GSP-Plus and Labour Compliance

Previously a beneficiary of the tariff cuts under the Generalised System of Preference, Pakistan is one of the 10 countries which have been granted the Generalised System of Preference Plus (GSP-Plus) status by the European Union from January 2014. The GSP-Plus allows developing countries tariff-free export of their products to European markets. Under this special incentive trade arrangement, presumably for ‘sustainable development and good governance’, Pakistan fulfils the criteria for vulnerability. As defined by the EU, vulnerable (in terms of trade) are the countries which lack diversification and insufficient integration within the international trading system.

The GSP-Plus is conditional to ratification of, and compliance to, 27 international standards and covenants on labour, human and women’s rights, environment, narcotics and corruption. These 27 standards comprise eight ILO core labour conventions, six UN conventions/covenants on human rights, and gender and racial discrimination, nine UN conventions/protocols on environment and four UN conventions on narcotics and corruption.

The textile and clothing sector will be the biggest beneficiary from the GSP-Plus, though the economists warn that zero tariff is not the only factor that would lead to rise in export. The factors crucial to materialising the advantage include higher productivity, stable prices of raw materials, quality control, customer confidence, standards compliance and certification. The analysts believe that if the industry turns itself around from being supply-driven to demand-driven, it could create 200,000 direct and another 300,000 indirect jobs in the value-added textile sector.

The GSP-Plus has created a plenitude of responses in the country: euphoria among industrialists who foresee increased profits from tariff-free export; anxiety among state officials who lobbied for GSP-Plus in the European Union and now are at a loss how to ensure compliance; cautious optimism among labour and human rights activists who envisage the promotion of core labour standards and human rights; and cynicism among workers who think they are destined to toil in poor conditions, come what may.

A curious response, reflecting denial of ground realities, has come from the policymakers of the biggest province. The draft Punjab Labour Policy 2014 states that “the acknowledgement by the international community of standards’ compliance [in Pakistan] is demonstrated by the grant of GSP Plus by the EU.”

Pakistan has ratified all eight ILO core labour conventions. These standards relate to the right to unionisation and collective bargaining; minimum age for work; elimination of the worst forms of child labour; elimination of forced/bonded labour; gender equity in wages and elimination of discrimination in employment. Relevant legislations in respect of six conventions are already in place. Equal remuneration for men and women for equal work and discrimination in employment (on the basis of race, colour, sex, religion, political opinion, national extraction or social origin) are the two areas devoid of statutory legislation in Pakistan.

The status of implementation of six core conventions on which national legislation exists — union-making and collective bargaining, child labour and forced labour — is dismal, to say the least. It is not just small production units in the informal sector where labour laws compliance is amiss. Labour laws violations in large production houses and factories linked to the global supply chain are not just anecdotal but well documented through research.

The biggest challenge in utilising the GSP-Plus to the maximum is how to ensure labour laws compliance in the four provinces and in both sectors of the economy — formal and informal — as a significant portion of global chain production is outsourced to contractors and sub-contractors who get the work done from an informal labour force. After the passage of the 18th Amendment, the uniformity in labour laws has been compromised. The provinces have separate industrial relations acts based largely on the repressive legislation IRO 1969. The Punjab Industrial Relations Act, 2010, has added a provision which is in conflict to the ILO core convention No.87 concerning the right to form unions, whereas the Sindh Industrial Relations Act has granted the right to organise to agricultural workers.

There is a crucial need to harmonise labour laws across the country. A broader national legislative labour framework — based on constitutional rights, national legislation and international labour standards — must be devised and a statutory/constitutional mechanism put in place to ensure provincial laws adhere to this blueprint.

For effective implementation of labour laws, a strong and unified labour inspection system is essential. Pakistan has ratified the ILO labour inspection convention No.81. Under this convention, labour inspection needs to be placed under the supervision and control of a central authority and the system should apply to all workplaces. Previous national and provincial policies (Punjab Industrial Policy 2003, Labour Inspection Policy 2006) and practices in Pakistan have severely undermined labour inspection. If the country views itself poised to gain from the GSP-Plus, its perspective on labour inspection and labour compliance must undergo a paradigm shift.

A unified reporting mechanism at the federal level is also required. The GSP-Plus monitoring mechanism is based on 1) a system of scorecards and, 2) a GSP-Plus dialogue with the beneficiary country. The dialogue will take place at the federal level. The GSP-Plus scorecard will measure Pakistan’s performance and update it regularly on the basis of reports issued by the monitoring bodies established under the international conventions. Pakistan will need to abide by the reporting requirements imposed by each UN and ILO convention and ensure submission of accurate and timely reports.

Published in Dawn on 17th May 2014:

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