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Good practices in collective

bargaining: A compilation of case

studies from Pakistan

iii

Foreword

Collective bargaining is a critical process whereby employers and workers can engage, through their organizations, to establish sound industrial relations. There are many examples of collective bargaining arrangements which contribute to strengthening labour- management and industrial relations in Pakistan, Even though it is difficult to capture all of the forms of collective bargaining, taking stick of such processes in their context, provides useful insight on this key element of social dialogue.

For the purpose of the study, relevant stakeholders representing workers, employers, government, civil society and research organizations were identified and interviewed. Some factory visits were also arranged to witness some of the provisions that are extended to workers under the Collective Bargaining Arrangements.

The present study is envisioned to be a step towards collating and documenting examples of good practices in collective bargaining in different economic sectors in the country. The rationale for this exercise is rooted in the need for drawing lessons from experience in terms of what works and what does not when it comes to advocating and representing the rights of workers through institutional mechanisms.

Ingrid Christensen Country Director Country Office for Pakistan Islamabad July 2018

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Acknowledgements

This report was researched and written by Ms. Sabina Ahmed. Ms. Rabia Razzaque at the ILO Country Office for Pakistan provided invaluable technical support to the author during the project. Substantial comments were provided throughout the research and drafting process by Mr. Mathew Cowgill, Chief Technical Advisor, Programme for Sustainability and Standards in Global Supply Chains in Asia, at the ILO Regional Office for Asia and Pacific. Mr. Christopher Land-Kazlauskas, Freedom of Association and Collective Bargaining Specialist at the Advocacy and Partnerships Unit in Fundamental Principles and Rights at Work Branch, ILO Headquarters, Geneva provided inputs to the terms of reference and methodology of the research. Mr. Ravindra Peiris, Senior. Specialist, Employers' Activities, DWT/CO-New Delhi and Mr. Mahandra Naidoo, Specialist, Social Dialogue and Labour Administration, DWT/CO-New Delhi also provided extensive inputs to the initial draft.

The author extends appreciation to Pakistan Workers’ Federation and affiliates, Department of Labour in Sindh and Punjab, and Registrar National Industrial Relations Commission for sharing copies of Collective Bargaining Agreements. The author also expresses her deepest thanks to all the focus group discussants, interviewees and other participants.

This publication has been supported within the framework of the programme for Sustainability and Standards in Global Supply Chains in Asia, financed by the Government of the Federal Republic of Germany. The programme was initiated as part of a renewed partnership between the German Ministry for Development Cooperation (BMZ) and the International Labour Organization (ILO). The responsibility for opinions expressed in this publication rests solely with its author, and its publication does not constitute an endorsement by the ILO or the Government of Federal Republic of Germany of the opinions expressed in it.

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Executive summary

It is widely recognized that industrial relations based on trust and social dialogue enhance productivity, increase efficiency and promote decent work. The need for a structured mechanism and system to carry out this dialogue becomes imperative in the given context of global transformation marked by market liberalization and deregulation and leading to implications for the workforce and rights of workers, employment and working conditions.

In Pakistan, the governing legislative frameworks for industrial relations include the provincial Industrial Relations Acts and the Federal Industrial Relations Act for coverage to more than one province (trans-provincial) at the federal level. The total number of unions including collective bargaining agents registered at the national level with NIRC (based on the trans-provincial clause) and the provincial labour departments according to a study^1 by ILO is 7,096 out of which only 19 per cent were collective bargaining agents.

Collective bargaining is a key means through which employers and their organizations and trade unions engage to establish sound industrial relations based on mutual trust and agreement. There are many examples of collective bargaining arrangements resulting in strengthening labour-management and industrial relations in the country. The challenge, however, is that collective bargaining is a ‘process.’ Therefore, sometimes it may not be captured in evidence as it is not uniform across the board and remains unique to varying contexts. It may also not always result in collective bargaining agreements. In some cases, collective bargaining may exist as an institutionalized and structured process while in others it may still be less formalized. In general, however, there is dearth of documented evidence base capturing the experiences of collective bargaining agents (CBAs) and the process of collective bargaining.

The present study is envisioned to be a step towards collating and documenting examples of good practices in collective bargaining in different economic sectors in the country. The rationale for this exercise is rooted in the need for drawing lessons from experience in terms of what works and what does not when it comes to advocating and representing the rights of workers through institutional mechanisms.

For the purpose of this study, collective bargaining is examined as an overarching institutional mechanism, encompassing both the process by which collective bargaining takes place, and the output in the shape of agreements as well as the outcomes of how collective bargaining impacts labour-management relations. In order to avoid confusion vis- à-vis the terminology, clear references are made throughout the report where a specific component (e.g. process or output) of the overall mechanism is discussed.

(^1) ILO: Trade union density in Pakistan (Islamabad, 2018), unpublished.

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from a few days to a few weeks and usually concluded within a few meetings between the management and the CBA. Reaching an agreement in a timely fashion was noted to be a key feature of successful negotiation as long drawn negotiations invariably indicated significant variance in positions and the inability to demonstrate flexibility for achieving a win-win situation.

Examining the outcomes, it was observed that, in general, where collective bargaining existed as a well-functioning mechanism, it had contributed to maintaining cordial industrial relations and safe guarding rights of workers. Outcomes of stable collective bargaining arrangements consisted of both immediate and tangible results as well as relatively more subtle and institutional level gains including cultural and attitudinal change.

It was noted that in organizations with a history of collective bargaining arrangements in place, there existed a high level of mutual trust and respect between the workforce and the management. One major factor in creating an environment of trust and congeniality was also attributable to good management practices especially in ensuring their accessibility. The overall impact of good labour management relations led to the creation of a conducive work environment.

In addition to financial gains, a tangible outcome of collective bargaining appeared to be greater recognition of improving work conditions. A high emphasis on health and safety at workplace was noted in the cases observed.

It was noted that the overall impact of a robust collective bargaining mechanism led to improvements in motivation of workers, resulting in better work discipline and improved attendance. This, in turn, impacted and improved the quality of work and production.

A key outcome of collective bargaining also appeared to be a more inclusive approach to all workers’ rights. Many of the agreements reviewed sought to extend benefits to temporary and contract workers, who were not trade unions members as the current legal provision excludes them from being member of the trade union.

Detailed review of the institution of collective bargaining reveals that several contributing factors and enablers play a key role in strengthening it. A key enabling factor encouraging an effective and well-functioning collective bargaining system appears to be the attitude of management and employer. As noted earlier, accessible and supportive management is a key factor in ensuring that industrial relations are cordial, and a robust collective bargaining arrangement is in place.

Similarly, a well-informed and aware workers’ organization is essential in creating harmonious industrial relations. In the cases reviewed, it was observed that the office bearers of CBA were well informed about workers’ rights and obligations and fully conversant with the governing laws and legal requirements. Information and knowledge of

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the general economy, trends in the economic sector and relevant policy developments were deemed necessary for CBA representatives in order to carry out their role effectively.

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1- Background and context

It is widely recognized that industrial relations based on trust and social dialogue enhance productivity, increase efficiency and promote decent work. By bringing together government, employers’ and workers’ organizations, an industrial relations system provides an opportunity for on-going social dialogue, protecting the rights of workers on one hand and safe guarding the interests of the employers on the other hand in a continuously evolving economic and social context.

The need for a structured mechanism and system to carry out this dialogue becomes imperative in the given context of global transformation marked by market liberalization and deregulation and resulting in unemployment, poverty, inequality and marginalization for the disenfranchised. It has also led to implications for the workforce and rights of workers, employment and working conditions.

Collective bargaining is a key means through which employers and their organizations and trade unions engage to establish sound industrial relations based on mutual trust and agreement. Collective bargaining is a fundamental right, rooted in the ILO Constitution and reaffirmed as such in the 1998 ILO Declaration on Fundamental Principles and Rights at Work.

While numerous challenges beset the institution of collective bargaining globally, ranging from restrictive legislative and policy regimes governing the industrial relations, to institutional capacity issues limiting efficacy of such arrangements, there are many examples of collective bargaining arrangements resulting in strengthening labour - management and industrial relations. Pakistan is no exception to this. The challenge, however, is that collective bargaining is a ‘process.’ Therefore, sometimes it may not be captured in evidence as it is not uniform across the board and remains unique to varying contexts. It may also not always result in collective bargaining agreements. In some cases, collective bargaining may exist as an institutionalized and structured process while in others it may still be less formalized. In general, however, there is dearth of documented evidence base capturing the experiences of collective bargaining agents (CBAs) and the process of collective bargaining in the country.

While there are many examples of successes as well as challenges of how the institution of collective bargaining arrangements has evolved in Pakistan, most of this information has not been made part of any institutional repository.

The present study is envisioned to be a step towards collating and documenting examples of good practices in collective bargaining in different economic sectors in the country. The rationale for this exercise is rooted in the need for drawing lessons from experience in terms of what works and what does not when it comes to advocating and representing the

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rights of workers through institutional mechanisms. This, in turn, can inform policy level advocacy initiatives by providing an evidence base. It can also serve as a baseline in terms of where Collective Bargaining Arrangement as an institution stands today so that any future effort for their promotion and capacity building can be assessed against a benchmark.

For the purpose of this study, collective bargaining is examined as an overarching institutional mechanism, encompassing both the process by which collective bargaining takes place, and the output in the shape of agreements as well as the outcomes of how collective bargaining impacts labour-management relations. In order to avoid confusion vis- à-vis the terminology, clear references are made throughout the report where a specific component (e.g. process or output) of the overall mechanism is discussed.

Based on this rationale, the key objectives of the good practice case studies compilation include:

 Exploring the practices/factors that define the success of collective bargaining  Investigating impact of collective bargaining on workers  Capturing impact of collective bargaining on enterprise performance

A cross-sectoral collection of case studies representing different economic sectors has been complied for this purpose. However, in line with ILO’s project prioritization, the textile sector was especially focused and three out of the nine cases studies have been identified from this sector.

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Enabling Factors

Examining the enabling factors for the good practices

Enabling factors were examined both through interviews with selected respondents representing CBAs, Enterprise management, representative of Department of Labour and civil society organizations.

The preparatory stage also included a detailed review of literature especially legislative framework governing trade unions in general and CBAs in particular. For primary data collection, a series of interviews were planned with various stakeholders. Three sets of questionnaires were developed to guide the interviews with representatives of CBAs, enterprise management and govt. officials.

Data collection followed the preparatory phase. Through support of the ILO, various CBAs, workers organizations across various economic sectors and Department of Labour in Sindh and Punjab were contacted and explained the purpose of the study. They were requested to shortlist and share copies of collective bargaining agreements which closely met the criteria for good practice case study.

The criteria for selecting agreements included picking up agreements which covered a wide topical range of issues including but not limited to:  Financial gains in the shape of increments and bonuses  Service awards  Grants and allowances  Loan schemes for workers  Health and medical benefits and schemes  Training and professional development opportunities.

Twenty-five collective bargaining agreements were thus received and examined. It was followed by a further classification of cases based on the following benchmarks:

 At law: Collective bargaining arrangements with provisions presenting terms and conditions equal/equivalent to or not in direct contravention with provisions of national laws and regulations  Above law: Collective bargaining arrangements provisions providing benefits greater than provisions of laws and regulations.

On the basis of the above classification, a total of nine case studies were selected presenting examples of ‘above law’ provisions. The selected cases also represented different economic sectors including three from the textile sector, and one each from automobile, pharmaceutical, oil and gas, food, sports goods and packaging industry.

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Field visits were carried out to Lahore, Faisalabad and Karachi to conduct interviews with CBA representatives, enterprise/ factory management, employers’ associations and officials of the Department of Labour in Sindh and Punjab. The data collected through interviews and literature review was analyzed and used in developing the write up for the present compilation.

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The following table contains compilation of the total number of unions including collective bargaining agents registered at the national level with NIRC (based on the trans-provincial clause) under the National Industrial Relations Act 2012 and the provincial labour departments registered under their respective Provincial Industrial Relations Acts.

Table 3.2. Total number of unions registered with NIRC and provincial registrars

Province Total No. of unions

CBA

unions

Non-CBA unions

Total membership Federal level (Registered with NIRC)

Punjab 2 342 674 1 668 502 546 KPK 366 71 295 51 225 Sindh 3 924 379 3 545 494 417 Balochistan 63 33 30 15 776 Total 7 096 1 390 5 706 1 414 160

Source: Trade union density in Pakistan.

The above table indicates that as of December 2016, the number of trade unions registered in Pakistan was 7,096 out of which only 19 per cent were collective bargaining agents.

Trade unions have a checkered history in Pakistan. While Pakistan inherited progressive labour legislation at the time of its creation, subsequent legislation was, however, marked by retrogressive labour laws which weakened the fundamental rights of the workers. For example, the Industrial Disputes Ordnance 1959 fundamentally changed the underlying policy of the legislation and also curtailed drastically the right in respect of collective bargaining and the formation of trade unions’. The Industrial Relation Ordinance 1969 (IRO1969), however, proved to be more progressive than the preceding legislation, as It allowed the freedom of association for all workers and stressed specific measures concerning trade unions, conciliation and arbitration, settlement of disputes, industrial relation, collective bargaining in the public sector, minimum wages, workers’ welfare fund, workers’ housing, occupational health and safety. Improved legislation under IRO 1969 led to an increase in the numbers of registered trade unions which jumped 8600 from 1500 soon after the promulgation of IRO 1969.^3

Both the democratic and dictatorship regimes of the 1970s and 80s did little to support the labour movement in the country. By the 1990s, the shift to privatization led to an increased joblessness among workers while the trade union continued to lose in numbers. In the recent years, global transformation leading to changes in employment structures and

(^3) Labour Education Foundation: Research study on Pakistan labour movement ,

www.lef.org.pk/images/Studyper cent20Finalper cent20Draft.pdf [accessed 11 July 2018].

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resulting in increased ‘informalization’ of labour, has also impacted the trade union movement in the country.

3.2 Legal framework governing labour organization The constitution of Pakistan contains provisions for the economic and social well-being of the people and for the promotion of social justice. Fundamental rights with regard to the security of life or liberty, prohibition of slavery and forced labour, and the right to form associations or unions, among others, are enshrined in the constitution. Article 17 of the constitution deals with freedom of association and provides that “every citizen shall have the right to form associations or unions, subject to any reasonable restrictions imposed by law in the interests of morality or public order”.

Pakistan has ratified 36 ILO Conventions (33 in force), including all the eight Core Labour Standards of the ILO. These include Freedom of Association and Protection of the Right to Organize Convention, 1948 (No.87) and the Right to Organize and Collective Bargaining Convention, 1969 (No.98) in addition to international instruments on the rights of the child and elimination of discrimination against women.

In the post 18th Amendment period, labour has become a provincial matter, with the responsibility for legislating as well as administering labour laws transferred to the provincial governments.

Industrial relations in the workplace are governed by the provisions stipulated in the industrial ordinances or acts enacted by the federal and provincial governments. Each of the province has enacted the Industrial Relations Acts for registration and promotion of unions in their geographical ambit, while at the Federal level the Federal Industrial Relations Act for coverage to more than one province (trans-provincial) has been in place.

Trade unions in Pakistan function on a plant-wide basis, with their membership contingent on the size of the industry or trade to which they belong. It may be noted that in the current legislation, there is no membership threshold for the first or the second union registered at the establishment level. They can be registered with a few members. However, registration of the third union requires membership of 20 per cent of the total workforce. The limitation clause also applies to the number of persons forming the executive; not less than 75 per cent are to be amongst the workmen actually engaged or employed in the establishment or establishments or the industry for which the trade union has been formed.

Once established, the trade unions and employers' associations have the right to draw up their constitutions and rules, elect their representatives in full freedom, organize their administration and activities, and formulate their programmes. If there is more than one union in an establishment, these unions are required to participate in a referendum to determine the CBA union. The trade union that secures more than one third of the total number of eligible votes in an establishment gets the status of CBA.