The laws are expected to impact a sizable proportion of at least 4.4 million vulnerable HBWs in Pakistan. The data collection activities will be critical in developing a deeper understanding of the impact of the legal reforms. Further, amendments in labor laws (Shops and Establishments, and Factories Acts) achieved through the SHIFT reforms will ensure better working conditions and facilities for 3.7 million women workers in the formal private sector, reduce restrictions on women’s work hours, and encourage more women to enter and stay in the workforce.
“For the first time, hundreds of thousands of informal home-based workers living in KP and Balochistan provinces will be recognized as formal workers because of KP and Balochistan’s HBWs laws. This is a great achievement for women HBWs who have been demanding for their labor rights to access minimum wage and social security for decades.” Zehra Khan, General Secretary, Home Based Women Workers Federation.
At 20 percent, Pakistan’s workforce participation rate for women is one of the lowest both in South Asia and globally. Low education levels, mobility challenges and gender norms limit women from entering and being retained in the formal workforce. Consequently, a significant proportion of women workers are represented in the informal sector as homebased workers (HBWs).
Pakistan has 4.4 million HBWs, of whom 3.6 million are women. These workers perform work for remuneration from their home or other premises of their choice (ILO C177, R184). They mainly operate as piece-rate or own-account workers involved in production and manufacturing chains to make products like textile articles, leather goods or raising livestock for agriculture and biproducts. Because of gaps in available data, estimates likely underrepresent the true extent of home-based work. Women HBWs are especially vulnerable to exploitation from contractors/middle-men and typically belong to poorer households, having little to no formal education. They have limited access to markets, training, and most public services and work amenities. HBWs lack rights and social protections, face greater work and safety hazards, and are given little to no consideration in economic and labor policies.
In addition, only 10 percent of non-agricultural workers in the private formal sector are women. Studies indicate that provision of specific facilities, such as transport by the employer, separate toilets for women, and childcare facilities, are a major factor in encouraging women’s labor force participation. The need for enhanced legal protection for women workers to improve their access to basic facilities in the formal sector was identified as a critical challenge during consultations with experts on gender and social inclusion in Pakistan. Therefore, the SHIFT program is geared to respond to gaps in legal coverage pertaining to women workers both in the formal and informal sectors to enable greater female labor force participation in Pakistan.
The project was prepared after a review of gaps in existing reforms meant to enhance women’s economic participation.
Given the complex nature of passing legal reforms, the Bank team worked closely with provincial departments of labor and leveraged the World Bank’s convening power with development partners, workers, and other stakeholders. Experts on labor rights conducted a gap analysis and supported governments in developing amendments jointly with inputs from UN Women, the International Labour Organization (ILO), employers’ federation, prominent civil society organizations (CSOs) including workers organizations and labor unions in Pakistan. Reforms were envisioned using a forward-looking approach to integrate implementation mechanisms that focus, e.g., on registration of home-based workers as formal workers within government database to improve their access to social security and decent wages. The initiative of passing laws by respective provincial governments succeeded because of close monitoring of progress with the provincial labor departments, general administration, and political leadership to build consensus and catalyze the reform.
The SHIFT program resulted in the adoption of laws and amendments by provincial assemblies in two broad areas.
Labor laws to enhance women’s economic participation in shops, commercial establishments, and factories:
Women working in the private sector employed in commercial shops, establishments, and factories have limited access to basic facilities, e.g., segregated toilets, childcare facilities, and safe transport options due to gaps in labor laws. Sex based legal discrimination also existed in working hours and equal remuneration for work of equal value for women compared to men. These gaps have been addressed through amendments to two different labor laws (factories act, shops, and establishments act) in all four provinces and two additional laws in Balochistan (Industrial and Commercial Employment (Standing Orders) Bill, Payment of Wages Bill) in 2021. Easing women’s access to labor force and lifting constraints for them was possible because of these amendments. Assemblies in Sindh, KP and Balochistan have passed the reforms in these labor laws (total 8 laws), while Punjab assembly is currently in the process of adopting the changes after cabinet approval in 2021.
Labor laws for protection of homebased workers:
HBWs face some of the most challenging working conditions and remain highly vulnerable to exploitation given that they are largely undocumented and outside the ambit of any legal coverage (except in Sindh where the Homebased Workers Protection Act was passed in 2018). Through SHIFT, the laws to enable protection and welfare of homebased workers have been passed by KP and Balochistan assemblies in August 2021, and April 2022 respectively (two laws). Punjab, and federal Cabinets have also approved HBWs laws, and the cleared drafts are currently with the national and Punjab assemblies for adoption. HBWs laws are transformative and will result in the documentation of the HBWs workforce for the first time in Pakistan. Official registration of these informal workers will enable greater access to social security, service delivery, and legal rights as formal labor, as well as greater awareness and bargaining power for better wages. Further, the actions will result in creation of evidence and data to support responsive research-based policies in future.
The next main challenge is to ensure that the laws are implemented. The capacities of client counterparts remain weak. The World Bank, jointly with provincial labor departments, has launched a mixed method research to collect comprehensive and representative data of 13,000 HBWs in KP and Balochistan to help bridge knowledge gaps and develop more responsive programs based on evidence.
Bank Group Contribution
The reforms were outlined under Pillar B of the SHIFT-I and II DPC series, with financing of $500m and $400m for the two successive policy operations. Pillar B of the DPC on recognizing the contribution of women to economic productivity was led by the Pakistan Gender and Social Inclusion Platform (Social Sustainability and Inclusion GP), jointly with the Human Development Practice Group.
The results were achieved with support from the Departments of Labor in Punjab, Sindh, Balochistan, Khyber Pakhtunkhwa (KP) and the federal capital. The reforms were supported by invaluable technical inputs from UN Women, HomeNet Pakistan, Center for Labor Research, Home-based Women Workers Federation, ILO, and other CSOs working to support the welfare of women workers, especially HBWs.
The legislation serves as an important first of many steps needed to help vulnerable workers on the ground. The Bank is supporting the implementation of HBW laws by enhancing the capacity of Departments of Labor in the four provinces and providing facilities to enable the registration and service delivery for HBWs. A comprehensive survey to collect robust data on the status of HBWs has been launched in four districts of KP and Balochistan. Support to Government in data collection, developing the rules for implementation, HBWs’ registration, and improving HBWs’ access to skills trainings and other facilities are all crucial for implementation of the HBW laws and will provide a baseline for evaluating the ultimate impact of the reforms.