ISLAMABAD: An overwhelming majority of Pakistani garment workers have suffered wage losses that were actually wage theft by global brands during COVID-19 lockdowns, a recent study shows.
Wage theft — the denial of wages or employee benefits — is endemic in global garment supply chains due to power asymmetry between brands, suppliers, and workers, and was escalated by COVID-19 lockdowns, according to the report by Asia Floor Wage Alliance (AFWA), which interviewed workers from 189 factories in Sri Lanka, Pakistan, India, Indonesia, Cambodia and Bangladesh.
In Pakistan, the garment sector is the country’s second largest employer, accounting for around 8.5 percent of GDP and almost 70 percent of its exports. Despite the pandemic, it continued to grow with garment exports increasing to $15.5 billion in fiscal year 2020-21 from $12.6 billion in 2019-20.
AFWA interviewed 605 workers from 50 garment factories across three districts in Pakistan’s Punjab and Sindh provinces — Faisalabad, Lahore and Karachi — suppliers were left short of cash to pay workers as brands refused to pay for shipments that had already been delivered or canceled orders for which factories had already purchased supplies.
“Garment workers in Pakistan faced some of the highest levels of wage theft in the Asian garment industry during the COVID-19 crisis due to the imposition of provincial COVID-19 lockdowns,” AFWA said in its report, “Money Heist: COVID-19 Wage Theft in Global Garment Supply Chains.”
“All workers in our survey experienced employment shocks either in the form of layoffs (86 percent) or terminations (14 percent),” the report said.
The practice peaked in April during the total lockdown period in March-May 2020.
“Wage theft peaked in April 2020 but workers consistently experienced wage theft throughout the year, and well into 2021,” the report said. “Workers reported an overall wage theft of 29 percent in 2020, with a sharp decline in wages by 61-69 percent during the total lockdown period and 26 percent during the partial lockdown period (June-October 2020).”
It estimated that in the 50 factories surveyed, 244,510 workers were denied $85.08 million as wages due to order cancelations or non-payment for existing orders.
The situation started to improve near the year’s end as pandemic curbs relaxed, production increased, and government support started to reach garment workers.
Aliya Hamza Malik, parliamentary secretary for textile and industries, said the government had approved a Rs1.2 trillion package in March 2020, which had helped mitigate the economic fallout from the COVID-19 outbreak.
“We gave a relief package to the industry to help them pay salaries to their workers and ensure their social security,” Malik told Arab News.
“Workers and laborers are on the top priority of our government and we will keep looking after them,” she said. “The textile sector is one of the best performing industrial sectors in Pakistan as its exports have increased from $12.6 billion last year to $15.5 billion this year.”
According to AFWA, however, around 65 percent of the workers did not receive any social security benefits even during the pre-pandemic period, with the number increasing during April-May to 80 percent.
Ijaz Khokhar, chief coordinator at the Pakistan Readymade Garments Manufacturers and Exporters Association, rejected the AFWA findings, at least in Pakistan’s “formal industrial sector.”
“Our industry employs skilled workers and cannot afford to lay them off in any short-term crisis,” he told Arab News. “We have retained our workers, paid them full salaries and additional benefits and allowances during the COVID-19 lockdowns because they are backbone of the industry.”
Most garment workers in Pakistan reported wage theft during COVID-19 crisis — survey
https://arab.news/yw5tb
Most garment workers in Pakistan reported wage theft during COVID-19 crisis — survey
- 86 percent of garment workers in Pakistan experienced layoffs during the COVID-19 crisis, Asia Floor Wage Alliance report shows
- Textile sector is Pakistan’s second largest employer, accounting for around 8.5 percent of GDP and almost 70 percent of the country’s exports
Pakistan’s deputy PM says country seeks to convert $1 billion UAE deposit into investment
- Ishaq Dar says the UAE will acquire shares in Pakistani companies using the amount, with transaction to be completed by March 31
- The UAE’s remaining $2 billion in deposits, part of funds used to shore up Pakistan’s foreign reserves, are due for rollover in January
ISLAMABAD: Pakistan is seeking to convert part of its financial support from the United Arab Emirates into long-term investment to reduce external debt, Deputy Prime Minister Ishaq Dar said on Saturday, following talks with UAE President Sheikh Mohamed bin Zayed Al Nahyan during his visit to Islamabad.
Dar said Pakistan was engaged with the UAE on converting $1 billion in deposits into equity investment, potentially involving stakes in companies linked to the Fauji Fertilizer Group, a move that would end Pakistan’s repayment obligation on that portion of the funds.
The UAE has been one of Pakistan’s key financial backers in recent years, providing $3 billion in deposits to the central bank as part of a broader effort to stabilize the country’s external finances and unlock support from the International Monetary Fund.
Speaking at a year-end briefing, Dar said Pakistan had already begun discussions with the UAE on rolling over the first $1 billion tranche, but Islamabad now wanted to replace short-term borrowing with investment.
“They will be acquiring some shares, and this liability will end,” Dar said, adding that discussions were under way for the transaction to be completed by March 31.
Dar said the Fauji Foundation Group was taking the lead in the process, with plans for partial disinvestment by Fauji-linked and other companies to facilitate the deal.
He added that Pakistan also raised the issue of a separate $2 billion rollover due in January during talks with the UAE leadership, saying Islamabad had conveyed that converting debt into investment would be preferable to repeated rollovers.
The issue was discussed during Al Nahyan’s visit, which Dar described as cordial, adding that the UAE had expressed willingness to expand its investment footprint in Pakistan.
Pakistan has relied on repeated rollovers of deposits from friendly countries to manage its balance-of-payments pressures, a practice economists say provides short-term relief but adds to debt vulnerabilities unless replaced with foreign direct investment.
The country acquired $5 billion from Saudi Arabia and $4 billion from China, which, along with the UAE, helped shore up its foreign reserves and meet IMF conditions at a time when its external account was under severe pressure.
Dar said Pakistan was now focused on shifting from temporary financing toward longer-term capital inflows to stabilize its economy and reduce reliance on external borrowing.
