The strange case of factories without workers
Workers at textile and garment factories tell tales of existing without any records, of arbitrary firings and low wages with no recourse to justice
Hussain Chowrangi is a landmark in Karachi’s Landhi industrial zone, home to many of Pakistan’s household brands in textiles and garments. It is also my rendezvous point with Ahmed, a school teacher who lives 10 minutes away, in Muzzafarabad Colony. Ahmed is hosting tea today for a few industrial workers of the area and I had also been invited to hear their grouses about those who employ them.
Ahmed used to be a managerial-level employee at one of Pakistan’s household textile names. He quit his job a few years ago and started working as a teacher in a government school. Hailing from a relatively well-off family, this school teacher has assumed the role of a whistle-blower of sorts. A well-respected man in his locality, young factory workers often turn to him for counsel.
“You will notice that nearly all factories are barricaded behind high walls and private security guards,” says Ahmed.
Indeed, even though the bumpy ride to his house is only 10 minutes long, nearly all factories en route show prison-like security.
“Why is it so?” I ask.
“The workers will tell you,” he says with a smile.
Soon, we turn into a street in Muzzafarabad Colony before Ahmed lets outs a sigh of relief. The lane where Ahmed’s house is situated is far removed from the stench of trash and the torture of traffic outside. “This house is not as good as a house should be, but factory workers can only dream of owning such a place,” he says.
The house is Ahmed’s family home. His bedroom is small but well-lit. On one side of the room are a personal computer and a flatscreen monitor. His phone is connected to the speakers via bluetooth so that he doesn’t need to get off his bed to play his music.
Inside, a group of workers is already huddled in a discussion.
“If you are on contract and you make one mistake, you can be fired,” blurts Rafique, who must not be more than 24 years of age, almost immediately after we have settled down.
The situation they describe is that of what they call ‘contract workers,’ whereby one is not hired directly by the company where one works but through third-party contractors. The permanence of these contracts is fleeting; workers are hired and fired in a flash, many times without receiving any dues that they are owed.
TEXTILE AND GARMENT SECTOR: THE BACKBONE OF PAKISTAN’S MANUFACTURING INDUSTRY
• The industry employees about 15 million workers.
• It makes up 54% of Pakistan’s total export earnings.
• It is the country’s second largest employer.
The textile and garments sector gives Pakistan its fashionable brands, with top models displaying their latest collections on billboards all over the country. Many of the factories in Landhi and other parts of Pakistan also export to high street European and North American stores.
While garments return handsome profits, the glitz and glam of Pakistani textile exports often camouflages the ugly truth behind them:
Workers’ rights violation assumes criminal proportions, and yet, workers have little recourse to justice.
“The security will take away your punch card. They will tell you to sign on the resignation letter and go home,” continues Rafique, the tone of his voice betraying a deep sense of anguish and bitterness over the injustices at his workplace. “I am telling you, there is nothing. There is not even the company’s name on the punch card.”
Ahmed picks up on how perplexed I am at how it works. “You are probably thinking that there is some sort of an appointment letter or a joining letter. But no, there is nothing of the sort that is handed to workers. Not even the company’s card. Even if there is a card, it does not have the factory’s name on it.”
In a later conversation at another location, Hasan, who retired a few months ago after working 30 years in several factories, including two of Pakistan’s main textile brands, shows proof of how contractual labour works.
In his congested and dimly lit bedroom in a different, yet just as litter and sewage water-ridden, part of Landhi, he asks his son to lay out the cards from all the places he has worked. Except for one – a French clothing company that operated in Pakistan in the 80s – none of the factories had their names on the employee cards.
But there is a reason why factories don’t hire – or if they do, it’s mostly only for the upper management staff – on their own.
More than just a way of easing a company’s operational tasks, hiring workers on someone else’s books allows factory owners to obtain, to the detriment of the workers, the biggest concession of all:
“Sidestepping legal requirements,” in the words of labour lawyer Manan Bacha.
“The crux of the system is that workers are hired by factories through contractors and are offered no proof of employment,” he argues.
Jahangir Azar, former assistant director of the labour department, corroborates these testimonies. Sitting in his Defence office of a consultancy firm that advises the government on privatisation, Azar asserts that “appointment letters is where there is the least compliance” in factories.
What is referred to as ‘contract work’ by the workers is, therefore, “no contract” work for all practical purposes, as Bacha calls it.
This is a situation that even factory owners acknowledge.
“We outsource hiring because it is too much work. We cannot do everything on our own,” says Shabbir Ahmed, CEO of textile company D.L. Nash (workers of this factory were not interviewed).
Sitting in his company’s claustrophobic head office in Keamari, he points out, rather defensively, that this practice is the norm, and that every major name in almost every industry, nationally or internationally, does it too. “When we have an order, workers can work for one week and then they can easily switch over [to somewhere else],” he adds.
“As per the law, the only instance when hiring labour on ‘contract’ is allowed is when there is a production order that requires labour to work for a limited period of time,” points out Bacha.
For a one-week period, a factory would be justified in hiring temporary labour. But factories don’t work on a per-order basis, especially the big names that cater to the local market rather than exporting; production goes on throughout the year, 24/7. Even during Ramazan, production does not stop.
Ali, another worker who drops by Ahmed’s house to tell me his tale, had to resign from his workplace as he could not fast and do hard labour at the same time. “I don’t care if you fast or not, I want production,” is what his manager told him.
After being employed at a place for three months, the law demands that a worker should be made permanent. Other than that, ‘contract labour’ was declared null and void by the Sindh High Court around 10 years ago, according to Bacha.
But Rafique has been working in his factory for 10 months, whereas Hasan worked for 30 years. Khalid, who works in a lower managerial capacity for another major name, has been there for five years, yet is still on ‘contract.’
It is actually temporary labour that is being used on a permanent basis by factory owners. Added to the state of permanent temporality, labour is made anonymous and taken off the company’s books through sub-contracting and outright contraventions, resulting in the precarious labour conditions that workers describe.
“Temporalising labour and taking them off the books means that the factories don’t have to pay for a worker’s gratuity, retirement, social security, medical, etc,” explains Dr Akbar Zaidi, one of Pakistan’s eminent political economists.
For factory owners, this practice is cost efficient, they are not responsible for labour, and they are hands-off. “How it works,” Dr Zaidi explains, “is that they fire you on the 29th of the month, hire you again the next month, and then fire you again.”
Workers don’t hold back when detailing what’s happening to them.
Driving along a road in Korangi in his brother’s taxi, Khalid tells me that he works for a renowned denim-producing factory. And yet, like the rest of the workers, it would be only a dream for him to wear the kind of clothing they make at their factories day and night. “There is no facility in the company. They don’t give us any benefits, no medical, no gratuity.”
Hasan’s testimony validates the cyclical nature of hiring and firing, though at his work place, it was yearly instead of monthly. “Every 11th month they renew the card so that no proof remains.”
“Right now is the time for year-end bonuses, and they are looking to find someone make a mistake so that they can fire them,” chimes in Rafique about his factory.
There’s an added dimension to Rafique’s predicament, as well as Hasan’s when he was working: they work on piece rate and earn daily wages.
D.L. Nash’s CEO Shabbir Ahmed is clear about the intentions of factory owners. “We get more production when workers work on piece rate,” he says. Zubair Motivala, former president of S.I.T.E, tells me over the phone that ‘piece rate’ is beneficial for the workers as well, as they know that “the more they work, the more they earn.”
But this is a two-edged sword.
For the factories, this is a disciplinary measure to keep workers on their toes. Shabbir Ahmed believes, rightly or wrongly, that “if we pay them fixed salaries, they will think that whether they stich 10 pieces or 20, they will get the same amount of money.”
While piece rates might pay more, tailoring workers’ remuneration in such a manner adds to their insecurity since this mode of payment takes away the surety of guaranteed end of the month income. Azar, while agreeing that “workers can take home some more money” on ‘piece rate’, also concedes that it comes at the cost of worsened wage insecurity.
An anguished Rafique says, “we are putting in a dihari [daily shift that pays daily wages], we only get paid if we produce every day.”
Payment is tied to production to such an extent that Rafique gets paid for 26 days in a month only. “Four days are cut for the Sundays.” He does not get paid holidays either, nor paid sick leave. Once he had a bike accident and had to stay home for 15 days and didn’t get paid for those 15 days.
Is payment also withheld if a worker gets hurt in an accident on the production line?
“We know a worker who did not get anything [after his accident],” explains Rafique.
“If you do have an accident on the job and you’re in pain, and if you go to the HR, they will tell you that you will be fired and when you are feeling better, you can come back and get hired anew.”
The consequence for the worker – and benefit for the factory – is that your “bonus and salary stops right at that point,” says Rafique.
When asked how much a worker earns on average, Motivala says: “We are paying above the government-appointed minimum wage of Rs14,000. Workers across the board are earning between Rs20,000 – Rs30,000.” Mr Shabbir also gives similar figures.
Talking to workers, however, it would seem that these figures are exaggerated. They claim that they are remunerated in paisas and given production targets each day, which pays them Rs400-800 a day.
While Motivala admits that workers are required to put in several overtime hours, he says that the money workers take home can be higher if they do work the extra hours.
But is the remuneration, especially the minimum wage, enough for workers?
PAKISTAN’S TEXTILE AND GARMENTS SECTOR HAS ONE OF THE LOWEST LABOUR COSTS IN THE WORLD
• The labour costs are between five and eight percent of the total production cost.
• Meanwhile, import income of this sector stood at $12.5 billion in 2010-11, according to the Federal Board of Revenue (FBR).
For CEO Shabbir Ahmed, even these low labour costs are “too high.”
Workers have an acute sense of not being given their due share. “Jaan marna” and “jaan dai dena” [implying killing oneself] are two phrases commonly thrown about when they describe how hard they have to work every day to earn the little they are.
But “what do we get in return?” Khalid asks. “Nothing.”
Ali, who drops in at Ahmed’s house toward the end of the day, pictures it like this: “I have been working for 35 years but I couldn’t even buy a house, yet my factory owners keeps opening a new production unit every day.”
Do the workers not protest?
“For what will they protest? If they protest, they’re fired. Who will feed their families?” retorts Rafique.
“If someone says anything, they kick them out,” adds Khalid.
Firing workers should not be so easy as Pakistan’s labour code has stringent provisions when it comes to hiring and laying off workers. As lawyer Manan Bacha explains, if a worker is fired, factories have to issue a “written order, mentioning the specific reasons” for why he is being fired, which the worker has the “right to challenge in labour courts, where he can have lawyers and witnesses, if he is not satisfied with those reasons.”
But since factories don’t issue letters of employment to workers — a violation of the law in itself — they can fire them anytime without any consequences. Workers can’t take their complaints to court since they can’t prove that they are actually employed at the factory.
“Courts will first of all ask if you have been a worker at this factory. They will tell the worker to provide evidence and the worker won’t be able to prove his identity as a worker,” says Bacha.
But do the courts not know the situation inside factories? “Our courts are courts of evidence, not inquiry,” replies Azar. Bacha adds that there are thousands of such cases just languishing in courts. Indeed, the labour courts in Karachi’s Saddar area wear a deserted, desolate look: no sign of lawyers or judges, and given the dust on the benches, it looked like nobody had been inside the tribunal for a very long time.
Having so much leeway in dismissing workers shows that factories are not just concerned with saving costs, but also with having power and control of their labour force. The principle bargaining force that workers have are the unions, which “were very active and were responsible for strikes, militancy and labour demands,” recounts Dr Zaidi, especially in textile since “Pakistan’s main industry and industrial development” has been in this sector. “They played a very important role in the 60s and the early 70s.”
A copy of the Pakistan Labour Gazette that I found at the library of Pakistan Institute of Labour Research and Education (PILER) documents the number of stoppages in factories due to strikes:
• 779 stoppages in 1972, but progressively going down to only 78 in 1978. The state resorted to repression to counter labour agitation, according to Dr Zaidi.
• The most iconic moment came in 1972 when striking workers at Dawood Mills in Landhi were shot at by the police. By the time Zia-ul-Haq came to power, unions were a spent force.
When Zia took over and industries were denationalised, Bacha claims that factory owners opted for the ‘contract’ system in order to make sure that unions could not be formed again. Just as workers can’t submit proof of employment when they go to court, they can’t register their unions since that also requires proof that you are working at the place where you are forming a union. “The registrar will ask the factory if these workers are your employees and the owners will refuse to claim them as their workers,” concludes Bacha.
The process of certification that textile factories use to show obedience to labour laws is riddled with corruption
On September 11, 2012, over 250 workers were burnt alive in Karachi’s Baldia Town area as their multi-storey garment factorybuilding was gutted to ashes in what is believed to be an act of arson.
Till now, more than four years later, justice has not been dispensed.
But while Zubair Motivala, former president of S.I.T.E, dismisses the inferno as one caused by sabotage, Karamat Ali of the Pakistan Institute of Labour Education and Research (Piler) is adamant that the factory “was violating each and every law.”
“They were storing chemicals in the basement, while all their exits and windows were sealed,” claims Ali.
If the courts are unable to dispense justice, what about the labour department which has the authority and the duty to enforce labour laws? Is there any real role for international auditors since many of these factories have international certifications?
Baldia’s Ali Enterprises, which was gutted in the inferno, was awarded the SA8000 certificate just a few weeks before the fire broke out. The certificate is issued by Social Accountability Accreditation, a US-based body, to companies that are compliant on issues related to labour, among others. Numerous factories in Pakistan have this certificate, which is accepted by the European Union as well.
But compliance is a different matter, as money buys corrupt officials of the labour department as well as international accreditation.
“You will see these factories displaying all these certificates, but when you go there, you find no compliance,” says Abul Kalam Siddiqui, CEO of Bureau Veritas’ office in Pakistan, one of the biggest inspections company in the world. This company made 4.6 billion Euros last year in revenue, and has the authority to deliver the SA8000 certificate globally, including in Pakistan.
“There is oil and dyes in the open, waste water is going where it’s not supposed to, you should have water treatment plants that you don’t, there is no check on the exhaust emissions, there is no proper bathroom and eating places inside factories, there is no proper lighting, air circulation, there is overcrowding,” says Siddiqui.
How can it be that a non-compliant company can get certified?
“The problem is that 99pc of the certification bodies are working on the basis of franchises,” Siddiqui explains.
How the franchise system works is that a local company buys a franchise from an international accreditation body on revenue-sharing basis. In return, the parent company asks the franchisee to ensure that their standards of integrity, code of conduct, ethics, and standards are upheld.
But the pitfall is that there is nobody to monitor the private local auditors. “The regulatory body in Pakistan, the Pakistan National Accreditation Council, does not have the power to regulate these certification bodies and does not have the jurisdiction to penalise anybody. Even the registration of these companies is not ensured,” Siddiqui says.
The SA8000 certification was promoted on a mass level during the Musharraf era, according to Siddiqui. “It was realised that there is an issue, European and other countries insist on applying laws. Our factories are not certified on social accountability, but everybody is focused on this angle and don’t want to do business [with Pakistani companies if they can’t comply].”
An effort was made thereafter to improve labour conditions and increase exports for the benefit of the country.
A policy was also created to subsidise SA8000 certification, whereby the government would pay the certification fee and the auditor’s fee.
But lack of monitoring, coupled with the promise of government subsidy, resulted in proliferation of bogus auditors who were focusing on commercial interests.
“Within two months we realised that there was something fishy. The consultants who got involved were there to make money. They’d ask for different invoices for themselves, the factories and the government,” Siddiqui narrates.
But when his company went to the government and told them to monitor what was going on, the response was cold. “We didn’t realise that it were the guys in the government themselves who came up with the idea that they should form a company and, through it, make some money for themselves by issuing certification,” claims Siddiqui.
A genuine auditor would charge US$4000 for the audit and the certificate, but a bogus company would go to the same factory and offer it for US$2000. “SA8000 certification demands that 10-15pc of the workers have to be talked to in absence of the employer in order to know their concerns, but nobody is there to check if the auditors are doing anything,” says the Bureau Veritas chief.
“Even if the labour department doesn’t exist, it would not matter,” Jahangir Azar tells me. “It does not deliver.” Corruption is the main issue plaguing the labour department, making it unable to implement much of the 47 labour legislations that Pakistan has. “
“Companies don’t have clean records. They don’t have compliance, which is why they bribe. If they were compliant, they would insist on not paying,” adds Azar. “And they don’t comply on purpose. There is only one inspection per year and they pay 20,000 rupees [to the inspector] and save hundreds of thousands that they would have spent on compliance otherwise.”
Ever since the Baldia fire case, SA8000 certification has been suspended in Pakistan and no new factory has been certified.
Siddiqui says that the Baldia factory is the best example of unregulated practices and corruption. It was Rina, an Italian company, which had subcontracted the SA8000 audit to a Pakistani company. “Rina is no doubt a good company,” Siddiqui admits, “but who is the guy who brought the franchise from Rina?” he asks.
“We have been issuing SA8000 certificates since the past 10 years but no more than 45 were issued,” Siddiqui explains. “We didn’t issue more certificates since companies weren’t compliant. But this guy was the key person in this monkey business that was going on between the government and SA audits. Just in two years, this company had issued more than 140 SA8000 certificates, including to the Baldia factory.”
The oversight is not only intentional but also criminal.
“We should ask our state how can it do this?” asserts Karamat Ali. “This is a question concerning the state’s role in the whole scenario and not just one or two aspects of the labour situation. It is a question certainly worth asking, as people’s lives are on the line.”