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Review of safety standards can improve productivity.

Economic Review: What are the major problems of the employers in our country and what is its remedy? Iftikhar Ahmad Malik: The major problem is a failure to understand the potential of the Human Resource of an organisation and this in turn affects the latter's ability to make a significant contribution to the work of an organisation. There is no short term remedy to overcome such a major problem and it can only come through an educated management and workforce who must be responsive to the needs of the organisation e.g. gaining a market share means that both quality and quantity are important and for this it is no one single individual who is important in the process. Everybody in the organisation has to contribute.

Multinational employers are expected to set an example, but unfortunately they face severe difficulties. Multinationals if allowed to follow progressive policies will be able to benefit the country tremendously and enhance the status of the Pakistani worker for overseas employment. Today Co.'s in Europe are sitting across the table agreeing on standardizing labour practices such as conditions of night work, part-time work, minimum wages, worker participation, maternity leave etc. and all this is being done to upgrade the skill and productivity of the European worker to compete with USA and Japan. Such new policies will affect employers like British Airways who will need to hire about 750 pilots and Tesco the supermarket chain will have to increase the payroll by 16 per cent. Deutsche Bank will have to re-think in terms of extending benefits. Reforms do create problems and possibly increase costs but they compel employers to be vigorous and dynamic.

New and progressive standards which will be beneficial for our industry must be allowed to be extended and the Government needs to seriously take this matter in hand with employers. Countries like Thailand and the Philippines by changing and improving their policies have benefited and as a result have enhanced their productivity and status. They have displaced the Pakistani worker overseas and if we want to catch up we have to reform urgently.

ER: How will you comment on Labour-Management Relations in Pakistan.

IAM: Labour-management relations is an abstract term - how can they be said to be good or bad. I would say they are good when there is work of a high standard and both parties are willing to forego immediate benefit for long-term and lasting benefit. Strikes and lock-outs are indicative of labour-management relations. The latest figures show that in 1990 the country witnessed 99 strikes and lock-outs which has been the highest number over a 10 year period. In 1990 Thailand had 9 and the Philippines shows a lower trend over the same period. I leave the judgement to you to decide whether or not our labour-management relations are good or bad. They do affect our image overseas in terms of foreign investment and opportunities for employment of Pakistani workers overseas.

ER: Can you comment on Labour productivity and whether it has improved in the last two years.

IAM: There are simple ways to express labour productivity the most common being of a unit being produced in XYZ man hours or sales per person employed but research in the area has moved to another concept i.e. productivity is measured and compared as a percentage of added value. To give an example, companies with good performance in the food processing industry in Japan in 1989 showed the following percentage of the added value:
1. Profit before Tax 26.3%
2. Personnel Cost 56.4%
3. Interest paid 2.7%
4. Lease rental 4.1%
5. Taxes 3.6%
6. Depreciation 6.9%

Hitachi, Nissan Motors and Honda report figures of 53.1, 51.1 and 54.5 per cent of value added as personnel costs. These are very successful companies and they monitor the figures carefully for further improvements. In Pakistan the dearth of statistical analysis makes comparison and evaluation difficult and it is essential that organisations get together to evaluate data and thus enable organisations to improve.

Obviously there are some factors in the hands of the management and workforce to improve productivity such as absenteeism, waste and quality control and safety at work. Every policy should be designed to encourage individuals to conserve and expand and use resources more effectively. I am sure readers are aware of the potential for improvement. New systems of work which are simple can be implemented. Productivity can improve by reviewing safety standards. It is shocking to see that the rate for fatal injuries in manufacturing industries in Pakistan has increased from 0.240 units in l981 to 0.620 in 1987. A safer working area will produce positive results and here again employers can play an active role.

ER: Are you optimistic about the incoming Labour Policy. Is it likely to contain employers aspirations.

IAM: A sound Labour Policy has to emerge to fit in with the overall economic development policy of the Government. A policy which has few constraints will lead to tremendous development and create positive satisfaction for a large population. However, a policy which concentrates for the betterment of about 40 per cent of the economically active population leaves a very large majority without any direct benefit. The Government should therefore make a policy which is equitable for all sections. Within the policy employers must have the right to retain employees of their choice. Many of the current pieces of labour legislation are a direct outcome of labour demands leaving very little choice to CBAs. This causes frustration. The Government can lay down minimum standards and leave the rest to employers and Unions.

An important feature of a policy should be that it must be for a long term, say 10 years which will allow definite employer-employee programmes to be undertaken. The Government has been engaged in the privatisation programme which employ a large workforce and it appears that once this programme is over, employers and employees in the revised set up will be able to understand the problems and issues better and recommend policies which are pragmatic and productive. This delay is affecting existing employers. The Government has to find some way of satisfying both the categories at the earliest possible.

ER: You are an advocate of denationalisation policy of the present government. Now, do you feel that the denationalisation policy proved its worth in term of investment. If not, then what measures do you suggest to attract investors for the development of industrialisation.

IAM: I can only comment on the aspect of the manpower in units which are the subject of transfer to the private sector. The new employer must have the right to keep manpower which he thinks is suitable. Currently the conditions restrain an interested party but those with enlightened and capable management can comfortably adopt policies to change an organisation. The difficulties being encountered over employee issues is a true indication of labour legislation and how difficult it is for an employer to be able to operate with a workforce of the requisite number and quality. The policy of nationalisation has affected merit and skill and the new policy will bring about a change which is so vital for the country.
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Title Annotation:Industrial Relations in Pakistan '92; interview with Iftikhar Ahmed Malik
Author:Haque, Ansarul
Publication:Economic Review
Article Type:Interview
Date:May 1, 1992
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