Contract employment is here to stay

“Contract Labour is understood as covering all situations in which work is performed for a person who is not the worker’s employer under labour law as it now stands, but in conditions of subordination or dependency that are close to an employment relationship under that law. Thus at one end of the spectrum, in fact just beyond the border of Contract Labour, there are the hidden or disguised employment relationships. In this situation, all of the characteristics laid down in national law for the existence of an employment relationship between a worker and an employer are displayed, but in order to avoid legal obligations, an attempt has been made to cloak that relationship in another form.” Report of ILO Committee on Contract Labour 1998.

The Report further stated that “One of the main difficulties has been that the term ‘Contract Labour’ generates different connotations in different countries. Before grappling with a universal definition, it may be helpful for a moment to focus on what the sources of concern among ILO constituents in this context have been.” There has been strong opposition against any ILO Conventions impacting upon the employment of Contract Labour. The ILO Convention on Contract Labour that was proposed in 1998 met strong resistance from most of the countries, and difficulties even arose in its translation into French and Spanish. However, at the ILO International Labour Conference in 1997, the Private Employment Agencies Convention, 1997 (ILO Convention 181) was adopted. Convention 181 states that its purpose is to allow the operation of private employment agencies as well as the protection of the workers using their services. Today, out of 183 countries that are ILO members, only 38 have ratified ILO C181. Pakistan is among those nations that have not ratified this Convention.

Over the past couple of decades, the representatives of Pakistani workers have been vociferously agitating against the culture of Contract Labour and the federal and provincial governments attempt to mollify them with political pledges to formalize Contract Labour through legislation. The prime reasons why representatives of workers are against Contract Labour include the fact that these workers are not members of any labour union because they are not permanent employees of the principal employers. Moreover, as is generally the prevailing system, there is an informal bilateral agreement between the employers and the contract workers. It is alleged, and to a large degree is correct, that the Contract Labour is denied all benefits and privileges that a permanent worker enjoys under the various labour legislations. The leaders of workers are also rightly concerned with the fact that the Contract Labour do not have job security and that the Damocles Sword of termination without any benefits or notice is dangling over their heads.

The genesis of Contract Labour in Pakistan was the volatile and disruptive industrial human resource situation during the early 1970s when a free-for-all right was granted to the industrial workers. This ensued into chaos and mayhem with “pygmy” labour leaders attempting to push their vested agendas. The experienced senior labour leaders, at times, were, forced to grudgingly bear and cede to the radical agenda of these “pygmies”. Those were the days of nationalization, days of tarnishing the image and contributions of the private sector, days of plethora of industrial cases, many frivolous, in Labour Courts, days of strikes, violence, and harassment, and days of flight of capital. Sanity was gradually restored from 1978 and many industrial SMEs decided on a policy of hiring Contract Labour and discouraging Unions in their industries. The short-term thinking and aggressiveness of “pygmy” labour leaders were the harbinger of a Contract Labour system resulting in the proliferation of Contract Labour not only in SMEs but in large national and multi-national enterprises.

Contract Labour, in one way or another, has been in vogue for a long time. Outsourcing is one form of Contract Employment. Enterprises have been outsourcing janitorial services, security guards, accounting services, landscaping, and transport services, etc. Hence the salaries, perks and benefits of workers or employees from these services are not the direct responsibility of the principal employers because all these costs are factored in the rate agreements. This trend is continuing and growing and now freelancing is getting momentum. Thus the number of permanent and job-secured employees is percentage-wise lower than what it was in the past. However, there is still the culture of bilateral, informal Contract Labour agreement between the employer and the employee. Notwithstanding this prevalent system, the good news is that employee service providers are now able to establish formal agreements with many industries. This is overall beneficial to the principal employer, the service provider, and the Contract Labour who are on the payroll of these providers.

In response to the inability of the federal and provincial governments to introduce a formal structure of Contract Employment, the Employers Federation of Pakistan, during the tenure of this writer as President, authorized then Secretary General, Fasihul Karim Siddiqi, to prepare a Draft of The Sindh Contract Labour Regulation Act 2018 that was forwarded to the Sindh government. This Act was intended to apply to “every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as Contract Labour and every contractor who employs or who employed twenty or more workmen on any day of the preceding twelve months”. This Act “would not apply to establishments where only work of an intermittent or casual nature is performed. The definition of a ‘workman’ shall be deemed to be employed as ‘Contract Labour’ in or in connection with the work of an establishment when he/she is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer; a ‘workman’ shall be deemed to be employed as ‘Contract Labour’ in or in connection with the work of an establishment when he/she is hired in or in connection with such work by, or through a contractor, with or without the knowledge of the principal employer”. Under the Act, there would be a Sindh Contract Labour Advisory Board consisting of Secretary Labour Department, Chief Inspector of Factories, four nominees of Employers (two from principal employers and two from service providers) nominated by Employers Federation of Pakistan, and four nominees of workers to be nominated primarily by Pakistan Workers Federation.

Despite being the apex body of Manufacturers of Pakistan, the EFP maintains an open-minded posture and emphasizes tripartite consultation with workers and government. EFP undertook the exercise to prepare an enlightened and pragmatic Draft that was accepted by the other two social partners. The sad story is that the Sindh government has other priorities and the Draft is still on the back-burner. Syed Hasnain Mazher, a leading institutional Contract Labour service provider, categorically stated that “payments made towards workers’ welfare contribution are strictly paid to the government and in return the Contract Labour avails benefits from these workers’ welfare institutions. The benefits are the same for permanent workers or Contract Labour under Standing Orders Ordinance 1968. Contract Labour can be terminated on expiration of contract or violation of contract terms. As such they are not permanent employees”.

There are efficacy gains in employing Contract Labour because the worker is aware that his employment tenure lies on performing well and providing value to the given task. The EFP Draft has been conceived of as a response to what is perceived as an unhealthy trend in employment which means engaging contractors to supply labour. At this moment, there is formidable non-contract labour employment rather than Contract Labour. Anecdotal evidence suggests that Contract Labour is gathering momentum with both private and public sector enterprises embracing it in a big way. Hence, what the government needs to do is to allow the natural process to take full effect. Contract employment is here to stay. What is also worth emphasizing is that Contract Labour wants a hassle-free paycheck and continued employment. Most of them do not want unions to represent them and that is one reason why less then 2% of enterprises have labour unions and that figure is decreasing instead of more representation of workers by unions. Samuel Gompers, the Founder of American Federation of Labour, had this to say on unionization: “There may be here and there a worker who for certain reasons unexplainable to us does not join a union of labour. That is his right. It is his legal right, no matter how morally wrong he may be. It is his legal right, and no one can or dare question his exercise of that legal right.”

(The writer is Ex-President Employers Federation of Pakistan Twitter: MajydAziz)

Copyright Business Recorder, 2021