Posts Tagged ‘Labor’

Fifty Years of Activism in Pakistan: A Sea Change

January 11, 2016

By Anjum Altaf

Pakistan today is very different to what it was fifty years ago. An aspect that has changed significantly – literally turned on its head – is the nature of political and social activism, i.e., the very dynamic that leads to change in society. I describe this transformation based on my interactions with the young – as a student at the beginning of the period and as an instructor of students at its end.

Needless to say, the majority in any society is content to swim with the tide. Members of this majority may hold opinions about desirable changes but they are not involved in the process of bringing them about. On the other hand, there is always a small minority of individuals who become actively engaged in efforts to change society. Such activists mobilize varying numbers of the majority for or against in different situations but the fact remains that most internal movements are initiated by this small number of activists.

As one would expect, activists are motivated by a range of concerns and inspired by varied sets of ideas. Since both concerns and dominant ideas change over time, it is reasonable to think that the nature of activism itself might undergo changes of various kinds. The transformation in the nature of activism in Pakistan over the last half century is the focus of this discussion.

At one level, the situation fifty years ago was simple. The 1960s, with the ongoing Vietnam War and decolonization, was the height of anti-imperialist and anti-capitalist sentiment, both reflected in the popularity of Marxist-oriented alternatives. These had an appeal to those segments of the young who were open to external ideas and focused primarily on political change in the nature of the state. This orientation was supported by the influx of heavily subsidized literature from Soviet and Chinese sources.

There was another set of the young who were motivated much more by internal ideas and focused primarily on moral improvement of individuals in the belief that such moral improvement would result in a better society. These were primarily Islamic moral and religious ideas for a better future.

There were a number of important differences in these two broad categories of activists. The left-oriented political activists articulated the views of a small minority of the total population but were a fair proportion of this population. The right-leaning social activists articulated the views of a large majority of the total population but were a relatively lower proportion of this population. On balance, because of the large difference in the relative sizes of the population pools, the absolute number of right-leaning activists exceeded the number of left-leaning activists.

Other salient differences were quite obvious. Left-leaning activists subscribed to secular ideas, sought systemic political change, and attempted to mobilize collective movements to achieve their objectives. Right-leaning activists derived their inspiration from religion, focused on individual moral improvement, and furthered their objectives through schemes providing social welfare to communities. It would also be fair to say that in Pakistan left-leaning approaches were top-down while right-leaning ones were bottom-up.

Fifty years later, the situation appears significantly more complex. External ideas offering alternative models of state structure have lost much of their appeal. Marxist approaches, in particular, have little credibility to offer and various articulations of hybrids remain too vague to have sufficient resonance in large enough groups of people to be relevant. Internal ideas, on the other hand, have grown from a focus on individual moral reform to offering political alternatives of various shades supported extensively with subsidized inputs from the Middle East. These mark the transition from the Islamic to the Islamist orientation in Pakistan.

What one sees today is a world of activism almost upside down. The segment of youth that fifty years ago would have been in the vanguard of left-leaning, secular, political activism is engaged now in a very different manner. Most are involved in efforts to improve individual social welfare through NGO-sponsored community projects while at the same time being quite at ease with religious prescriptions to achieve a better society. The latter is manifested by initiatives centered on promoting inter-faith harmony.

On the other hand, the segment of youth that fifty years ago would have been in the vanguard of the right-leaning, religious, moral activism has split, with a significant element moving on to religiously inspired activism directed towards political change. (The reader would no doubt register that these are broad generalizations and not applicable to every single individual in either group.)

The bottom line is that there has been a marked rightward shift in activism in Pakistan over the last fifty years. This shift includes both the sources of ideas and the nature of the activism itself. A large proportion of the segment that earlier contributed political activists has transitioned to social welfare approaches while those who earlier contributed moral activists have split into two – a section continuing in the older tradition and another moving on to political activism inspired by internal religious ideas.

This much should be acceptable to the reader who takes the time to reflect on these changes. It is less clear, however, as to what might be the forces driving this change itself. At one level, the erosion of the credibility of externally inspired models is a convincing enough reason for the decline of left-leaning activism. In parallel, the emergence of a seemingly real clash of religions at the global level can explain the rise of right-leaning political activism.

However, there might be a less obvious factor that has facilitated this transition and helped give it the specific character we see today. This relates to the evolution of the labor market in Pakistan over the last fifty years. At the beginning of this period the balance of economic growth and the supply of labor was such that almost anyone with some education was guaranteed a reasonable employment. This assurance was sufficient to allow many young people to indulge their idealistic aspirations whether on the left or on the right.

Fifty years later, the pool of educated youth has expanded manifold and greatly outpaced the growth in the number of acceptable jobs created by a consistently anemic economy. This outcome has pushed even the better educated to struggle for decent employment which has become the over-riding priority. Idealistic aspirations are now satisfied through part-time or incidental social work. At the same time, the job market for the less well-educated is so bleak that many of them have found attractive the promise of political change that would skew the distribution of resources in their favor. One might almost claim that the activism of idealism has been replaced by the activisms of anxiety and resentment.

A counterfactual thought experiment might prove useful to probe the plausibility of this hypothesis. What would have happened if the Pakistani economy over the past fifty years had been propelled by East Asian rates of growth? Would we have seen the same patterns of activism even in the face of the decline of Marxism and the rise of the clash of religions?

If not, what might we have seen instead? Perhaps much more activism centered on human rights, participatory governance, and basic freedoms. It is plausible that the concerns could have been quite different. If so, the conclusion supports the contention that the evolution of the labor market is a factor that must be considered in understanding how our society and the nature of its activism have evolved over the preceding half century.

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Why Labour Needs Help

February 5, 2015

By Anjum Altaf

It may seem counter-intuitive but if we wish to spur economic growth in Pakistan both government and citizens would have to step in to help labour. This is the surprising conclusion of a study of the local economy carried out by students from the Lahore University of Management Sciences (LUMS) under my supervision.

Initial discussions with representatives of several small cities around Lahore identified violations of labor laws as having a significant impact on both the welfare and productivity of industrial workers. As a result, the interactions between labor laws and economic growth were studied in Sheikhupura, a half-million sized industrial city about 30 miles from Lahore.

Observations of small scale industry, employing the majority of the industrial labor force, revealed desperate, survival level, working conditions at compensations below the minimum wage. Workers had little or no protection from various forms of exploitation and exposure to hazards. There were virtually no mechanisms of redress and no collective bargaining. One outcome of limited incomes was little or no investment in human capital improvement and sustained poverty over generations.

The balance of power among the three key agents – workers, factory owners, and government regulators – was found to be completely one-sided with the latter two holding all the cards and employing a strategy of extensive collusion. This collusion allowed gross violations of all labour laws with various subterfuges and mechanisms, the most egregious being the outsourcing of worker hiring to contractors less subject to the application of laws. This significantly diluted the legal accountability of factory owners.

The situation in the small-scale industry in Sheikhupura could be characterized as a low-level equilibrium trap sustained by a competitive market in which no individual firm by itself could afford to change the terms of engagement with either the workers or the regulators without going out of business. Charitable intentions were not enough to change the plight of workers.

In such a scenario, market forces alone would not prove sufficient to provide a dynamic leading out of the low-level equilibrium trap although escaping the trap would actually be in the long-run interest of both factory owners and workers. The existence of so many people at survival level keeps purchasing power low which negatively impacts the prospects for consumer-driven growth. As a result the development of local industries catering to the demand of the majority of the population is stifled. At the same time there is no incentive or ability to invest in human capital improvements for the future.

The study concluded that only federal action can change market conditions creating a new level playing field forcing all factory owners to equitably comply with higher standards in their own long-term interest. An example of such federal action was witnessed in the American South in the 1960s with the promulgation of the Civil Rights legislation that altered the negative equilibrium resulting from pervasive racial discrimination leading to with win-win outcomes for all stakeholders. Business was forced to act in its long-term interest against its will and contrary to its perceptions of short-term competitive advantage gained by exploiting labour. In retrospect the federal intervention was deemed to be the best thing that happened to American South.

Federal governments in Pakistan have been unable to initiate such legislative action and present trends in South Asia are actually in the opposite direction owing to pressures generated by the forces of globalization to create business-friendly markets.

In such a scenario of weak support, grassroots political mobilization and consumer activism are necessary to advance the cause of labour. In developed countries such initiatives have often succeeded in convincing governments and employers to curb harmful labor practices at home and abroad and they have been lauded for the contribution. Recent public interest litigation in the Punjab on behalf of workers employed in unregistered stone crushing factories and dying of silicosis is a case in point. Such activism illustrates both the need and the possibilities of proactive lobbying on behalf of labour rights in developing countries.

Many innovative policy responses are possible to improve the conditions of labour to spur demand-driven economic growth in Pakistan. In addition to strengthening existing penalties, a new dynamic can be triggered by measures that incentivize companies to voluntarily improve working conditions and standards. A calibrated carrot and stick regime supported by public disclosure and citizen labor boards can yield sustained progress towards greater social justice and workplace democracy.

There are no fundamental reasons that prevent governments from adopting some or all of the measures that could improve the livelihoods of workers. Continued failure to act is contrary to national interest. Governments and citizens committed to economic growth ought not to allow conditions to deteriorate to the point of a demand deficit that can have uncertain outcomes.

Anjum Altaf is the provost at Habib University and was formerly dean of the School of Humanities and Social Sciences at LUMS. This op-ed appeared in Dawn on January 23, 2015 and is reproduced here with the author’s permission. The complete report is available at http://www.theigc.org/wp-content/uploads/2015/01/Altaf-2014-Working-Paper1.pdf

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The Curious Case of Hyderabad Sindh

July 17, 2013

By Anjum Altaf

Peshawar is by no means the busiest airport in the world but compared to Hyderabad it is a monster.

I mentioned in an earlier post (Anchoring Khyber-Pakhtunkhwa Province) that the number of flights per week into Peshawar airport was 79 of which 56 were from the Middle East. I used the information to venture that the KP economy was anchored in the Middle East and that this was not due to the flow of investment into KP but the export of manpower from it.

A reader commented that what I had mentioned for Peshawar was true of every big city in Pakistan. This may well be established and, if so, it would suggest that Pakistan as a whole is a manpower exporting economy – statistics indicate that almost the only positive number in recent years has been remittances from workers overseas.

Still, it is my guess that Peshawar is an outlier amongst cities in Pakistan and that extending the comparison to every city is not warranted. I make my point by referring to the curious case of Hyderabad which in terms of population size is of the same order as Peshawar.

In extending the research to Hyderabad, I was, much to my annoyance, surprised again. I had not expected to find that Hyderabad airport had actually remained inoperative for ten years till 2008 and just this year has been closed to commercial traffic again.

My memory of earlier years recalls flights to Hyderabad from Lahore and Islamabad via Nawabshah but clearly something had changed. This warrants investigation given that in the normal course one would expect more economic integration not less over time.

A number of scenarios could be postulated. First, Hyderabad might really have declined economically over the years and is not any more a viable destination for air traffic. I would be skeptical of this explanation given that there are still flights into smaller cities like Sukkur.

Second, it could be the case that there is real economic demand for service which is not being met for reasons we are unaware of. If so, it would signal a failure of the political process through which the needs of a community are articulated and met.

Third, it could be that Hyderabad can do without air service because of the proximity of Karachi. I am not convinced of this argument which could be made just as plausibly for Peshawar. One could ask why Islamabad airport does not serve the same purpose for Peshawar.

The answer to the last question should be obvious: Enough passengers wish to fly directly to Peshawar which makes the supply of air service a viable proposition. There is clearly not the same magnitude of passenger demand into Hyderabad.

This brings me back to the study of relative labor flows from and to Pakistan that was mentioned in the post on Peshawar. The district-level study summarized its findings as follows: “The general pattern seems to suggest that the less developed districts have high out-migration and low return-migration, whereas the more developed districts… have low out-migration and high return-migration.”

It then highlighted the exceptions: “The only districts that do not fit into this pattern are the less developed districts of Sindh and lower Punjab, which are characterised by both low out- and return-migration.”

The puzzle was that while both the erstwhile NWFP and Sindh were characterized by similar indices of rural poverty, the relative outmigration of labor from the former was much higher than from the latter. One of the joys of research is stumbling upon the unexpected – I realized for myself the importance of the dog that does not bark. While we were focused on studying the causes of migration, the lack of migration from some areas was an equally important phenomenon to explore and explain.

It was my inference at that time that the explanation of the puzzle pertaining to the very different individual responses to rural poverty resided in the nature of the land tenure systems in the two provinces – one tied its labor to the land in much more coercive ways than the other. The why and how of it are fascinating topics to explore but I leave them here to the imagination of the reader.

It was natural to extend this insight to the movement of labor from rural Sindh within Pakistan. The immobility hypothesis explains why, for example, Karachi is the largest Pakhtun and not Sindhi city in the world despite the fact it is located in Sindh and over a 1000 kilometres from Peshawar.

The internal movement of labor in Sindh also threw up an interesting contrast with the Punjab. The ethnic homogeneity in the latter meant that both labor and capital circulated freely between rural and urban locations in the province. The ethnic heterogeneity in Sindh, with rural and urban areas dominated by different groups growing increasingly alienated from each other, meant that the corresponding circulation of labor and capital was much more restricted if not severed altogether.

The deprivation of modernizing capital investments from urban areas had obvious negative implications for the prospects of rural development in Sindh. For our limited hypothesis related to demand for air service, it meant that both international and national flows of labor from rural Sindh were severely constrained.

To some extent, this provides a partial explanation for the curious case of Hyderabad whose airport has remained barely functional over the years. Of course, it highlights a number of larger questions about local variations in political economy and their implications for the nature of economic change that would bear more careful analysis.

Anjum Altaf is Dean of the School of Humanities, Social Sciences and Law at the Lahore University of Management Sciences. This op-ed appeared in Dawn on July 16, 2013 and is reproduced here with permission of the author.

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Anchoring Khyber-Pakhtunkhwa Province

July 1, 2013

By Anjum Altaf

I learnt there is just one flight per week from Lahore to Peshawar and it returns three days later. This prompted an investigation of how the city is connected to the outside. Here is some quick information on the flights per week to Peshawar and their origins: None from Central Asia; 1 from East Asia; 1 from Afghanistan; 1 from the Punjab; 2 from Balochistan; 4 from within KPK; 4 from Islamabad; 10 from Sindh; and 56 from the Middle East.

While KPK is part of Pakistan, it seems reasonable to infer that its economic engine is in the Middle East.

One might post oneself outside Peshawar airport to determine the nature of the economic engine. I doubt one would see investors armed with briefcases and laptops. Much more likely that the vast majority would comprise migrant workers returning home for a break with the type of consumer goods unskilled and semi-skilled migrant workers come back with.

This would confirm that KPK is a manpower exporting economy. It does not generate enough jobs to employ its labor force; nor does the rest of Pakistan put together. The type of work for which the human capital of KPK has been equipped by its governments is to be found in sufficient numbers in Karachi and, at a living wage, mostly in the Middle East.

This is not an outcome of the recent unrest in the province. It has been so for a long time. I wrote a paper in 1992 – The Spatial Pattern of International Labour Flows from and to Pakistan – which showed that the NWFP (as it was then called) was the province with the highest relative outmigration from Pakistan (about three times the national average) and the lowest return migration to Pakistan (about half the national average). There was little for people to do in the province and little for them to come back to.

Within NWFP, Peshawar district had the highest relative outmigration (over six times the national average) and the lowest return migration (about a fifth of the national average) suggesting that better prepared workers were even more likely to leave the province and even less likely to return. Clearly the prospects for socioeconomic development would be dented if those most likely to contribute were left with no alternative but to exit.

It might be argued that there is nothing really problematic with the above scenario – we are part of a global economy and labor moves to where the jobs are. There are many sociological and political reasons to argue the contrary. Think of the inner cities in the US that were reduced to pockets of poverty after the flight of the affluent to the suburbs. The pathologies that arise from such phenomena are a source of concern to social scientists. One could surmise that the rise of social and religious conservatism in KPK is an outcome of its manpower-exporting economy, anchored in the Middle East, which transforms laborers into small-property owners imbued with the values of its host society (1).

For an economist, the aspect of interest is not that labor moves to where the jobs are but why jobs are not in KPK. Is it a desert capable of growing or producing nothing? Since few would subscribe to that judgment a search is needed for a plausible explanation.

The corollary to the above is that there has been very little investment in KPK from the Punjab, a neighboring province, or from Karachi, despite the fact that the province is rich in energy potential and many kinds of natural resources. At the very least one might have expected over the many preceding decades some relocation of industry attracted by lower  land and labor costs in KPK. An examination of the reasons for the absence might be a good place to start in designing a new development strategy for the province.

A thought experiment might trigger some ideas. Imagine KPK as an independent country no longer eligible for allocations from a federal budget. What might it do to generate its own revenues and how might it go about attracting foreign direct investment from its neighboring countries?

One could add an analogy to the thought experiment. There was a time when Mexico was exporting its labor across the border to the US for agricultural work. The shock of suspension of the arrangement in 1965 was the catalyst for a border industrialization program designed to provide alternative employment. By the end of the century, almost 4000 factories financed by US investment were generating 25 percent of Mexico’s GDP, almost 50 percent of its exports, and about 10 percent of its formal employment.

The analogy might seem far-fetched but is suggestive of a vision to develop the province. Central to the vision is identifying the type of industry compatible with KPKs natural resource endowments, the type of infrastructure and skills required to operate the industries, the type of incentives needed to attract back skilled labor, and the downstream industries that would cater to the consumption needs of workers with rising incomes to keep money circulating in the domestic economy (2).

In thinking of a border industrialization program it might be useful to re-examine the experience of the Hattar Industrial Estate presumably located on the Punjab-NWFP border to attract capital investment. By all accounts it has not been a success – a recent report indicated that abandoned and sick industrial units exceeded in number those that were operational and under construction. The reasons remain to be fully examined.

Khyber-Pakhtunkhwa is a rich province poorly served by its governments. Its citizens deserve better. They are too desperate to leave and too much in debt to find the time or energy to protest but such good fortune may not last forever.

Anjum Altaf is Dean of the School of Humanities, Social Sciences and Law at the Lahore University of Management Sciences. This op-ed appeared in Dawn on June 30, 2013 and is reproduced here with permission of the author.

(1) This is an involved argument that is developed more fully in a note, The Political Implications of Migration from Pakistan, which was published here and reproduced on this blog here.

(2) In connection with attracting migrants back, see Return Migration in a Lifetime Setting: An Exploratory Study of Pakistani Migrants in Saudi Arabia. At the time of the study, wage differentials between Saudi Arabia and Pakistan needed to be of the order of 7:1 to attract migrants. However psychic costs for the migrants were very high. They were willing to return at a wage ratio of 3:1.

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The Economics of Urbanization

May 7, 2013

By Anjum Altaf

We ought to care about urbanization because it will shape our lives, for better or for worse, and often in surprising ways.

An obvious starter is that all developed countries are predominantly urban. Of course one can ask whether it was development that led to urbanization or the other way around. The historical evidence is clear: cities produced jobs that pulled less productive labor from rural areas. That, in a nutshell, was the story of the Industrial Revolution.

The most unremarked replication in recent times has been in South Korea, going from 5 percent urban in 1925 to 80 percent by 2000. At the same time the country transitioned from an aid recipient to a member of the industrialized world, a donor in its own right. (more…)

Informal Labour at the Root of Corporate Corruption

August 6, 2011

By Dipankar Gupta

If bribe giving is legalized will that ground the bribe taker for good? This suggestion was made recently by Kaushik Basu, the Prime Minister’s Economic Advisor. Sadly, such low cost, budget one-liners invariably fail to fly. Eager to clean up the corporate sector, Narayana Murthy, of Infosys, initially endorsed this suggestion, but later found faults with it. The bribe giver could rat on the bribe taker, but it would not be worth the halo. Word would go around and that person would be singled out forever in the real world of give and take.

Under current conditions, but for a handful of companies in IT, telecom and financial services, it is hard for business to play clean and be above board. (more…)