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Coronavirus challenge: employers' perspective

Employers Federation of Pakistan (EFP), the apex body of manufacturers of Pakistan and a constituent of International Labour Organisation (ILO), is deeply concerned with the economic and social consequences of the outbreak of COVID-19 that has deeply impa

04 Apr 2020

Employers Federation of Pakistan (EFP), the apex body of manufacturers of Pakistan and a constituent of International Labour Organisation (ILO), is deeply concerned with the economic and social consequences of the outbreak of COVID-19 that has deeply impacted global economy besides creating new challenges of Social Protection for the workforce as well as innovative operational culture at the workplace.
Employers responded positively to the call of the Prime Minister by keeping their establishments shut and ensuring that workers and staff were paid full wages for the month of March 2020. This commitment reflected the contribution of the private sector as a national and social obligation. However, the outlook for the coming months is ominous and uncertain.
EFP has declared its total support to the Federal as well as the provincial governments' decision of lockdown in order to discourage the spread of COVID-19 by limiting human movement to the minimum. It motivated its member organizations to comply strictly with the instructions by closing down factories, offices, plants, and facilities.
Enterprises providing essential services are exempted and allowed to function. However, they are requested to ensure that least possible staff and workers were called for work and all necessary safety and precautionary measures taken to ensure minimum human contact and hygienic work environment.
The dilemma was the status of export-based enterprises. The immediate impact of the lockdown was on them. There were reports that buyers were cancelling orders, or were asking these vendors to defer production, or, in some cases, agreeing with exporters to ship the goods that were ready for shipment. EFP is receiving frantic phone calls and Whatsapp messages from exporters who, due to the lockdown scenario, are between a rock and a hard place.
The little display of euphoria seen in February and March, mostly due to an uptick in exports, suddenly transformed into dire visions of doom and gloom. Some units clandestinely defy the lockdown orders and continue to operate despite the fact that they are unnecessarily inviting an outbreak of the virus among their workers.
In order to mitigate the sufferings of workforce, EFP urged its members that it should be ensured that all non-attending workers including those that are on daily wages, piece rated and contracts are paid full wages during the initially announced lockdown period. The directions of the governments in this respect should be fully complied with.
Notwithstanding this, and being conscious of the fact that if the lockdown prolongs for a longer or even indefinite period, it may become difficult for enterprises to continue paying wages. EFP proposes the following:
Every factory, industrial and commercial establishment should be allowed to establish an Emergency Fund comprising of the following:
1. Adjusting employees leave balances for the current and next years' leave entitlement.
2. Amount due to be paid to employees on account of bonus for the current year.
3. Amount distributable among employees on account of Workers Profit Participation Fund, for the current financial year.
4. Amount of 2% of profit payable on account of Workers Welfare Fund.
5. Amount payable to Social Security Institutions and EOBI on account of their monthly contributions should be suspended for a year and the resulting amount to be transferred to the Emergency Fund.
6. Workers Welfare Fund has huge funds available with it that can be transferred to companies for utilization of payment of wages. EFP proposes that last five years contribution by enterprises to WWF be refunded to respective enterprises for utilization in this fund.
7. The Fund so accumulated as a result of the above components may be used by enterprises for payment of workers' wages, which may meet the requirement for the next 3 months.
8. Enterprises may be required to send monthly statements to the EFP and the Labour Department showing utilisation of this Fund.
9. In case the Lockdown situation is over earlier than the utilization of this Fund, the balance amount remaining in the Fund could be refunded to the respective sources from where it was initially generated.
EFP is aware of the fact that the informal sector is badly affected. Despite all efforts to get these units registered and regularized, these units preferred to stay out of the FBR radar.
Nevertheless, now that the situation is unbearable for these units, especially for their workers who are unable to receive any benefits, such as bonus,profit participation, or social security, etc, EFP proposes that in case of SMEs where entitlement of bonus, profit sharing, WWF etc. does not arise, special allocation be made from the WWF and Government's economic relief package/Emergency Funds to help them pay wages to their workers.
The situation is becoming extremely complex. On the one hand, industries are not able to operate and on the other hand, the employees are unable to survive without appropriate social protection and direct assistance from the Government. EFP strongly feels that the above measures may not be sufficient but would contribute, to a large extent, in helping the employers in mitigating the suffering of their workers and their business risk in these difficult times.
A notification was issued by Secretary Labour, Government of Sindh under Section 3 of the Payment of Wages Act, requiring employers to pay wages up to 30th March 2020 to workers for the month of March 2020.
According to the legal opinion by EFP Senior Legal Advisor Zaheer Minhas, Advocate Supreme Court, this Notification is legally invalid because 'Wages, under the Payment of Wages Act' are payable only on fulfilling terms and conditions of employment and not otherwise, as is in the present situation. However, without going into the legality of the Notification and taking into account the purely humanitarian aspect of the situation currently prevailing because of the COVID-19 pandemic, the EFP called upon its member organizations, even in Punjab, KP, Baluchistan, G&B, and AJK as well to pay full wages to workers and staff to comply with the Notification to mitigate the sufferings of the industrial workers in these difficult times.
EFP categorically reiterates that employers have the legal right to lay off workers on half wages for 14 days and terminate if the lockdown is likely to continue indefinitely. It has conveyed to the government the hardship effect on workers and how government could help provide them social protection by allowing employers to create an Emergency Fund out of which full wages may be paid to workers without additional burden on employers.
EFP reiterates that as a last resort, if employers lay off their workers on half pay in April, then the government should pay them half wages out of WWF and in case it continues in May, employers will not be able to pay wages to workers; hence the entire month wages be paid to workers from WWF by the government.
EFP further emphasizes that there is no need to seek government permission in exercising employers' legal right to lay off or retrench workers. Employers agreed to pay full wages in April instead of using their legal right of lay off. It is because of corporate social responsibility and it should be understood that this involved taking such a harsh decision in an unusually difficult time.
Employers are free to use their legal right and do not need nor seek any permission and should be ready to fight out for their right in courts.
However, they need to be mindful that even courts are considering social aspects and may not give the expected relief. Reference could be made to a recent case where the Lahore High Court denied the legal relief of paying half wages in lockdown saying these were not normal circumstances.
EFP is rarely consulted by the Prime Minister or by his economic team. Usually, a select elitist group of businessmen is invited every now and then. Mainstream industry representatives are mostly ignored.
This is, however, the time to build consensus nationwide and the Prime Minister and his economic team should comprehend this. At times, EFP feels that "the only time people take you for granted is because they assume you'll always be there". EFP has the same feeling for this government. (The writer is President Employers Federation of Pakistan).

Copyright Business Recorder, 2020