairly large and cannot be considered informal organisations by any stretch of imagination.
Till some years back, when competition was less severe in the sector, many media groups even had formal but often unwritten agreements that they would not try to woo each other’s employees. These anticompetitive practices are illegal in almost all labour market domains but they survived for decades in Pakistan. It has only been the pressure of expansion that has made such agreements less effective.
Where are labour laws in all this? Where are the regulators and courts who should be looking into protecting the interests of the weak and providing fairness and justice to all? Few such issues make it to any formal fora and even fewer are decided and hardly any ever see implementation: the Wage Board saga is a good example of how this process goes on.
The problems with labour markets are not just present in the media sector, they are ubiquitous. Many factory owners hire labour on daily basis, on paper, so that they do not have to register these workers for various benefits that workers should get. Others hire labour on renewable contracts, against permanent jobs, while making sure that the length of the renewable contract remains less than the limit stipulated by law after which the job has to be turned in to a permanent post. Still others insist on getting signatures of hired labour on plain sheets so that they can write resignation letters on behalf of the employees any time they think the employee has become a ‘troublemaker’ or is not needed and needs to be fired.
But this is just the tip of the iceberg. Over time the influence of privatisation and liberalisation has almost become all powerful and all pervasive and it is thought that anything that attempts at shaping markets is wrong and should be discouraged. Labour rights have taken a bad hit in this era. Collective action is increasingly becoming harder to organise and it is looked at with disapproval. Labour unions have lost a lot of their power and efficacy to speak on behalf of labour and they are often looked upon, by all other players, with certain amount of contempt. Provincial governments, in the name of facilitating private business, have weakened labour legislations numerous times. For example, Punjab Labour Department does not make surprise inspections anymore where random inspections can be an excellent means of assessing if enterprises are abusing labour laws. And even labour courts have been fairly inactive or hostile over the last couple of decades. Despite all the retrenchment and upheaval in the labour markets, the courts have mostly been going with the trend.
Even unions from the public sector, traditionally considered to be the most organised and powerful in the country, have been unable to do much against the trends. Many of them have been on the streets agitating, but the results, for them, have usually not been easy to achieve. Most recently we even saw the young doctors, traditionally not thought of as workers needing unions for facilitating bargaining for their rights, indulging in industrial action across the Punjab. Apart from the misery and trouble that it caused patients and their loved ones, it is unclear what either side to the dispute was able to achieve.
A lot of large companies have started using vendors for outsourcing the more routine labour intensive functions. There are companies that provide janitorial services, garderning services, guards, physical infrastructure maintenance teams and so on. The primary company is thus no longer the employer of the workers that vendor companies hire even though they work on site at the primary company. The primary company feels that since these people are employed by vendors all labour law responsibilities should be borne by the vendors. But most of the vendors tend to be smaller and more informal companies. They are also less visible to the law. So, a lot of them tend not to live up to the requirements of labour laws.
In one instance we found that though a primary company was paying the minimum wage for each employee they were getting from the contractor, for janitorial services, the vendor was not paying the stipulated amount as salary to its employees. Since the employees were non-unionised and mostly non-registered, they could do nothing about this. They could either work at the salary the vendor was offering or go look for another job. Given the market conditions for unskilled labour, most of them just took what the vendor was paying. In this case the primary company, when they came to know of it, threatened to cancel the contract and were thus able to make the contractor pay the stipulated wages and arrears. But in most cases primaries do not care and feel it is not their responsibility. Labour departments are not very active or effective in these situations either. And few such cases, if any, make it to the courts.
Standard results of economic theory suggest that any activity that has low returns will get low investments. If labour is so insecure, why should they invest in their skills and/or education? But we are a country that has a large and young population and deficits in the human capital area. If we do not make our labour more effective, trained, efficient and motivated, how can we think of sustainable growth in the medium to long run? Getting labour markets right should be a part of any growth revival strategy and/or thinking.
The writer is an Associate Professor of Economics at LUMS (currently on leave) and a Senior Advisor at Open Society Foundation (OSF). He can be reached at [email protected]
