The hallmark of the present Government’s industrialization policy is to attract foreign investment. In this connection, the aggressive efforts of the Government have paid off and more than US$ 20 billion worth of MOUs have been signed in the past few months with foreign investors. Most of them have, of course, been in the power sector. There has also been a lot of investment in the securities market by the foreigners and the establishment of the Pakistan Funds abroad to invest in stocks have been huge successes.

The Government has continued with the policy of privatization, and the Privatization Commission has sold off many state-owned enterprises to the domestic investors. Moreover, the Government has disposed off 2% shares of the gigantic Pakistan Telecommunications Corporation both thru the local stock exchanges and thru foreign placement. There was a tremendously positive response to this issue by the foreign investors, and the country received nearly a billion US dollars from the sale of 01 % of the stock.

At the same time, the Government has ensured that the interests of the workers of the privatized units are protected. In most of the cases, a generous golden hand-shake scheme has been implemented, a program which has proved effective in trimming down the already bloated employee roster of these units. In fact, many of the new owners did not retrench the employees and in some instances even added more workers on to the rolls. However, the privatization of a major power plant, the Kot Addu unit operated by the monolith WAPDA, has faced resistance from the Workers’ Union. At one time, the unit was forcibly taken over by the workers but lately, there has been some thaw in the rigid stand of the workers and the negotiation between the workers and the Privatization Commission has borne some fruit. The Government will go ahead with the privatization of other major utilities like the KESC, Gas companies, telephone, and the banks, etc and is on the lookout for strategic investors.

The burning issue of Child Labor has begun to take on prominence in this country. The murder of a child activist, Iqbal Masih, a child carpet worker, sparked off a raging controversy and resulted in the substantial decline of carpet exports from this nation. The worldwide publicity given to the arrests of other activists dealing with the issue of Child Labor has also hurt the nation. The local news media has taken up the issue too and the traditional rivals of PAKISTAN in the global export trade have also accelerated their propaganda against the country at all international levels.

The Labor Department in the Sindh Province has issued orders to its Factory Inspectors to implement the provisions of the Children Employment Act without any discrimination, and to effectively prosecute the errant industrialists who are intentionally employing Child Labor.

There has also now been a concerted effort on the part of employers and their associations to seriously check the misuse of Child Labor. The employers’ organizations are preparing to make proper guidelines for their members to follow in this respect. However, the labor unions and their federations are not very vociferous in this respect, more so because the children are normally not part of their membership, and thus the interests of the labor federations is not too intense. The sad part is that these children are also taking up jobs which generally would have gone to the adult worker. And, they are being deprived of proper education too.

The deteriorating law and order situation, especially in the largest city of the country, Karachi, has resulted in the closure of many industries and businesses, exodus of capital, and the migration of the work force back to their native homes. The frequent calls for strikes and protests by the political parties has led to the drastic reduction in production activity resulting in the reduction of wages for workers, especially in these times when the spiraling inflation has seriously hurt the populace.

The prevailing situation has also been tough on the daily wage earners who have to forego their income for the period during which all industrial activity is at a standstill. This has played havoc with their standard of living and has put a heavy strain on their capacity to survive. It has also aggravated the discontent in the ranks of the work force which could turn calamitous.

The global environment has been tough on Pakistan which is dependent on imports of most of her essential items. The rising yen, the increase in dollar-rupee parity, the recessionary trends in world trade, and the excessive dependence on deficit financing, have all ensued into an uncontrollable upsurge in the cost of living in the country. The official inflation rate is around 10%, a figure disputed by independent economists who vary the rate from 18-22%. The prices of essentials have sky-rocketed and the outcome has hurt the lower- and middle-income segment of the society tremendously.

The Government has recently increased the power rates by up to 21%, gas rates by 26%, and water rates by 33%, all in one go. These announcements were made after the presentation of the national budget. In the budget, the Government increased gasoline prices by 5%, and has now levied 15% sales tax on many industries.

The effect of this high inflation will, undoubtedly, result in a serious re-negotiation of the wages and benefits agreement between the employers and the workers, and could create unsavory situations in many industries, a circumstance this country can ill-afford, especially in these turbulent and volatile times.

The Federal Labor Minister had announced that the contents of the new labor policy will be presented very soon. This encompasses the views of all three parties and has been heralded as the first realistic policy to emerge on the labor scene. However, due to certain constraints imagined by the Government, the policy is still in cold storage. The major areas of dissatisfaction are contract labor, the right of hire and fire, and the issue of 25% outsiders in n union. It is presumed that the Government is waiting for an opportune moment to make the announcement.

The employers and the workers have embarked on a more conciliatory avenue these past few years. The moderate labor leaders and the enlightened employers have got together under the auspices of the Employers’ Federation of Pakistan and are sincerely working on a pragmatic Code of Ethics and a realistic system of bi-lateral negotiations to iron out the present differences and stem the unnecessary rise of perceived snafus. This historic breakthrough was reached in the early part of this year by the two parties. It is the sanguine wish of all those involved to create a harmonious industrial environment which will prove to be a major instrument of industrialization in this country.