Investing in Pakistan: international trade, business and workers’ rights

As Pakistan goes to the polls today amidst the turmoil of a bitterly contested and sadly violent election campaign, ETI's Ben Rutledge and Cindy Berman consider what the future holds for international trade, local businesses and workers’ rights.

For international businesses looking to invest, Pakistan presents a complex challenge. Given the social, economic and political realities, there’s no denying the risks. The country registers very highly on corporate risk assessments, and many of the global indicators make for depressing reading.

In terms of labour rights specifically, the 2016 Global Slavery Index estimates that around 2.2 million people in Pakistan live in modern slavery, mostly in the form of bonded labour, while the government estimates that 73% of the workforce is still employed informally. Less than 1% of workers are members of trade unions, and attacks on trade unionists and human rights defenders are all too common. For women, the picture is even bleaker: Pakistan currently ranks 143rd on the World Economic Forum’s Global Gender Gap Index.

Yet, ETI believes that international brands shouldn’t give up on investing in Pakistan.

International trade agreements

The GSP Plus trade agreement between the EU and Pakistan presents a real opportunity. But the country only has two years to prove it can deliver on the conditions set by the EU for tariff-free trade. Critical to that is implementation of the 27 international human rights conventions that GSP Plus insists upon.

In this context, industry bodies and government officials are increasingly willing to explore what they could and should be doing to promote responsible business.

That’s why ETI, jointly with our Pakistan partner PILER, recently held our first ever high-level workshop in Karachi – not to talk about the problems, but to talk about finding solutions to long-standing labour rights issues.

The event brought together stakeholders including representatives from the Pakistan Employers Federation, the Pakistan Business Council, the Sindh Government, international brands including Inditex and H&M, trade unions, the UNDP, NGOs and other business associations.

All parties agreed on the need to build bridges and work together to understand and tackle the root causes of poor working conditions, particularly if Pakistan is to retain its GSP+ status. There was also clear recognition of the business case for ethical trade and decent work. As Khalid Junejo, Vice President of Employers Federation of Pakistan said, "It's the right thing to do, plus it reduces operating costs and helps businesses become more efficient."

New business regulations at federal and provincial level

Looking at the wider landscape, the work being done by some federal and provincial governments on business regulation should be recognised.

Earlier this year, the Sindh Government passed a progressive new regulation, presented as the first ever tripartite provincial labour policy in Pakistan, which was collectively agreed by employers, unions and Sindh’s government. It is universal in coverage, removes restrictions on freedom of association, and extends scope of social security and welfare payments to all workers in all sectors of the economy.

Meanwhile, the federal government is developing a National Action Plan on Business and Human Rights in coordination with the Pakistan Institute for Parliamentary Services and Oxfam GB.

These are important commitments, and we hope to be able to support these efforts through our partnership with PILER, which aims to strengthen capacity amongst civil society and businesses to conduct human rights due diligence, map supply chains and improve business practices.

Encouraging the business and human rights agenda

As part of ETI's commitment, we’re launching training in Pakistan for businesses on ethical trade and the UN Guiding Principles on Business and Human Rights. We’ll also hold a major roundtable on responsible business practice, this time in Lahore on July 30th, in partnership with the Lahore Chamber of Commerce and Industry and Employers Federation of Pakistan.

It's important to acknowledge that realising workers' rights is a journey that takes time and a great deal of effort. Yet there's no denying that it is necessary, both for the millions of workers still struggling with poor working conditions, and for the prosperity of Pakistan as a whole. 

For information on the next Roundtable on Responsible Business in Pakistan, please contact Ben.rutledge@eti.org.uk.