Labour Laws & Social Security Systems: The Dilemma of Forgotten…

Labour laws and social security systems in Pakistan, which are intended to safeguard workers, have succumbed to systemic neglect, corruption, and incompetence. Institutions such as EOBI and SESSI fail to keep their commitments, putting millions of workers in severe situations, according to a report by Iftikhar Ahmad in CLR.

Labour laws and social security systems in Pakistan were enacted to provide a safety net for workers, notably private-sector employees and industrial labourers. These workers, who make considerable contributions to the economy, frequently face exploitative working conditions such as low pay, a lack of healthcare, and little legal protection. Social security organisations, such as the Employees’ Old-Age Benefits Institution (EOBI) and the Sindh Employees’ Social Security Institution (SESSI), were established to address these challenges and offer workers financial and medical protection. (WEB HR)

However, during the previous two decades, these organisations have failed to carry out their mandates. Instead of protecting workers’ rights, EOBI and SESSI have become rife with corruption, incompetence, and systemic negligence. For example, billions of rupees earmarked for retirement and healthcare have been plundered, depriving many workers of their due entitlements. Employers, too, have used labour law loopholes to underpay employees and deny them access to life-saving protections. (The Express Tribune and Home-based Workers ILO )

Apart from the agricultural sector, private sector and factory employees in Pakistan regularly face legal discrimination, low wages that are low and inadequate healthcare. Pakistan’s social security schemes, such as the Employees’ Old-Age Benefits Institution (EOBI) and the Sindh Employees’ Social Security Institution (SESSI), are intended to provide a safety net for the country’s workforce. However, during the previous 25 years, these organisations routinely fail to meet their mandates. The institutions have come to symbolise systematic negligence, ranging from inefficiency and corruption to insufficient coverage and disdain for employment regulations. The failure of these social security schemes underscores the critical need for change to combat corruption, increase enforcement, and ensure that every worker in Pakistan is treated with dignity and fairness. Until these challenges are addressed, the nation’s labour force will be subject to exploitation and systemic neglect (Sadia Zaheer).

In a similar vein, most registered workers are unable to use SESSI’s healthcare facilities due to a lack of funds. These social security systems benefit only a small percentage of Pakistan’s workforce, which totals more than 70 million people. Over 80% of workers labour in the enormous informal economy, which is excluded from SESSI’s primary coverage of formal-sector workers.​Due to the insufficiency of the EOBI database, millions of senior individuals do not receive pensions. Contrary to common opinion, these safety nets do not cover informal workers, who are often the most vulnerable. (Human Rights Watch).

Sindh’s government raised the minimum salary rate for industry workers by 15.62%, according to a Tribune story on October 22, 2024. Semi-skilled workers earn Rs 38,280 per month, skilled workers earn Rs 45,910, and highly skilled workers earn Rs 47,868. In 2023, the salary will be reduced to PKR 32,000, although enforcement remains lax. Manufacturing and textile companies continue to underpay their employees by exploiting labour legislation loopholes. Both professional and unskilled workers endure hazardous working conditions and delayed pay.​ (Tribune)

SESSI and EOBI operate without worker participation, and regulatory barriers render their services mostly inaccessible. Many elderly people are compelled to live alone since pension claims might take years to process. Workers have a limited awareness of their rights under these regimes. Poverty and economic difficulties compel many elderly people to labour over the age of 75. It is frequently observed that the majority of females have lower-paying jobs. (Eaber)

Pakistan’s social security coverage is significantly less extensive than that of its neighbours. India, for example, has implemented tiered systems that provide workers with higher healthcare and pension benefits based on their skill level. Even Afghanistan and Bangladesh have made progress in formalising labour regulations. (Human Rights Watch and The Express Tribune ).

Improving Transparency: Conduct impartial SESSI and EOBI audits to detect and punish corruption.

Extending Coverage: Ensure that workers in the informal sector are covered by the system, including pensions and healthcare.

Streamlining processes: Introduce digital platforms for registration, claims, and fund disbursement to reduce delays.

Worker involvement: To ensure that policies reflect their interests, include worker representatives on decision-making committees.

Tough Enforcement of Labour Laws: Establish processes to enforce and punish noncompliance with the minimum wage.

Though they began with noble intentions, SESSI and EOBI have grown to reflect systemic dysfunction. If significant changes are not implemented, these institutions will continue to fail the very workers they are expected to safeguard. To ensure that all workers, regardless of industry or job rank, receive the respect and safety they deserve, the government must prioritise modernising these systems. Only then can Pakistan strive to build a decent and equitable economy that recognises its workers as an essential component of the country’s development.