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Industrial relations in Pakistan.

Pakistan is a land of 110 million people, with a population growth rate of 3.1 per cent per annum, against average annual economic growth rate of 5.2 per cent. At present the local employed labour force of Pakistan is 31.78 million. It includes 16.26 million in agriculture, 4.08 million in the mining and manufacturing sector, 3.86 million in community and services sector, 3.79 million in trade, 2.03 million in construction and 1.55 million in transport etc. The distribution of the employed labour force, of different sectors as under:-
Employed Labour in Pakistan

(In million)
Sector Employment

Agriculture 16.26
Mining and Manufacturing 4.08
Construction 2.03
Electricity & Gas Distribution 0.19
Transport 1.55
Trade 3.79
Others 3.88

Total:- 31.78

Source: Pakistan Economic Survey Published by Finance Division

Unions and Associations

To play an effective role in labour-management co-operation, the industrial labour force in Pakistan is organised in the form of trade unions. At present, the number of such trade unions is around 7000 with a membership of about 1 million workers. These unions represent about 8.59 per cent of the employed industrial labour force in 11.64 million. The unions are affiliated with the federations of workers at the national level. Trade unions and their membership as under:
Trade Unions and their Membership in Pakistan

 No. of Membership
 Trade of Trade
Year Unions Unions

1979 6,869 984,699
1980 6,551 869,128
1981 6,227 746,362
1982 6,344 762,764
1983 6,253 771,548
1984 6,271 859,753
1985 6,170 859,517
1986 6,322 858,967
1987 6,349 880,905
1988 6,428 888,014
1989 6,897 952,351
1990 7,080 952,488

Source: Provincial LabourDirectorates

Likewise the employers have also organised themselves in the institutions of Chambers of Commerce and Industry with a view to protect their interest. Such Chambers are about 40 in number and are established at the district, regional and national level.

Collective Bargaining

In establishments having powerful trade unions, the conditions of work and wages are determined through the process of collective bargaining. The workers elect their representatives who act as collective bargaining agents for a period of two years. There are about 2000 collective bargaining agents who are actively participating in safeguarding the interests of their workers simultaneously working for the promotion of harmonious labour management relations and the growth of the economy.

The basic law which plays an important role in promoting sound labour-management relations is the Industrial Relations Ordinance, 1969 which provides for settlement of industrial disputes through bilateral negotiations between the parties. It is legally obligatory on the parties to enter into direct negotiations in the first instance. In the event of failure of bilateral negotiations, either party to the dispute, may invoke conciliation proceedings by serving on the other party to the dispute a notice of strike or lock-out. The Conciliator is required to finalise the conciliation proceedings within fourteen days period of strike or lock-out notice unless the parties agree to extend the proceedings. If a settlement is arrived at in the course of proceedings before the Conciliator, the parties to the dispute are required to sign a Memorandum of settlement.

If conciliation proceedings fail, the Conciliator tries to persuade the parties to agree to refer the dispute to an Arbitrator. In case the parties agree, they make a joint request, in writing, for reference of the dispute to an Arbitrator agreed upon by them. The Arbitrator gives his award within a period of 30 days. The award of the Arbitrator is final and no appeal lies against it. Arbitration is optional and not compulsory. If the parties do not agree to refer the dispute to an arbitrator, the workmen can go on strike or the employers can declare a lock-out, as the case may be before or after the commencement of a strike or lockout, the concerned party can make an application to the Labour Court for adjudication of the dispute.

Labour Judiciary

Industrial disputes are resolved in the forum of adjudication, called the Labour Court. Functions of the Labour Court are as follows:-

(a) to adjudicate and determine industrial disputes which have been referred to it or brought before it under the Industrial Relations Ordinance.

(b) to enquire into the facts and adjudicate any matter relating to the implementation or violation of a settlement which is referred to it by the Provincial Government.

(c) to try offences under the Industrial Relations Ordinance.

Decisions and awards of the Labour Courts are appealable before Labour Appellate Tribunals. The Tribunals also exercise administrative control over the Labour Courts. At the national level, the national Industrial Relations Commission adjudicates labour cases. The Commission consists of a Chairman and at least six whole-time members. The functions of the Commission are:-

(a) to promote the formation of federation at the national level.

(b) to promote the formation of trade unions of workers within the same industry and federation of such trade unions.

(c) to adjudicate and determine industrial disputes to which an industry-wise trade union or a federation of such trade union is a party and or any other industrial dispute of national importance which may be referred to it by the federal government.

(d) to register industry-wise trade unions, federation of such trade unions and federation at the national level and to determine collective bargaining agents amongst such organisations.

(e) to deal with cases of unfair labour practices and to try certain types of offences under the Industrial Relations Ordinance.

A simple and effective procedure has been laid down to redress grievances, arising out of rights guaranteed under the law. The dispute can be referred by the aggrieved person or the Collective Bargaining Agent to the Labour Court for decision within seven days.

Unfair Labour Practices

Collective disputes are raised through Collective Bargaining Agents. The procedure and machinery for settlement of collective disputes has been laid down in Industrial Relations Ordinance, 1969. Any malafide action on the part of employer, against an office bearer of a Trade Union has been made an unfair labour practice on the part of employer. Recruitment of new workmen, during the period of notice of strike or during a legal strike, is also unfair labour practice on the part of employers. Coercion on an employer to accept demand is an unfair labour practice on the part of workers. Instigating or inciting others to take part in an illegal strike or 'go slow' is also an unfair labour practice on the part of workers. The unfair labour practices are dealt with by the National Industrial Relations Commission. The Commission has been entrusted the task of preventing such offences.


The determination of wages of an unskilled worker is a prerogative of the Tripartite Minimum Wages Boards set-up in the four Provinces of Pakistan, primarily because majority of workers are not organised and the Government, with a view to protecting the interests of this segment of labour force, has decided to determine their wages, as and when considered necessary. On the other hand, the organised trade unions bargain their terms and conditions of employment through the process of collective bargaining with their employers.

Productivity of both men and machinery is very important for increasing the pace of economic development in a country. Although there is great stress for increasing productivity in Pakistan, but so far no independent studies have been carried out to measure productivity. The wages of workers are not linked with productivity. However, in some of the establishments where piece rate system exists, targets have been fixed between workers and employers.

Terms and Conditions of Service

As regards the terms and security of employment and working conditions in the industrial and commercial establishments, the following labour laws provide special provisions for the workers:-

* The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968.

* The Factories Act, 1934

* The Merchant Shipping Act, 1923.

* Workmen's Children (Education) Ordinance, 1972

* Employees Old-Age Benefits Act, 1976

* The Provincial Employees' Social Security Ordinance, 1965

* The Mines Act, 1923

* The Newspapers' Employees (Conditions of Service) Act, 1973

* The Road Transport Workers Ordinance, 1962

* The West Pakistan Shops and Establishments Ordinance, 1969.

Of all the above laws, the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1969, is the most important piece of legislation and is of specific application, too. The law provides a number of benefits and safeguards to the workers employed in the industrial and commercial establishments, such as group insurance, gratuity, profit bonus and safeguards against arbitrary and illegal dismissal and termination of services etc.

According to this Ordinance, the employers are required to provide in writing the terms and conditions of employment to every worker. It lays down that before terminating the service of a permanent worker for reasons other than misconduct; one month's notice or one month's wages in lieu thereof are to be paid to the worker apart from gratuity or other outstanding dues. Orders of termination of service are given in writing, vis-a-vis reasons stating for such an action. A workman can be charged for 'misconduct' and can be dismissed from service if he is found guilty of disobedience, go-slow, habitual late attendance and participation in illegal strikes etc.

Labour-Management Relations

The Industrial Relations Ordinance, 1969, provides a basis for the development, growth as well as the regulations of the employer-employee relations in the country. The object is to secure maximum cordiality between the workers and the employers and to establish a climate of mutual understanding where-by the workers may be able to contribute their best for the growth and development of the economy. At present the legal system provided for promoting sound labour-management relations in the country, is working satisfactorily. The available statistics on strikes/lock-outs indicate that o n an average 70 to 80 strikes have been place annually in the country. A statement showing strikes, workers involved in them and the mandays lost is as under:
Work Stoppages due to Industrial Disputes in Pakistan

 No. of work Workers Mendays
Period stoppages involved lost

1979 65 38,733 247,867
1980 59 24,710 54,730
1981 64 47,236 521,803
1982 26 22,409 690,872
1983 63 29,163 590,406
1984 81 30,702 157,748
1985 53 35,858 159,427
1986 26 12,929 189,025
1987 26 12,992 270,794
1988 18 8,231 197,351
1989 42 29,205 229,089
1990 99 65,918 186,726
1991 94 116,306 582,694

Source: Provincial Labour Directorates

For improvement of labour relations and mutual understanding between labour and management, we have allowed both workers and employers to form their trade unions and associations. At present there are about 7000 trade unions of workers and 40 organisations of employers. The workers and employers through their representatives within the context of the federations, the trade unions and the Chamber of Commerce and employers, come into contact with each other. The interaction which takes place between the representatives of both workers and employers federations gives rise to the improvement of relations. It is important to note that over a period of more than four decades, the employers as well as the workers have developed an environment of mutual trust and understanding which has helped in the maintenance of industrial peace and good labour-management relations.


Joint consultation is undoubtedly a very important process for resolving the problems and taking new initiatives in what ever field it may be. When it comes to the industrial relations, the importance of consultation can hardly be over-emphasized. Industrial Relations are not mainly governed by laws and regulations alone; but the attitudes, the educational attainment and cultural background of the participants in joint consultation play a decisive role in influencing the behaviour of the workers as well as the management. At present the problem solving machinery in Pakistan is the four-tiers system of labour participation in the management set upunder the laws, as below:-

i) Shop Steward at the shop level

ii) Works Council at the sections or Department level

iii) Joint Management Committee at the factory level

iv) Joint Management Board at the company level

The consultation system mentioned above is not very effective perhaps because of the illiteracy of workers or due to the reason th at the employer is the final authority to take decisions about the finances of the enterprise, the processes to be employed; production targets to be achieved and the cross section of the workers to be employed; it becomes rather difficult for the workers' representatives to play an equal role with their management. The relevant provision of the law, however, expects that the workers representatives would be free to discuss the various management aspects as well as labour relations questions with their entrepreneur across the table.

Further, in the composition of management Committee only 20 per cent representation is available to the workers. In such a case only one seat out of five goes to the representatives of workers on the Management Committee. The very composition of the Committee rules out any affective performance of the workers' representatives on it. Efforts were made in the past to know about the working of these Committees but the data could not be collected primarily because a limited number of enterprises have set up the various consultative agencies provided under the IRO in their enterprises.

As against the foregoing, the experience shows that the consultative bodies like the Standing Labour Committee and the Pakistan Tripartite Labour Conference have been able to make positive contribution for the amendments and improvement in the labour laws, framing of the labour policy and discussing the various issues that have been agitating the labour-management relations in the country over the last decade. These forums have become more strong after the advent of the democracy. It is, however, again important to note that the Provincial Tripartite Labour Boards have not remained as active as was expected of them. Barring a few exceptions noted above, the consultative efforts in the country undoubtedly had wholesome effect on labour management relations with the result that not only the industrial climate remained peaceful in the country but there has been no major industrial action, either on the part of the workers or the managements.


The Government of Pakistan firmly believes in intimate collaboration between the Government, the workers and the employers at all levels of its industrial relations system. With this end in view, all welfare programmes and the institutions responsible for their implementation, function under the general supervision and control of Boards of trustees or Governing Bodies, which are tripartite in their character. The representatives of workers and employers on these bodies are appointed in consultation with the most representative organisations concerned.

Likewise, the Government convenes Pakistan Tripartite Labour Conference, a body consisting of the representatives of employers and workers drawn from the four provinces and representing all major functions of employers and workers in the country. The Standing Labour Committee which consists of leading representative organisations of the two partners of production including the Government, is the executive body of the Pakistan Tripartite Labour Conference. All new programmes and amendments, modifications and improvements in the labour laws and the labour policy as well as other related decisions are taken in consultation with the Standing Labour Committee and the Pakistan Tripartite Labour Conference.

The ILO pattern on representation, having the most representative organisations of workers and employers, has been adopted, so that, it is the organisation which should choose their representatives without governmental interference. These Conferences are meant to advise the Government on Labour Matters, such as formulation of labour policy, enactment of labour laws, and to suggest amendments in the existing legislation. The Conference, also comments on the economic and social policies as they affect the interests of the workers and the industry; and reviews the suggestions.

Most of the labour related decisions are arrived at through tripartite consultation s between the government, workers and employers representatives.
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Author:Siddiqui, Sohail Qadeer
Publication:Economic Review
Date:Jul 1, 1994
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