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A Case Study of a Nike Vendor in Sialkot, Pakistan

Pakistan Institute of Labour Education & Research

L a b o u r S t a n d a r d s i n

M a n u f a c t u r i n g I n d u s t r yFootball

June 2009

First published June 2009ISBN

Published byPakistan Institute of Labour Education & Research

PILER CentreST-001, Sector X, Sub-Sector VGulshan-e-Maymar, Karachi-75340, PakistanTel: (92-21) 6351145-7Fax: (92-21) 6350354Email: piler@cyber.net.pk

Research AdvisorKaramat Ali

Research Team Leader &Author of the ReportZeenat Hisam

Project ManagerZulfiqar Shah

Field CoordinatorTariq Awan Malik

Consultant-LawyersMunazza HashmiRana Amjad Ali

Field Team MembersAasma CheemaNadira AzizOwais Ahmad RazaMehrunnisaZahid Ali

Sialkot Field Support StaffGhaffarKashif Mahmud KhanMuddassir

Cover Design and LayoutK. B. Abro

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The Pakistan Institute of Labour Education and Research (PILER), engaged with labourissues for the last 25 years, has undertaken to review the changing trends and the factorsimpacting adversely on the workers' lives and the working conditions, and document theworkers' struggles to counteract these forces. This report attempts to put together a picture

of the current status of labour in the country.

The report aims to facilitate the role of the civil society as a watchdog of human rights related towork and workplace. A constant vigil and monitoring of labour laws violations can serve as a usefultool in the struggle to ensure rights enshrined in the Constitution, national legislation and interna-tional covenants and standards.

The report covers the period up to December 2006 and is based on two categories of sources. Firstly,the secondary sources which range from print media and the internet, to the latest official reportsand documents, research studies and articles available on the subject. Secondly, and of particularsignificance, is the PILER's direct engagement and interaction with workers and labour organizationsin the informal sector, trade unions, civil society groups and representatives of state labour institu-tions.

The assessment of conditions of work and employment put together in this report is based on thework undertaken by the PILER programme and field staff members in recent years. Besides smallsurveys, rapid assessments and sector profiles, the national conventions of workers in the textile,brick kilns, transport, construction and light engineering sectors organized by PILER in 2005 havecontributed richly to the report. Information sharing by workers' representatives, trade unionists,social activists during seminars, training workshops and consultative meetings organized by PILERand the help sought by the workers through the Labour Rights Helpline services have also providedinsights in to the assessment.

The report, first of its kind, acknowledges being deficient in many aspects in view of the constraintsin documentation and systematic data collection prevalent at all levels of society. The constraintsinclude non-cooperation of state governance structures to share data related to labour, lack of dis-passionate critique of labour legislation, and the lack of a unified institutional mechanism at non-governmental level to monitor labour matters.

PILER looks forward to critical review, comments and suggestions for improvement in future report-ing.

Karamat AliExecutive DirectorApril 2007

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Preface

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1. The Study: Introduction

1.1. Objectives1.2 Methodology1.3 Data Collection Process1.4 Constraints

2. The Context: Football Manufacturing in Sialkot

2.1 Decentralization: Cutting Labour Costs2.2 Technology: Writing on the Wall2.3 Labour Standards in Foot ball Industry: Exclusion and Oversight2.4 ILO Labour Conventions: Ratification and Reality2.5 Code of Conduct and Corporate Social Responsibility: The New Paradigm2.6 State Regulatory Mechanisms2.7 Focus on Child Labour versus Core Labour Standards: The Missing Link2.8 Prioritization of Issues in the Global Supply Chain2.9 Macro Policies and Livelihood Options2.10 The Industrialist's Mindset2.11 Cost of Labour Compliance: View from Above

3. The Field: Production Process and the Work Place

3.1 Switch from Home to 'Centre': Changing Labels3.2 The 'Monitorable Stitching Centres' 3.3 Saga Sports Purposely-built Work Centres: Introduction of a New Concept3.4 Saga Management: Benevolent Employer

4. The Workers: Life and Work Conditions

4.1 Socio-Economic Indicators4.2 Employment Status and Work Conditions4.3 Wage Structure and Facilities4.4 Subcontracting through Makers4.5 Peshgi or Advance Payment System4.6 Workplace Preferences and Collective Resistance4.7 Monitoring Mechanism4.8 Workers' Age and Child Labour4.9 Knowledge of Nike Code of Conduct, ILO Conventions and National Labour Legislation

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Contents

4.10 Unionization 4.11 Status of Workers employed at the Main Factory

5. The Women Workers

5.1 Saga's Machralla Community Center5.2 Preference for Work Centres 5.3 Solidarity, Collective Resistance and Bargaining5.4 Gender and Access to Information5.5 Gender and Wage Differential

6. Post-Saga Employment Status

6.1 Impact of Closure6.1.1 Economic Hardship for the Household6.1.2 Impact on Children's Schooling6.1.3 Impact on Women's Income6.2 Entitlements and Claims6.3 Registration with Employees Old-age Benefit Institution6.4 Registration with Punjab Employees Social Security Institution6.5 Post-Closure Claims of Entitlement through Legal Support

7. Can Sialkot Take the Lead?

71. Sialkot Football Manufacturing Industry: Key Issues7.2 The Way Forward: The Sialkot Model 7.2.1 A Rights-based and Holistic Approach7.2.2 Workers' Representation7.2.3 Industry-based Employers' Associations 7.2.4 Tripartism at the Local Level7.2.4 Strong State Labour Institutions and Mechanisms7.2.5 Research and Development7.2.6 Human Resource Development

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Sialkot district is a hub of industrial clustersproducing sports goods, leather goods andsurgical instruments for local and foreign mar-kets. Linked to an increasingly sophisticated

global finance and marketing system, the Sialkotlabour-intensive business model and productionprocesses are still largely family-owned, cottage-based and informal, relying on a semi-literate, semi-skilled workforce operating in precarious conditionsunder weak state regulatory mechanisms.

Global business, pushed by the western media, civilsociety and the end-consumers on fulfilling its corpo-rate social responsibility, singled out an element of theprevalent informal labour relations in 1996: the use ofchild labour in the football industry. The threat to localbusiness led the Sialkot industrialists to sign theAtlanta Agreement in 1997 to rid the industry of childlabour. Facilitated by the other three signatories—theILO, the UNICEF and the state body—the subsequent

implementation of the Sialkot Project succeeded, byand large, in its focused mission: child free labour infootball manufacturing. The other crucial terms andconditions—denial of free association and collectivebargaining, low wages, lack of social protection andoccupational health and safety—prevalent in theindustry were overlooked by all stakeholders (localindustrialists, state bodies, international organizationsincluding the ILO, the civil society and the academi-cians who researched the issue).

It was after a decade of the Atlanta Agreement thatthe industry faced consequences of non-compliance oflabor standards. In November 2006, the Nike Inc.cancelled its order of hand-stitched soccer balls to itscontracting manufacturer, Saga Sports Private Limited,on charges of violation of labour standards, includingallegation of child labour. One of the several largesports goods exporters in Sialkot, Saga Sports wassupplying 15,000 to 25,000 balls per day to Nike

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1. The Study: Introduction

Inc. Saga Sports closure caused loss of job to 7,387men and women workers. According to Nike Inc.:That decision was due to the factory's inaction on cor-recting significant labor compliance violations and afundamental breach of trust with factory management.Among the violations was widespread, unauthorizedoutsourcing of Nike production inside homes in thesurrounding area.1

By December of 2006 Nike had decided to withdrawfrom Saga Sports, although the phased withdrawalwas not completed until March 2007. With the deci-sion to withdraw, a Request for Proposals was drawnup and advertised in the Pakistan business media seek-ing new suppliers of hand-stitched soccer balls thatcould work with Nike to develop and to maintain pro-duction within a social environment that complied fullywith the company's code of conduct. On 15thFebruary 2007, Nike issued a public letter to stake-holders in which it stated, "Nike is committed to plac-ing soccer ball production back in Pakistan with a newmanufacturer operating a new business model thatstrongly supports workers' rights." With the letter Nikeissued a tender, seeking business proposals. Afterextensive appraisal of technical and social complianceaspects of the responding factories by Nike, a newsupply contract was initiated with the Silver StarGroup. The agreement included workers' training inlabour rights and the company's code of conduct.

During this period, the Nike Inc. also mediatedthrough Just Solutions Network, a European NGO, tosupport an action research project in Sialkot imple-mented by Pakistan Institute of Labour Education &Research (PILER) during April to March 2008. Thecomponent of legal support to the retrenched workers,however, has continued in 2009. Simultaneously, aprogramme of labour education in the new supplyfactory was also initiated by Nike Inc., mediatedthrough Just Solutions Network and implemented byP I L E R .

1.1 Objectives

The project aimed to explore the ex-Saga workers'life and past/current work situation, the produc-

tion processes in place, particularly the concept andthe reality of 'work centres' or 'monitorable stitchingcentres' and probed the extent of non-compliance of

labour standards in football manufacturing focusingon Saga Sports. The project also sought to sensitizea number of the identified ex-Saga workers on labourstandards, national labour legislation and code ofconduct. Legal aid was provided to those amongretrenched workers who could claim entitlements fromSaga Sports. The sacked workers were assisted torelocate in the new supply chain.

The project attempted to facilitate emergence of amulti-stakeholders (manufacturers-employers, workers,state officials, trade union bodies, civil society repre-sentatives) consensus on a framework leading to somesort of institutional mechanism for corporate socialresponsibility and labour standards compliance andmonitoring in Sialkot.

1.2 Methodology

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The objectives of the action research—pertaining toinquiry of the problem and support to the affected

workers—and the specific condition of the partici-pants (workforce in transition) necessitated a blend oftools. Collaborative inquiry with main research partic-ipants (the sacked workers) yielded information andinsights through one-to-one interaction and question-naire filling, focus group discussions, informal meet-ings and labour education interactive workshops.Meetings and broad-based consultations with otherstakeholders—representatives of ex-Saga Union, localtrade union federation, state officials (Employees Old-age Benefit Institution, Punjab Employees SocialSecurity Institution, Provincial Labour Department,Local Government), members of Sialkot Chamber ofCommerce and Industry, ILO and IndependentMonitoring Association on Child Labour (IMAC) offi-cials—facilitated understanding of the larger perspec-tive and shed light in to the dynamics of variant roles

of the key stakeholders.

1.3 Data collection process

At the time Nike Inc. announced its intention to pullout in November 2006, the Saga Sports

employed a workforce of 7,637 of whom 5,257 werepiece-rate workers residing in more than 400 rural set-tlements dispersed in three tehsils of the district(Sialkot, Pasrur, Daska)—spread over 3,016 kilome-tres—and converging to work at the Saga-operatedtwelve (12) large official stitching centers located inthe semi-rural settlements of the district.2

By the time the support project began in April 2007(one month after the last Nike orders had been ful-filled), all of Saga Sports' 5,257 piece-rate contractworkers had already lost work. The 2,380 permanentemployees were retrenched in phases. Only about250 employees were reported to be working at theSaga Sports main factory producing leather gloves inlate December 2007 when the field work came toend.3

The detailed list of the Saga Sports' contract work-ers/permanent employees and the Saga WorkCenters were used for mapping. Initial visits to the 12villages were made and the PILER field teams talked tothe local people about the closed Saga Work Centerlocated in that particular village and enquired aboutthe ex-stitchers who came from the surrounding vil-lages.

In the second stage, two teams, comprising one maleand one female investigator each, visited 4 to 7 vil-lages surrounding each Saga Work Center to locatethe listed retrenched workers by name and address.The questionnaire was tested in the first round of infor-mation collection and revised.

Initial group discussions with ex-Saga workers wereorganized in those villages where the work centerswere located. The discussions took place in the tradi-tional village community meeting space locally calleddera or chaupaal. Selection of the villages for discus-sions was made in view of the number of the identi-fied and available workers (15-25 workers). Focusgroup discussions were held with the assistance ofproactive ex-Saga workers who showed willingness to

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mobilize and gather ex-Saga workers. By the time theproject wound up its field work in December 2007,the team had interacted with a total of 2,484 ex-Sagaworkers, scattered in 250 villages.

Unstructured interviews and one-to-one meetings wereheld with other stakeholders-representatives ofMinistry of Labour, Sialkot Chamber of Commerceand Industry, Pakistan Workers' Federation, MatrixSourcing, Independent Monitoring Association onChild Labour and Community Development Centre.

1.4 Constraints

Access to the sacked workers in identified villagesturned out to be a difficult and time consuming

process as many workers by that time had eitheralready found stitching work, or were actively lookingfor work outside the village, or had taken up menial,odd jobs to feed the families and were not availableduring the days. It was after some time that the wordof the teams' persistent visits spread around and theworkers took time out to meet the field teams. Not allthe sacked workers could be located in view of timeand resource constraints. Apparently some of them

joined the ever growing 'foot loose'4 labour evermoving from one district/town to other in search ofdaily wage, low-skilled, manual labour or any low-paid work.

Saga Sports management refused to meet the teamwhen approached on several occasions.Understandably they neither had time, nor desire tobrief the team on the failure of a company onceranked as the most successful in Sialkot. The study,thus, does not contain any version of Saga Sportsown perspective on the issue. The Saga Sports work-ers' union also kept a cordial distance with the PILERteam though a couple of its representatives participat-ed in some of the workshops and seminars.

Sialkot's industrialists, specially the major footballmanufacturers, were suspicious and distrustful of thePILER intervention, particularly in the beginning whenthey competed for the contract by the Nike Inc. Later,however, they participated in the consultations andseminars held by PILER and granted interviews to thePILER team members.

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Hand-made leather and wooden sports goodsproduction in Sialkot dates back to late nine-teenth century when locally crafted sports

goods were made to order for the ruling British.Cottage-based, export-oriented industry survived theexchange of population--departure of Hindu tradingcommunity, and induction of Muslim peasants andcraftsmen-in 1947. The industry, comprising small,family-owned enterprises, received state support dur-ing the 1960s and saw the emergence of mediumsized firms employing labour who came from the sur-rounding villages to the city-based units.

Today the inflatable ball is the core product ofPakistan's sports goods industry. Sialkot supplies 22per cent of total world exports5 , through a network of3,229 village-level sourcing or cottage enterprises

and informal labour.6 In 2005 the sports goods indus-try contributed US$ 318.8 million to the nationalexchequer.7

2.1 Decentralization: Cutting Labour Costs

Informalisation of labour in Sialkot began in the1970s when the state policies, apparently promis-

ing a better deal for labour, led to growing demandsfor improved terms and conditions—including theright to unionize and collective bargaining—in majorindustrial cities. In a bid to forestall it repercussions,the Sialkot entrepreneurs instead of devising strategiesto maintain efficient, productive and well-integratedlabour, took the easy way out—cutting labor costs—through decentralizing the production. The rudimenta-ry automated processes of football manufacturing(panel cutting, screen-printing, quality control) were

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2. The Context: Football Manufacturing in Sialkot

kept at the city-based units and the labour-intensivepanel-stitching was sub-contracted out to the village-based workforce.

A development that coincided with and augmentedinformalisation of labour related to technology. Till1970s the pieces of football, made of leather,demanded strength and a high level of skill for stitch-ing and only men did it. Football manufacturingunderwent expansion in the 1980s when syntheticmaterial totally replaced the leather. Synthetic panels,much lighter than leather, could now be sewn togeth-er by women and children as well.

Another decisive factor that led to the expansion ofemployment of semi-skilled, under-paid, piece raterural workers in late 1980s onward was the transfor-mation of global economy and the international capi-tal movements towards labour-intensive, unregulatedlabour markets. As a production site, Sialkot, with itspromise of much lower production cost of sportsgoods—9 to 10 percent as measured by the finalprice paid by the consumer8—attracted a number ofmulti-national brand companies (i.e. Nike, Adidas,Puma, Reebok). Within two decades, production offootballs in Sialkot had increased eight hundred fold:from 5.2 million footballs in 1980-81 the number shotup to 40-43 million in 2000-01. The number of sub-contracted workers increased from 5000-7000 in1980-81 to 54,000 workers in 2000-01. A down-ward trend in production is noticeable since then,indicating a wave of transformation linked to techno-logical changes and globalization. In 2003-04, thenumber of balls produced annually fell to 33-35 mil-lion and the number of workers taking this occupationdeclined to 41,000 - 44,000.9

2.2 Technology: Writing on the Walls

The evolution of football making—from pig's blad-der (1800) to vulcanized rubber (1836) to inflat-

able rubber bladders (1862) to mass production(1888)—was accelerated with the induction of syn-thetic material (1960s). In the 1980s synthetic leatherhad totally replaced hard leather. After severalimprovements based on material development, tradi-tional ball construction reached its limits. In 2000 anew ball production technique, thermal bonding, wasdeveloped to ensure consistent quality and perform-

ance from one ball to the next. The technique resultedin the first automated, thermal bonded, seamlessTeamgeist Berlin match ball used in the FIFA WorldCup (July 2006). The design and technology was per-fected by Adidas, Germany, and balls were pro-duced by the brand's suppliers in China andThailand.

Since then there is no turning back. Machine-madeballs were used in the 2008 Beijing Olympics Gamesand the 2010 and 2014 FIFA World Cup would usethe seamless balls. Romanticizing the dexterouslycrafted hand-made football and the centuries old her-itage of human stitching skills notwithstanding, the eraof manual craftsmanship seems to be ending. Nike,however, is of the view that there will always be aniche for hand-stitched balls hence it decided to con-tinue production from Sialkot.

Viewed in the historical context, mechanization andautomation always win out in the end. Resistance tochange is a natural human reaction yet the momentumof technological change carries in its force the com-plex dynamics of social, economic, historical and cul-tural factors that eventually over ride all resistanceand push communities to change and adapt. Thespeed of adaptation to technological change varies,though.

Addressing technology has never been a priority forthe Sialkot sports goods industry and is indicative ofan inward-looking, narrow approach rather than anopen, receptive-to-change strategy. Lack of timely andadequate response to changes in technology has costdearly in the recent past: the technology shift fromwood-based material to aluminum-based alloys andthen to graphite and other synthetic materials in theproduction of hockey sticks and badminton, squashand tennis rackets wiped out this component almostentirely from Sialkot in early 1990s. The process ofchange has accelerated with the advancement in nan-otechnology: since 2005 carbon nano-tubes arebeing used in the production of hockey sticks andsports rackets.

The stakeholders' consultation facilitated by theSialkot Chamber of Commerce and Industry inJanuary 2007 revealed reluctance on the part of the

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manufacturers to read the writings on the wall: theyseemed to be avoiding a full-throated debate on theissue, though the second generation industrialistsacknowledged the impending impact of technologicaltransformation on the Sialkot industry.

Similarly, in the subsequent consultation called by theMinistry of Labour, facilitated by the ILO-Pakistan, inFebruary 2007—that led to the document titledSialkot Initiative 2007—technology did not figure asa key issue.

2.3 Labour Standards in Football Industry:

Exclusion and Oversight

Right to work and earn a decent living under con-ditions of freedom and dignity is granted under

the Constitution of Pakistan in its Article 3 and Article37c10, and though national labour legislation hasturned increasingly restrictive and exclusionary overthe years, particularly with respect to the workers'right to unionize and bargain collectively, variousstatutes (i.e. Factories Act, Minimum WagesOrdinance) contain provisions to safeguard some ofthe basic standards. As the crucial monitoring mecha-nism, labour inspection by state bodies, has almostceased to exist since the Punjab Industrial Policy 2003(putting a stop to inspection in the province) andLabour Inspection Policy 2006 (diluting inspectionand advocating self-reporting) came into effect, viola-tions have become a norm, more so in small andmedium-sized establishments. Football industry inSialkot is no exception.

The existing laws contain provisions for contractlabour. These provisions, however, are violated byemployers due to a lacunae: section 2 (f) (iv) of theWest Pakistan Industrial and Commercial Employment(Standing Orders) Ordinance 1968 declares the'establishment of a contractor' as an independentestablishment, thus making it easier for both principalemployer as well as contractor to escape law. Thecontract system keeps the owner indemnified againstnon-observance of labour laws.

Subcontracted workers in Sialkot football industry,removed from the regulated environs of formal worksites and largely excluded from protective legislation,

are a part of the bulk of informal workforce (72.6 percent ) in the country. Low wages, lack of social pro-tection and lack of representational security charac-terize their work conditions. Unorganized and dis-persed in surrounding villages, with low literacy leveland little or no access to information on labour rightsand legislative mechanisms, football stitchers are vul-nerable to both local and global forces.

The regular workers employed at the main factoriesthat lined the Daska Road leading to the city, farehardly any better. Placed at the lower end of produc-tion hierarchy, these workers are largely deprived ofentitlements due to non-issuance of employment con-tract by the manufacturer and bypassing of applicablerules and regulations.

2.4 The Atlanta Agreement 1997 and Sialkot

Initiative 2007

The Atlanta Agreement, and the subsequent projectto eliminate child labour from football industry,

was termed successful. The success, though, was lim-ited. Three reasons can be cited for its limitations.Firstly, it did not embrace the full range of labour stan-dards but focused on child labour as if child labourexists in a vacuum. Secondly, though a tripartitearrangement it excluded workers' representation. Theissue of child labour was not just linked to childrenwho stitched footballs, but involved adult workers whomade a conscious choice to put their children to wagelabour. Thirdly, the Agreement came about inresponse to external stimuli. The threat to brand imageperceived by international companies played a cru-cial role. The business community in Sialkot waspushed by the global stakeholders to remove the stig-ma from the produce. These included the InternationalFederation of Football Association (FIFA), WorldFederation of Sports Goods Industry (WFSGI), theInternational Confederation of Free Trade Unions(ICFTU), the International Labour Organization (ILO)and the leading football manufacturers such as Nike,Adidas, Reebok, Mitre (UK).

The Sialkot Initiative 2007, that followed a tripartiteworkshop jointly organized, in December 2007, bythe Government of Pakistan and the ILO after Nike'scancellation of the contract, suffers from similar and afew additional drawbacks (i.e. over-emphasis on

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monitoring and the role of IMAC), including its lack ofa holistic approach. The Initiative 2007, till today,remains a document.

2.5 ILO Labour Conventions: Ratification and

Reality

Pakistan is a signatory to the UN UniversalDeclaration of Human Rights 1948 that recog-

nizes the right to work, to freely choose employmentand to have just and favourable working conditions,and to the 1998 ILO Declaration on FundamentalPrincipals and Rights at Work that pledges to 'pro-mote opportunities for women and men to obtaindecent and productive work, in conditions of free-dom, equity, security and human dignity'.

Pakistan has ratified all the eight core ILO conventionsthat codify the four most basic human rights related tothe world of work—the right to organize and engagein collective bargaining, the right to equality at work,the abolition of child labour and the abolition offorced labour.

Signing and ratification of international covenantsand standards put only a moral binding on the gov-ernment: practically it has little or no impact on theground. The ILO supervisory bodies (i.e. Committee ofExperts on the Application of Conventions andRecommendations) continue to urge the government toamend legislation to ensure core labour rights to allworkers.11 In Sialkot, the emphasis has been on theabolition of child labour—and that too mainly in thefootball industry—while other critical labour rights vio-lations have been sidelined by all stakeholders.

2.6 Globalization and Corporate Social

Responsibility: The New Paradigm

Global transformation is leading to greater inter-linking and interdependence of economies,

reshaping labour relations in the process. Expansionof international trade and international capital move-ments is impacting societies in unprecedented ways.Economic growth, generation of wealth and newdevelopment opportunities are benefiting the coun-tries that have a competitive advantage in certainareas. In Asian countries, competitive advantage islow production cost due to low labour cost and this in

turn is leading to greater informalization of labour.Contractual, home-based work relations are becom-ing a norm, replacing long-term employment rela-tions. The workforce stands unorganized, fragmentedand dispersed in various smaller locations andunconnected spaces. The impact of labour unions theworld over is much reduced.

The labour movement in Pakistan is weak, fragmentedand beset with a myriad of problems emanating fromsocial milieu and political culture and economy atlarge. The workforce is largely uneducated. Around90 per cent of the workforce is unorganised henceunaffected by labour movement. In the miniscule for-mal sector, rate of unionisation is very low. The exist-ing unions are divided along ethnic and sectarianlines, have undemocratic culture and lack committedand enlightened leadership. An important drawbackof the labour movement is its lack of acknowledge-ment of women's role in productive economy andinduction of women workers in its rank and file. All

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said and done, despite its many weaknesses, labourmovement has struggled throughout against repressivemeasures and legislation.

Competitive advantage is driving manufacturers andemployers to further cut labour cost and local power-ful stakeholders—manufacturers, industrialists, statebodies—deliberately sideline national laws and inter-national standards. Pro-industrialist policies andunconditional heavy subsidies to industries in Pakistanhave not translated in to better bargain and betterconditions for workers. Weak labour regulation andpoor implementation of labour standards in countrieswhere MNCs are shifting production, like in Pakistan,have created a vacuum and compelled MNCs toaddress labour compliance issues in the subcontract-ed production places in response to increasing pres-sure from consumers in their home countries.

The business environment in the 21st century hasevolved under the forces of globalisation, supply

chain complexity, existence of consumer and humanrights pressure groups, and the presence of fiercecompetition across the globe. In this environment, it isimperative for a successful and profitable MNC tohave a positive corporate image. The corporatebrand name must be free from any and all negativeconnotations.

To achieve this goal, one of the tools employed by theMNCs is the development and stipulation of codes ofconduct for constituent members of their supply chainwho may be operating in any of the numerous coun-tries of the world. The MNCs are developing codes ofconduct in compliance with international labour stan-dards codified in the ILO conventions. Many ratifyingcountries, though commit themselves to bring legisla-tion within the parameters drawn by the ILO stan-dards, fail to do so.

Development of codes is a sensitive and difficult taskespecially in countries where the state and local gov-ernments are lax in implementing existing laws. It isalso possible that the levels set by the state laws maydeemed to be not high enough for the requirements ofthe MNCs. In some cases the state laws may be defi-cient and may not be addressing an issue, which is ofconcern to the MNC. Hence the need for developmentof their own private codes of conduct for the con-stituent members of the supply chain. In case wherethe codes and the existing national legislation differ,the provision that gives high level of protection toworkers apply in the company's code of conduct.

The company's codes of conduct is a voluntary com-mitment by the MNC, though usually the company'smotives—either strategic, defensive or ultruistic—arestrong enough to compel the company to honour andpush for implementation of its code of conduct. Themode of implementation is mostly dependant on moralobligation on the part of the constituent member, orthe local vendor, in the supply chain. The ultimatelever remains in the hand of the MNC: that it can takeits business relationship elsewhere if the local vendoris not implementing the code and the MNC wants thecode to be implemented.

Consumer and media pressure for fair trade is leadingto an increasing number of codes produced after con-

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sultation and negotiation with stakeholders includingtrade unions. The Nike Code of Conduct, for instance,was produced after input from the InternationalTextile, Garment and Leather Workers' Federation(ITGLWF).

However, due to the overwhelming informal nature ofeconomy in developing countries and lack of legalcoverage to informal workers even when the codesare implemented, the benefits tend to remain limitedto permanent and regular workers and '…contractworkers experience little change' in their working con-ditions.12 Nike's provision for formal, custom-builtwork centres in Sialkot was supposed to address com-pliance issues related to informal work place. Thoughthe vendor (Saga Sports) did provide formal, custom-built centre, it failed to abide by the code and keptmore than 90 per cent of its work in the informal cat-egory which ultimately brought cancellation of thecontract by Nike.

A recent MIT study indicates that codes of conductproduce results only in those countries that have bet-ter implementation of national labour laws and arefound to be linked to '…the ability of the labourinspectorate to enforce labour laws and standards inthe country'.13

A PILER study of the Karachi garment factories sup-plying to the US and the European brands (i.e. Warl-Mart, C&A, Disney, Karstadt Quelle, la BlanchePorte) revealed non-compliance of labour standardsdespite existence of the codes of conduct of respectivebrands and the SA8000 accreditation of each facto-ry.14 Another PILER study on small and medium-sizedenterprises indicated that most enterprises do not com-ply with labour laws and are averse to collective bar-gaining.15

2.7 State Regulatory Mechanisms

The Ministry of Labour, Manpower and OverseasPakistanis is responsible for labour and employ-

ment policy formulation, legislation, administrationand implementation. Labor and employment are thesubjects listed under the concurrent legislative list andthe provincial governments are also mandated to for-mulate policies on their own.

Punjab Industrial Policy 2003 eliminated inspection ofindustries/workplaces by labour inspectors in viola-tion of ILO Convention 81 ratified by Pakistan. Theinspection was replaced by a self-declaration systemfor units having 50 or more workers. This also lapsedin June 2005 after completion of the 2-year period asthe government did not notify its extension. TheLabour Department, the Punjab Employees SocialSecurity Institution, and the Employees Old-ageBenefit Institution, however, remain restricted fromconducting inspections of the industrial units.

In 2006 the government came up with LabourInspection Policy and physical labour inspection wasdone away with in other provinces as well. The pro-cedures to replace physical inspection as spelled outin the policy document were vague and did not mate-rialize. The Labour Inspection Policy 2006 wasapproved by the federal ministry and the documentshared with stakeholders in Feb 2008. The Policynow envisages setting up a National LabourInspectorate and Provincial Labour Inspectorates toserve as focal points for all labour inspection functionsin the provinces, including that of Social SecurityInstitutions and the EOBI. At the moment the policyremains on paper.

2.8 Focus on Child Labour vs Core Labour

Standards: The Missing Link

Child labour has shown an increasing trend inPakistan. The total number of children aged 10-

14 years, engaged in a wide range of paid activities,rose from 2.12 million in 2003-04 to 3.06 million in2005-06.16 Currently labour force participation ratein this age group is 13.65 percent.17 The increase inchild labour is linked to informalisation and theexpanding low-paid, unprotected, home-based workthat does not generate decent income and compeladults to supplement the household income throughchild labour. Another key factor is lack of compulso-ry, adequate schooling facilities. Over 6.4 millionchildren are reported to be out of school in Pakistanand available to the segmented labour market.18

Though not included in the list of 39 hazardous occu-pations for children19, child labour in the footballindustry of Sialkot has been the focus of heightenedglobal and national concern, academic debate and

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contesting viewpoints of a wide array of stakehold-ers—consumers and media groups in the US andEurope, international human and labour rights organ-isations, global business partners, national civil socie-ty, industrialists, state bodies and academicians.While the western media pressure after the 1994World Cup and the 1996 ban imposed by the FIFAon the use of child labour in soccer ball production leftthe state and the local industry with no choice but torid itself of child labour, some academicians critiquedthe consequences of the undertaking done 'on the bid-ding of the West'.20

What did not come under scrutiny were the wide-spread violations of labour rights in the football indus-try and the crucial link between these violations andchild labour: low adult wages, informal labour rela-tions and lack of social protection that compel vulner-able families to supplement household income throughchild labour. Child labour occurs in an environment inwhich there is a reasonably high demand for labourand a low degree of labour empowerment.21 Lowlevel of labour empowerment in Sialkot and its mixwith a 'fierce entrepreneurial spirit'22 and weak stateregulatory mechanisms were overlooked both by aca-demicians and the project planners. Nike Inc. accept-ed after a decade (in 2007) that core labour stan-dards were not addressed in contract manufacturingof soccer balls:

'Based on the outcomes of the FIFA meeting held inNovember 2006, and our own findings, it is ourbelief that any revised agreement needs to addresshow one ensures adherence to core labour stan-dards—not just the issue of child labour'.23

Worth mentioning is the prevalence of child labour inanother equally important, export-oriented sector-Sialkot's 100-year old surgical instruments industry.Local stakeholders' low-intensity delayed action andthe absence of global stakeholders' concerns throwup questions on exclusive focus on child labour in foot-ball industry. Unlike football stitching, cottage-basedsurgical instruments manufacturing involves extremelyhazardous processes. Yet it was in 2004 that the ILO-IPEC started its project to combat child labour in thissector.24

Child labour in the surgical instruments industry (pres-ent since decades) went unnoticed by the global busi-ness because the end buyers are faceless institu-tions—private hospitals, state health services—deal-ing with dull and drab and unmentionable routine ofsickness, ageing and death, unlike consumers, indi-vidual players and professional teams, associatedwith the glamorous world of sports that celebrates life,youth and fitness.

2.9 Prioritization of Issues in the Global Supply

Chain

When a US media report first exposed childlabour in Sialkot football manufacturing in

1995, it galvanized the entire western media, humanrights organizations and the US legislators. The resultwas the Foul Ball Campaign launched by theInternational Labour Rights Forum. Sialkot city becamethe site of investigation against violations of childrights by global stakeholders. The campaign led toadoption of the Code of Labour Practice for all manu-facturers by the International Federation of FootballAssociations (FIFA) in 1996, and the signing of theAtlanta Agreement by the Sialkot Chamber ofCommerce and Industry, the ILO, the UNICEF andSave the Children Fund UK in February 1997.Subsequently, a monitoring system was put in place,children were phased out from the football industryand the stakeholders saw to it that the footballs pro-duced in Sialkot were labeled 'child labour free'.

In contrast to the uproar and subsequent action of themid 1990s to address the issue of child labour, theNike cancellation of the contract on non-complianceof labour standards, leading to massive lay-off inSialkot in 2007, did not stir the global media and nei-ther lead to any campaign by global stakeholders.

2.10 Macro policies and livelihood options in

Sialkot District

Sialkot district, a hub of labour-intensive industrialclusters, comprises largely a population (73.8 per

cent) officially defined as rural.25 The district is one ofthe most fertile lands fed by Chenab River, DeghNullah and Aik Nullah (flowing from the Jammu Hills)and the Marala Ravi Link Canal. The main crops arewheat, rice and maize. Change in land tenure pat-

17

tern, since the last four decades, has led to a declinein tenancy and an increase in the number of smallowner-cultivated farms. Rising number of small owner-cultivated farms, though, has not led to increase inproductivity and crop production growth hasremained stagnant.

In Sialkot district too fragmentation of farms is increas-ing and the cultivated farm area declining. In the dis-trict, the percentage of farms under 12.5 acresincreased from 91 percent in 1990 to 95 per cent in2000.26 Another characteristic of the district is thegrowth of peri-urban areas around Sialkot city. Thisgrowth is manifest in a higher rate of fragmentation ofagricultural land and land use change in settlementsadjoining the city.

Almost 50 per cent of the households in the district aredescribed officially as agricultural households,depending on agriculture and livestock.27 The ambi-guity of official definition of 'rural population' is man-ifest in significant difference within official data: inpopulation census (1998) 73.8 per cent of Sialkotpopulation is termed rural; in the 2000 agriculturalcensus 50 per cent is labelled 'agricultural house-holds'.

This study, however, indicates a different picture: forthe majority of the respondents, football stitching wasthe main source of income. High prices of agricultur-al inputs, low acreage and weather uncertaintieshave greatly reduced income from land. In addition,small farmers, due to low holding capacity are com-pelled to market their produce soon after harvest atlow price and purchase food requirements at highprices. Government policies have favoured largefarmers through subsidies in water and agriculture.Large farmers have benefited from credit schemes andcheaper access to mechanization.

Unprofitable farming is pushing many households tosell their small landholdings as indicated by severalcase studies of workers during this research.Landlessness and low return on agriculture have com-pelled households to depend mainly on wage work inthe manufacturing sector—sports goods, leathergoods and surgical instrument—in Sialkot.

2.11 The Industrialist's Mindset

The study shows an informal, non-professional man-agement style operating in Sialkot where industri-

al firms are owned and managed by immediate fam-ily members and blood relatives with a minimum ofprofessional staff at the managerial level.

'A typical management system of a company consistsof two tiers: the first comprises of the owner/entre-preneur (top management) and the second opera-tional staff. There is no link between the two tiers, i.e.middle management is either weak or non-existent'.28

The firms subcontract out work at piece-rate to distant,under-privileged, low-skilled, less-educated, ruralworkforce. The relationship between the employerand the worker in this case is much worse than theclassic unequal industrialist-worker relationship. Theowner-industrialist often tends to adopt the role of apatron-sustainer of the 'poor unemployed people'.This is sustained through nepotism and informal pro-cedures of hiring and firing, lack of implementation oflabour standards and services rule, and selective-spo-radic display of 'benevolence' instead of adhering toinstitutionalized mechanisms to ensure access to enti-tlements and established facilities.

The local industrialists looked down upon workers, orkammis, with scorn and disapproval and use deroga-tory words and stereotypes--jahil, nashaie, kaahil(ignorant, addicts, lazy).29 The industrialist believesthat the workers are poor because of their owndoings: 'they don't work hard'. The industrialist thinkshe has to make the best out of a semi-skilled, semi-lit-erate workforce who stands no chance for animprovement. 'Because that's the way they are'. Theindustrialist seems to hold as deterministic a worldview as held by workers about their own situation.

Interaction with manufacturers indicated a number ofmisconceptions or untested assumptions about work-ers. Generally held perceptions among the manufac-turers included unwillingness on the part of the work-ers to come and work in the city. 'They cling to theirvillages, like frogs in the well', 'They want work attheir door steps', etc.

In focus group discussions the workers talked of the

18

constraints. The daily commute to the city incurs trans-port and food cost and unless the wages are aboveRs. 5,000 per month, the workers find it uneconomi-cal to work in the city. Many villages are about 30 to50 km away from the city. With link roads in terribleshape, commuting time increases twofold. 'Besides,how can we get a better paid job in the city? Wehave no education and no other skill.'30

Many local manufacturers are in possession of theSA8000 certification, which according to a source'…is being sold in the city on thela (hawking cart) byaccrediting companies for Rs. 200,000 each'.

Several of the manufacturers believe they take care ofthe workers' rights and it is the workers who are outto exploit them and sabotage their businesses.

'We care a lot about our workers. We know if wegive them due rights they will cooperate with us oth-erwise they give us a real hard time. For example,during peak production days they can put us in trou-ble through non-cooperation. You don't know theexcuses workers come up with for poor performance,absenteeism and for not achieving the targets.'

According to one of the leading manufacturers, work-

19

ers in the registered main factories get due rights. Thecontractual labour, working from home, or in privatesheds, are not entitled to any rights and as such,states the manufacturer, there is no question of labourlaws violation. The manufacturers who do accept thatworkers are not getting a fair deal, think enhancedlabour cost would impact their businesses adversely.

'Your business will collapse if you increase labourcost beyond a certain point. You don't know howsharp the MNCs are. It's a cut-throat world out there.They want the best of the product at the cheapest cost.And there are so many countries with even cheaperlabour than Pakistan. How do you expect Sialkotindustrialists to survive in this scenario?'

According to the local manufacturers, the industryhas already squeezed its margin of profits to

avoid child labour and is losing its competitive edgeto China where labour is much cheaper. The industri-alist '… cannot pay the same benefits to piece-rate,contract workers as to the salaried, permanent work-er'.31 The older generation of industrialists, in controlof their businesses currently, seemed to be quite out ofsync with changing global scenario. The second gen-eration-owners' sons and male kins-qualified in busi-ness management, has yet to take charge. Most ofthese young men are working under the tutelage oftheir fathers.

2.12 Cost of Labour Compliance: View from Above

The argument that labour compliance is a costlyaffair and hampers growth of small and medium-

sized enterprises does not just reflect a (narrow) visionupheld by Sialkot manufacturers, it is an off-shoot ofmacro policy analysis and advice of internationalfinancial donors (IMF, World Bank, AsianDevelopment Bank). '…The Banks hold that the impo-sition of typical labour standards can hamper povertyreduction in Pakistan'.32 However, neither officialdata nor field assessments support the argument thatlabour compliance is a serious constraint in thegrowth of MSEs.33

A similar simplistic analysis—funded by the EuropeanUnion—of the constraints faced by Sialkot entrepre-neurs, implying a justification for lack of labour com-pliance, is attributed to the small size of the enterpris-es:

'Their small size puts a lot of constraints on the com-panies themselves and adds insufficiencies to the sec-tor's overall dynamics as well. These firms only focuson "me too" products, mostly compete on prices, tryto grab other companies' customers (usually by offer-ing lower prices), don't invest anything on R&D, pro-vide very little, if any, customer after-sales support andat times create a bad image for the country'.34

20

In terms of development Sialkot ranks as the thirdleast deprived district on the national scale trailingbehind only Karachi and Lahore.35 Known for its

thriving small and medium-size entrepreneurial cultureand its contribution to the national exchequer, Sialkothas also received famed for its Airport and the DryPort built and run by the private sector and itsexporters' voluntary contribution (0.3 per cent of theirexport invoice amount) to the Sialkot DevelopmentFund.36 The Sialkot exporters have had the distinc-tion of having made an effort to rid the football indus-try of child labour through signing the AtlantaAgreement a decade ago. Sialkot industry is domi-nated by the presence of foreign brands, voluntarily

committed to ethical business practices in contractingfactories through respective codes of conduct. Allthese facts conjure up images of a labour force inSialkot as the one receiving a fair share of benefits ofglobal supply chain production. There is a disconnect,however, between these assumptions and the lives ofthe workers as lived by them.

3.1 Switch from Home to 'Centre': Changing

Labels

Hand-stitched football manufacturing is a labourintensive process employing a large number of

informal piece rate workforce. Football productionhas low and high seasons (World Cup/other match-

21

3. The Field: Production Process and the Work Place

es/promotional campaigns by foreign brands)depending on orders from the foreign brand compa-nies. The contracting football manufacturer, with aproduction base/factory in the city to undertake initialand end processes (screen printing, panel cutting,hole-making, quality checking and packing) subcon-tracts the manual stitching of the panels to individualsubcontractors called 'makers' in local parlance. The'maker', himself a village-based worker—albeit rela-tively better-positioned and mobile—identifies stitch-ers in need of work in his own village and the sur-rounding areas.

Before engaging the stitchers, the 'maker' raisesmoney either through accessing credit or selling hisown meager assets to clear the first hurdle to his ownearning: 'advance' cash demanded by individualworkers. This 'advance' is given on the basis of theorder (number of footballs to be supplied) and thecapacity of the worker to stitch a certain number ofballs besides the stated need of the stitcher (i.e. med-ical treatment, daughter's wedding). The advancevaries from Rs. 2,500 to Rs. 15,000. With cash inhand to be paid to stitchers, the maker takes thework—football panels to be sewn together—to thestitchers' doorsteps and later deliver back the stitchedfootballs to the production base. The maker charges acommission (Rs. 3 per ball) from the manufacturer forthis service.

Prior to the signing of the Atlanta Agreement in 1997,football stitching was carried out by men, women andchildren in their respective homes in the surroundingvillages. The Sialkot Project that followed the AtlantaAgreement undertook to phase out child labourthrough a monitoring mechanism involving voluntaryparticipation of the manufacturers.

'Under the project, the participating manufacturerswere required to transfer their work from houses to (a)place, which could be monitored by the ILO-IPEC. Forsetting up such a center, the basic criteria agreed withthe SCCI was that wherever minimum of 5 stitchersmale or female or both could sit together and therespective manufacturer placed a small sign boardoutside that should be treated as a center.'37

The condition of 5 stitchers was later modified to 3

stitchers per center in case of women.38 This transferof work from houses to 'monitorable place' meantleaving one's own abode and working in a similarhouse in the same village or a nearby village. Thewomen continued to work in their own houses as eachhousehold comprising an extended family systemoften has more than three female members.

3.2 The 'Monitorable Stitching Centres'

The 'Monitorable Stitching Centres'—declared assuch by the ILO-IPEC and later by IMAC—are thus

mostly modest abodes of the villagers, dingy shops orprivate sheds located in rural areas. Outside theshops or sheds, one can catch glimpse of small rustysignboards indicating simply: Stitching Centre. Attimes the signboard also displays the name of manu-facturer in smaller font size. Common village houses-turned-centres generally do not have any signboard.The large houses or haveli, often owned by the absen-tee landlords, or other influential persons, areadorned by the names of the owners who rent thesepremises to the manufacturers. The large houses, withseveral rooms and covered verandahs, accommodate50 to 150 stitchers. Inside these 'centers' the IMACcertificate in English and the manufacturer notices inUrdu, are found glued to the walls.

The 'Stitching Centers' are mandated to have basicfacilities i.e. electricity fixtures, safe drinking water,toilets. As only a wooden, short-legged stool, with orwithout back support, is required for each stitcher tosit on, plus a wooden tool, called khancha, to bepressed against the two knees to aid stitching, noteven a room in the house is required to be exclusive-ly allocated to this activity. The stools are stacked afterwork in a corner of the room, or shoved under bed.We found stitchers working in the courtyard under theneem tree shade indicating inadequacy of physicalenvirons or congestion in the rooms.

The ILO-IPEC monitoring of these home or informalwork places labeled as 'stitching centers' was handedover to the Independent Monitoring Association forChild Labour (IMAC) in 2002. The only issue for mon-itoring was child labour.39 Later in 2003 the monitor-ing of basic infrastructure (adequate space, sittingarrangement, lighting, ventilation, hygiene, safedrinking water, toilet) was brought in, but this condi-

22

tion was waived for '3-women centers'.40

In 2007, the IMAC 12-member field team was moni-toring more than 2,500 football stitching centers for87 manufacturers. The ILO-IPEC monitoring entailedrandom physical visits of the center to ascertain childlabour if any, and filling up of a form with basic factsabout the center (i.e. number of workers, amount ofwork done, wages paid).

"The 2-member ILO-IPEC team was accompanied by arepresentative of the manufacturer. We used to ques-tion his inclusion in the team but apparently therewere pressures from the manufacturers. There was nodirect institutional complaint mechanism. The workers'complaints were not conveyed to the management.The monitoring teams gave the gathered (basic) infor-mation to the coordinator who presented it in theSCCI scheduled meetings attended by AtlantaAgreement signatories. If any violation on childlabour issue was found, the management was issuednotice immediately."41

The monitoring process thus excluded core labourrights other than child labour, and the exclusion wasnot by default but by choice. The ILO field team mem-bers did not ask any question relating to core labourrights and neither gave any information on the ILOcore conventions or workers' constitutional rights.

"If all the information is given, you raise the (workers')expectations which you cannot fulfill. Workers shouldbe handled carefully, they should not be provoked (todemanding their rights)".42

It is probable that the instructions on withholding infor-mation on core labour rights were not given to thefield members explicitly. Yet the team membersimbibed the ethos of the ILO work objectives in Sialkotas it filtered down from the top. The objective was'focus on child labour' and field team members madethe tunnel vision part of their work ethos.

The fact that ILO-IMAC monitoring was critiqued in theinner circle all way long by major stakeholders didnot bring about a change:

'….the brands would have preferred IMAC to be

closed—they thought it was useless and un-reformable. In the end, they agreed to support IMAC'scontinued existence. The reasons were: it wouldembarrass the ILO to state publicly their view onIMAC, and because the SCCI are familiar with IMACand cannot handle change.'43

This refutes the assumption that flaws in project designsurface later. The fact is: often the flaws are apparentat the planning stage but due to vested interests thestake-holders maintain a tacit silence for a consider-ably long period.

3.3 Saga Sports Custom-built Work Centres:

Introduction of a New Concept

Saga Sports Pvt. Ltd. was the first local vendor inSialkot that constructed, maintained and operated

12 large, formal workplaces in rural areas exclusive-ly for football stitching, primarily to meet the Nike'srequirement for a child labour-free production.44 Thecentres were managed by the main factory, located atDaska Road, Sialkot city, where all productionprocesses (panel cutting, screen-printing, repair, pack-aging, quality control) except stitching, were under-taken.

One of the 12 centres, the Machralla Centre, wasexclusively for women, while two other centers hadseparate halls and toilet facilities for women. Theremaining centres were all-male centres. The SagaSports' work centres' capacity ranged from 350 to650 workers. The centers collectively drew 4,537workers from approximately 350 surrounding villagesspread over 3,016 km area. In addition, Saga Sportsunofficially outsourced work to 50 'mini-centres' nei-ther owned nor operated by Saga Sports.45 Thesemini-centres were closed down in June 2006 whenSaga Sports received the first complaint from Nike.46

The Saga Sports work centers, custom-built on largerpremises, comprised spacious halls, storage areasand basic facilities (ventilation, lighting, toilets, drink-ing water, canteen, clinic, fair price shop, baby carecentre, open space and plantation). The centers withofficial paraphernalia and protocol—registration ofworkers, timings, supervision, pick-and-drop andlunch facilities—provided a formal work place to aninformal labour. Formalization of the workplace,

23

however, did not lead to formalisation of work rela-tions. The workers remained piece-rate contract work-ers. Unlike houses-turned-centres, the custom-built for-mal centers eliminated child labour within these prem-ises and its incidences got reduced to occasionalcheating (reporting incorrect age) through forgedbirth certificate.

The Saga Sports work centers introduced the conceptof work outside home for both men and women home-based workers. There was initial resistance from thecommunities towards this restructuring of work placeas it caused loss of flexibility (of timing) and freedom(from supervision) of working at home. The resistanceof men towards their own employment in the centerssubsided soon as the Saga centers had many attrac-tive features. But male resistance against womenworking at the centers continued for a long time.

3.4 Saga Management: 'Benevolent' Employer

Saga's owner, late Mr. Sufi Khursheed—who hadsigned the Atlanta Agreement 1997 on behalf of

the Sialkot Chamber of Commerce and Industry—hada patron-father image among the workers. All of theex-Saga workers contacted and talked to during thestudy, remembered him as a man of kind dispositionand generosity. The workers, due to their ignoranceof the existing state social security facilities consid-ered the amount of Rs. 50,000 or less that Mr. Sufigave on death/disability of worker as a personalbenevolent gesture rather than a worker's entitlementstipulated by the state under the Workers' WelfareFund Act.

One of his qualities as recollected by the workers washis accessibility and intermingling with workers, aquality prized in modern corporate culture as well. Ofthe surveyed workers, 91 per cent reported the behav-iour and the attitude of the 'employer' at the work-place as good towards them. Apparently for them theterm 'employer' referred to the owner as many work-ers recounted taking his or her personal or officialproblem to him and he would solve it. Thus it seems,the entire system depended on role of the 'Patron'.

As the system lacked professional management,appropriate channels and lines of communication forconflict resolution and smooth industrial relations, the

edifice collapsed with the death of Mr. SufiKhursheed, the 'Patron'. Many stories told by theworkers indicate that the relations between supervi-sors and the workers at the centre deteriorated rapid-ly thereafter. Several workers narrated incidences ofharassment and abusive tactics by the managementpersonnel at the Saga work centres.

The benevolent role of the owner was very much inline with the dominant social stratification and hierar-chy based on zaat, beraderi, occupation and accu-mulated wealth and the family-based entrepreneurialemployer-craftsmen relations that have evolved histor-ically in Sialkot. The entire supply chain is character-ized with the same familial-kinship model. At the topis the ultimate 'Patron' or owner of the factory/estab-lishment. Power then filters down to a couple of man-agers who are either sons or close relatives of the

24

owner, who subcontract orders to 'makers', the next inline of 'patrons'. The 'maker' obliges his own kith andkin and neighbours though here the stitcher, whom themaker awards work, exercises some power to negoti-ate 'advance'. This 'empowerment' of the stitcher hascome about solely due to the 'seasonal' and contrac-tual nature of the work itself: the contracting brandwants a specific number of balls at specific date andunless the balls are sewn by stitchers on time, the ulti-mate loser is the local manufacturer. The loser next inline is the 'maker' who earns commission per ballstitched. The stitcher has very little at stake to beginwith: his or her loss is minimum since s/he is gettingless than the minimum wage and nothing else. As theother limited livelihood options available to the work-er are similarly low-paid, switching to menial work,casual labour, or surgical instruments making is nothard as the case studies in the following section

demonstrate. The stitcher is part of a foot-loose, float-ing labour and has learned to eke out a living any-way.

3.5 Occupational Health and Safety

The main process in the production of inflatableballs—stitching of panels by hand—-is done while

squatting on a low stool, with a wooden khanchapressed between the knees. The khancha is used tosecure leather panels and give freedom of movementto arms. The stool, used at home or small stitching cen-tres, is made of wood and often has no back support.In Saga stitching centres stools were provided withback support. However, the act of stitching is such thatmost of the time the worker has to bend his head andcrouch a bit forward for better grip and firmness of thestitch. The back support, if it is there, can be used onlysparsely while taking a rest or changing the posture.Even when the stool is padded, or is made if ropestring or synthetic material for flexibility, sitting onsuch a stool for long hours is a physically tiring actand may give back ache, pain in the legs and hardsensation to the bums. Stitching done for longer dura-tion can also tire the eyes.

Another process, making equidistant holes in thepanel for the threaded needle to go through, can bedone through a simple machine or a cast dye.However, at many places the workers have to do itmanually through pressing the marked dots with thethick needle. Utmost care is needed to make holesmanually as slight deviation from the mark may causeinjury to the fingers.

The lamination and cleaning of synthetic leather, theinitial production processes, involve use of chemicals,particularly bonding, or gluing, solution. This solutioncan lead to addiction if inhaled frequently. In the cot-tage units, no safety masks are provided to the work-ers in this section. Incidences of addiction to bondingsolution were mentioned by workers during fieldinvestigation.

One reason of predominance of young workers (15-30 years) can be linked to physical exertion and stam-ina required for foot ball stitching that cannot beundertaken for sustained period by older people. Football stitching seems to have potential to accelerate or

25

trigger joint-related illnesses (i.e. arthritis).

3.6 Trade Unions in Sialkot

Historically, Sialkot manufacturing industry has beencottage-based, comprising informal work force scat-tered in rural settlements, hence there is no legacy oflabour movement in the district comparable to union-ization that existed in the public sector industrialestablishments in big cities in the 1960s and 1970s.With the expansion of export-oriented manufacturingof sports goods and surgical instruments in the 1980sand subsequent increase in the workforce, a handfulof trade unions did emerge in Sialkot.

According to national industrial relations law only oneunion in an establishment can have the status of col-lective bargaining agent if it wins the election throughsecret ballot. 'In effect, therefore, registered tradeunions which fail to get elected and certified as thecollective bargaining agent have no role in the pre-scribed procedure of industrial relations'. The lawmeant to curb multiplicity of unions, in effect hasaided employers to install 'pro-management' unionthrough corrupting the trade unionists and outlawinggenuine representation of workers.

The implanting of 'pocket union'--as called in localparlance-- is a national malaise and obstruct forma-tion and operation of genuine trade unions.Contributing factors are a weak and fragmentedlabour movement and overbearing individual impulsefor self interest versus values of cooperation, trust andcollective interest.

Three trade union federations—Pakistan Workers'Federation, All Mehnatkash Labour Federation andNational Labour Federation—are said to be operativein Sialkot, each claiming to have 10 to 12 localunions as members. A total of 62 trade unions in var-ied sectors—sports goods, sports wear, leather, surgi-cal instruments, banking, etc—are registered with theDistrict Officer Labour, Sialkot. Of these, only 25unions hold the status of collective bargaining agent.48

Two trade unionists, Niaz Ahmad Naji, GeneralSecretary All Mehnatkash Federation, and SardarRehmatullah, Genereal Secretary, Saga Workers'Union, Saga (Pvt Ltd.) were listed members (repre-senting workers) of the following committees of stateinstitutions:49

Dispute Resolution Committee, EOBI Sailkot, District Committee of Management Workers'Children Education Cess; District Scrutiny Committee for Marriage Grants, Death Grants and Talent Scholarships; District Allotment Committee for Allotment of Flats & Houses and Labour Colonies; School Management Committee of the Workers Welfare School, Punjab Workers' Welfare Board.

As indicated by the case study, no evidence of aneffective role of trade unions, particularly of the SagaWorkers Union, could be established in Sialkot.

26

For a better understanding of the life situation ofworkers in Sialkot district, it befits to start yourjourney from Cantonment area, subsequent to

your disembarkment either at the Sialkot Airport or atDaewo Bus Station and lodging in a comfortable zonein the city. After crossing the barricaded archway onthe 3-laned, two-corridor Kashmir Road, you coursethrough a neat, wide asphalt, lined on one side forconsiderable length by the green Garrison Park andleafy bungalows on the other. Ahead, the roadsideshave a row of big shops of local designers, a mall ortwo and the eateries. The Kashmir Road at the far endtakes on a T-shape and here is the most striking fea-ture of Sialkot. Lined by single-storey, swanky shops ofinternational brands and food chains, the peacefulambience of the street with wide footpaths on both

side evokes for a fleeting instant the images of theAmerican suburbia.

Besides the barracks, the officers' mess-turned-into-commercial Chowinda Meadows restaurant, the hos-pital and the army's other establishments, theCantonment area comprises residential neighbour-hoods inhabited by the army officers and the localelite. The area is serviced by the cantonment boardand is equipped with requisite social and physicalinfrastructure—underground sewerage, solid wastemanagement, schools, parks, service shops, internetcafes. In the morning and afternoon one comes acrossarmy trucks plying as school buses ferrying children toand fro!

27

4. The Workers: Life and Work Conditions

Once you leave the Cantonment, the contours of thereal city start to emerge: traffic congestion, narrowroads cluttered with small shops and vendors. Manyof the old adjoining residential neighbourhoods havenarrow brick-paved lanes with open drains on bothsides. The newly emerging settlements have smallagricultural plots in between brick houses. As youmove outside the city towards rural settlements, youfind the link roads either under construction or in poorcondition. None of the towns and settlements in thedistrict has underground sewerage system. Most ofthe link roads leading to towns and rural settlementsare lined with ribbons of development—vending andservices shops, hardware stores, warehouses andsheds—flanked by lush green wheat fields and yellowblossoms of mustard, or rice paddies, that give a falsesense of prosperity of the common dwellers of the dis-trict.

4.1 Socio-economic Indicators

The settlements, large or small, have brick-pavedlanes and open drains. The houses are of a mixed

stock. The majority (79.4 per cent) of the ex-Sagaworkers lived in pucca (of reinforced concrete)dwellings and 48 per cent had two-room structures.Average family size was 6 to 7 members. A signifi-cant number, 30 per cent, did not have toilet facilityat home while the number of workers who reportedlack of access to safe drinking water supply was high(75.5 per cent). The overwhelming majority, 96.4percent, reported to be living in own house. The own-ership of the living space serves as bulwark againsteconomic hardships providing at least security of shel-ter.

The majority (90 per cent) had no source of incomeother than football stitching indicating almost totallack of alternative livelihoods (i.e. agribusiness, dairy

production, agricultural processing) in the largelyrural/semi-urban Sialkot district. Some reported mea-ger livestock, a couple of buffalos or goats. Just about4 per cent workers were earning a little additionalincome through cultivation of their small piece of land.

'I have a 2-acre piece of land where I cultivate wheat,rice and some vegetables. But from land you get onlytwo crops a year. I was getting just Rs. 10,000 fromselling one crop. Two crops mean less than Rs. 2,000per month. How can a family of seven survive on thatincome? I have been stitching football since the last18 years, soon after I finished Matric. I worked inSaga for 6 years. I was getting Rs. 3,180 per monthwhen I left Saga.'

Mian Mohammad Riaz, Lalaywali, Kalowal

The study indicates that football stitching is the onlysource of income for an overwhelming majority andeven the households owning small pieces of land,football stitching is the main source of income. Itrefutes the notion held by policy makers and acade-micians that football stitching is a source of addition-al income for the households taken up largely bywomen and children to save money for special occa-sions. i.e. marriage of daughters.50

Majority (72.7 per cent) of the ex-Saga workers wereyoung, 15-30 year-old, and male (74.5 per cent). Theliteracy rate, 79 per cent, was much higher than theaverage rate of 56 per cent literacy in the province ofPunjab.51 This indicates accessible primary educationfacilities in the district, a fact corroborated by the dis-trict's ranking as the third least deprived. But the levelof literacy was low: 39 per cent had just 5 years ofschooling; 22 per cent had studied up to 8 yearswhile just 11 persons had passed 10th grade. Thedata correspond to the high drop-out rate in the coun-try. The male workers cited lack of secondary schoolfacilities, poor quality of education, irrelevant curricu-la in government schools and lack of prospects ofemployment in better paid occupations as the reasonswhile women simply said their parents could notafford secondary education.52 None reported exis-tence of technical education facilities with the excep-tion of a few computer skills centres in large settle-ments.

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'Our village, of about 5000 population, has no mid-dle level school for boys. The closest secondary schoolis five km away in Chaprar. There is no public trans-port so you have to walk 10 km everyday. Except afew, none of us could avail secondary schooling.Besides what quality of education do you get at a gov-ernment school in a small place like this? So I got intostitching football after I finished primary school. Ilearned football stitching when I was 8 years old. ButI want my son to have a different life. I plan to admithim in a private school. I want him to have good edu-cation'.

Javed, Najwal

4.2 Employment Status and Work Conditions at

Saga Sports

At the Saga Sports, an overwhelming majority—84.4 per cent—worked on piece-rate and just

15.6 per cent were regular employees. Ninety-twoper cent reported they were never given any appoint-ment/contract letter: none of them were aware of theimportance of this key document that establishes their

legal identity as worker.

More than half of the workers had worked in Saga upto five years, while 41 per cent worked 6 to 10 years.This indicates the Saga Sport had a relatively stablework force, negating general perceptions amonglocal vendors about stitchers' whimsicality and highturnover. If the workers are relatively satisfied, or thinkthey have no better options, they prefer to stay withthe employer. Saga Sports, aside its last years of mis-management, was reputed as 'the best option avail-able' company among the workers and their commu-nities.

4.3 Wage Structure and Facilities

At the time Saga Sports retrenched its workers in2007, the majority (84 per cent) was being paid

less than the minimum wage of Rs 4,600 per monthfixed in August 2006 by the government under theMinimum Wage Ordinance. Twenty-four per centreported a measly monthly income of up to Rs. 2,500only. Twenty-two percent were getting between Rs.2,500 to Rs. 3,500 and 38 per cent were paid up toRs. 4,500.

The study reveals that Saga Sports was paying evenless to its workers in earlier years. Sixty-eight (68) percent of the workers reported a salary of up to Rs.2,500 per month and 22 per cent were getting up toRs. 3,500 at the time of joining the company severalyears ago when its owner Sufi Khursheed was alive.Though late Sufi Khursheed was revered by the work-ers and remembered as a kind-hearted employer, thefact remains that labour standards were grossly vio-lated in his times as well. None of the workers wereaware of the Minimum Wage Law and of the period-ic raise in minimum wage by the state.

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As the majority of workers were on piece-rate andwithout any contract letter, they were not registeredwith the state-run social security institutions (EOBI,SSI). Free transport, lunch and tea, basic medical helpthrough once-a-week access to a doctor plus free med-icines, and fair price shops at each work centre, how-ever, provided some relief to the workers. These min-imum facilities played a role in conferring a 'positive'image to Saga Sports among its workforce. Thoughnominal, these non-cash benefits translated in to asubstantial chunk of monthly expenditure of the house-holds.

Several of the permanent workers, who possessedrelevant registration cards, reported access to med-ical facilities through social security hospital. None ofthe contract workers were provided medical supportto prolonged illnesses (i.e. hepatitis, typhoid), injuries(not related to work place) and deaths. Many workersnarrated incidences of illnesses that required a largesum (Rs. 10,000 to Rs. 75,000) for treatment raisedpersonally either through loans from relatives or saleof meager family assets.

'My brother died of heart attack while at work atSaga. The management promised to give his family asum of Rs. 200,000 but never gave the money.'

Ghulam Mustafa, Nowshera

Physical infrastructure at the Saga stitching work cen-tres were reported by the workers to be adequate interms of space, lighting and ventilation and toilet facil-ities, though according to several workers unhygienicconditions prevailed particularly in the toilet, kitchenand canteen areas. The stools were padded and theworkers were provided panels with pre-done holes.

4.4 Subcontracting through 'Makers'

The case studies, focus group discussions and fieldvisits revealed that the traditional system of sub-

contracting and providing advanced payment toworkers was widespread at Saga Sports despite theprovision of the formal work centers that Saga builtand operated to avoid downstream subcontractingand the system of advance payment or 'peshgi'. SagaSports would pick out stitchers and offer them the sub-contracting work as 'makers', (local term used for sub-

contractors in Sialkot). A 'maker' enters into an unwrit-ten contract with the manufacturing company and itspivotal condition is the number of workers he under-takes to mobilize to complete an order (received bythe manufacturer from an international brand compa-ny) on time. The maker gets commission per piecefrom the manufacturer/vendor and is responsible fordelivery of the material (football panels) to the work-ers at his/her door step or at the stipulated work cen-tre. He then collects the finished footballs and deliversthe order back to the manufacturer.

The stitchers commit their labour to the 'maker' in lieuof advance payment. The maker pays the advancefrom his own resources. When Saga Sports col-lapsed, many 'makers' suffered losses as they couldnot recover any money from the retrenched stitcherssimply because stitchers survive on a hand-to-mouthcondition and have no assets. The 'makers' are foundto be on the same socio-economic boat as are stitch-ers but with slight edge over other workers as theyseem to have a capacity to access assets and to takerisks. Socially upward-mobile, they have heightenedmotivation or drive to improve their lives and to suc-ceed.

Several case studies indicate adverse impact ofSaga's closure on the makers' life. Mohammad Ilyasstarted as a stitcher at Saga's Kotli Ameer SyedCentre. He approached the management to give hima loan to initiate his services as a maker. The man-agement refused. Since Ilyas thought he could makemore money as a 'maker', he sold his small piece ofland as he did not have resources to buy agriculturalinputs and make good use of the land. The money hereceived from the sale was extended as advance to40-45 stitchers who produced 100 to 150 balls per

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day. Rs. 3 per ball commission he received from Sagayielded a monthly salary between Rs.10,000 to Rs.13,500, fourfold amount he used to receive as aworker. At the time of Saga's closure, he requestedthe management to facilitate repayment from theworkers but the management refused. Ilyas lost thesum he had paid as advance to the workers when thecenter closed down.

Another maker, Munnawar Hussain, had borrowedmoney from relatives and raised a sum of Rs.120,000 to give advance to the workers to undertakesubcontract work for Saga Sports. He opened a mini-centre at his village Dolmanwali and mobilized 45workers.

'In addition, I gave work to 20 women at their homes.So I had a total of 65 workers. I did not get anymonthly salary from Saga but Rs. 3 commission perball and I earned Rs. 10,000 per month this way.When Saga closed operation, the workers did notpay me back the money. When I asked them forrepayment, they ask for work in lieu because theyhave no money, no assets. The factory owners ask meto collect at least 50 workers but the workers have losttrust in me after Saga's closure. I have no source oflivelihood now. My brother, a mason on daily wages,is supporting me during this crisis.'

Munnawar Hussain

Similar stories were narrated by 'makers' at differentSaga work centres. At the Narowal Centre, KhalidMunir told the team he had lent a sum of Rs 180,000to the stitchers. At village Ahloo Lah Saga Sports hada registered sub centre for women. Adil, who workedas a maker lost his money and is currently surviving asa daily wage brick kiln worker.

Saga Sports exploited a number of workers-makerswho had meager resources. As these makers wereneither piece-rate contract stitchers, nor permanentemployees, they had no legal identification or docu-ments to claim any benefits whatsoever.

4.5 Peshgi or Advance Payment System

In focus group discussions a few of the ex-Sagaworkers reported use of harsh tactics by the Saga

management related to advance giving system in

place. The makers did suffer losses when Saga centresclosed down, yet when the centres were operative,absence of those workers who had taken loans—evenfor a few consecutive days—led to extreme action bythe management. The absentee workers were hunteddown and taken forcibly back to respective work cen-ters to stitch footballs in lieu of the amount they hadtaken in advance. A room was used to interrogateand threaten the workers. A participant said once hecould not attend to work due to his mother's illness.He had earlier taken Rs. 4,000 as advance. The Sagasupervisor landed at his home to reprimand him andtake him back to the work centre. According to an ex-Saga worker the management had hired individualsspecially for this purpose.53

Apparently, threats and abuse of workers for absen-teeism occurred during the last days of Saga Sportsoperation and was limited to a couple of large workcentres that had an empty room to undertake abusivetreatment as reported by some workers. It indicatesabuse of authority by the 'maker' in case he wasgiven a supervisory role by the Saga management.

4.6 Workplace Preference and Collective

Resistance

Contrary to widely held perception among stake-holders in Sialkot (local industrialists, policy mak-

ers, researchers) the study reveals that an overwhelm-ing majority (96.4 per cent) of workers does not pre-fer home-based work, but want to work in a formal,custom-built appropriate work place with adequatefacilities and environment. This refutes the assumptionthat the rural workforce in Sialkot district prefer tostitch footballs at home because it is a light work andgives them flexibility to carry on their agricultural oragro-based economic activity, etc. The present studyrevealed that both women as well as men prefer towork in a formal, custom-built work area.

Preference for a formal custom-built work place islinked to i) better infrastructure and facilities; ii) oppor-tunities for interaction with workers from other vil-lages; iii) exposure and learning from immediate sur-roundings; and, iv) the possibility of collective resist-ance.

Many workers reported poor standards of hygiene at

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the Saga centres, particularly '…the toilets werealways in a bad shape', and recounted the brawlsthat would often break out among men on the use ofcassette recorders and playing of music of one'schoice while stitching footballs. Yet, they said theywould have still preferred to continue working in theSaga-built centres rather than work from home.

The workers at the Kotli Saeed Ameer Centre hadtwice resorted to collective action against the man-agement. This happened in early 2005. The reasonwas overloading of the vehicle operated by Saga topick and drop workers from adjacent villages. Oncethe vehicle overturned and some of the workers wereinjured. Around 60-70 workers demanded bettertransport facilities and went on strike for two weeks.But the management did not respond and the workersreturned to work.

4.7 Monitoring Mechanism

Saga Sports was subjected to a monitoring mecha-nism comprising three types of audits undertaken

by Nike: a basic environmental, safety and healthaudit, in place at Nike since 1997, called SHAPE(Safety, Health, Attitudes of Management, PeopleInvestment and Environment) performed by field-based local production staff; an in-depth managementand working conditions audit (M-Audit, launched in2002) conducted by Nike's in-house compliance spe-cialists and periodic inspections by the Fair LabourAssociation (FLA).54

The Saga work centres were, however, were periodi-cally monitored by the ILO-IMAC team. For M-Audit ofSaga Sports, Nike India was made responsible but"…due to travel restrictions (between India andPakistan) Nike India team was not able to travel toSialkot to conduct audit for many years."55 Nike Inc.sent a third party audit firm RBI to audit Saga's mainfactory in April 2005 which reported a number of crit-ical issues and Saga was rated at D on Nike'sCompliance Rating system. Nike then shifted audittask from India to its Thailand office for better accessto Sialkot and provided training to the Saga man-agement on compliance. In November 2005, Niketeam visited Saga to review verification with RBI andre-train entire Saga management on complianceintents and requirements. All critical issues were veri-

fied and closed per RBI's audit findings. Factory rat-ing was adjusted to A.56

Nike did not have any compliance audit at Saga'sstitching centers till August 2006.57 The Nike's ESHaudit conducted in April 2006 at Saga's main facto-ry found serious non-compliance. In August 2006Nike commissioned RBI and LIFT to monitor all stitch-ing centres and found serious non-compliance.58

Regarding internal monitoring or Nike's SHAPE auditundertaken by local production staff, one of the ex-Saga workers who worked as supervisor at one ofcentres for seven years stated:

'The management had identified 26 workers in eachof its centre for internal monitoring. A team of twomembers among this select group in turn made fort-nightly visits to other centres to monitor physical infra-structure-lighting, ventilation, safe drinking water facil-ity, electric fixtures, etc. The team was called'SHAPE'. Usually the teams were assigned to makethe visits during lunch or tea breaks. The team mem-bers were not allowed to probe into workers' issues orcomplaints related to management or supervisors' atti-tudes, wages, overtime, benefits, bonuses, etc.'

The ILO-IMAC team did visit the centres but workerswere not allowed to talk to the team members.According to several workers:

'A local interpreter assigned by the managementaccompanied the team and misinterpreted the state-ments of the workers. At the time of the team's arrival,utmost care was taken about cleanliness of the work-place. The whole centre would be swept clean, re-painted if needed, fresh towels would hang in toilets,etc.'

The complaint box did exist and the workers put incomplaints but according to the workers the Sagamanagement never opened the box or got back to theworker on the complaint. Some of the workers report-ed that the local ILO team would often chat with themanagement and go away without talking/listeningto the workers.

'There was no cleanliness in the factory. Toilets were

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in a very bad shape. But whenever an audit team vis-ited the centre, the management would clean up themess, put up a fresh paint and make every nook andcorner look spic and span. Discipline was observed inthe canteen and else where but as soon as the teamdeparted, things would return to normal disorder.Whenever any NGO representative visited the facto-ry, the manager would prepare 3 or 4 workers inadvance to answer questions falsely. If a worker everdared to speak up the truth in front of the team, hewas abused and threatened by the management later.

Seerat Abbas, Kotli Saeed Ameer

The visits by an external team were mentioned bymany ex-Saga workers. Some of the women whoworked at Machralla centre narrated the visits:

'The management organised a function on the occa-sion at the Machralla Centre. We were asked to dressup. Factory identity badges were given to us to pin upwhich were later taken away. Some of the girls wereasked to perform the traditional stick dance. One ofus decorated the hands of the visiting lady, a foreign-er, with mehndi (hena) and she was thrilled. The teamasked us simple questions like are we married or sin-gle, how many children do we have, if we have anyschooling, etc. We were told to answer questionsrelated to work precisely as instructed by the man-agement prior to the team visit"59

However, as Nike '…did not have any complianceaudit at Saga's stitching centres till August 2006,'60 itis likely that the workers were referring either to FLAor ILO or some other team visit.

The narratives of the workers, both men and women,about the visits indicate many lapses in monitoring,and by the time Nike started to audit the work centresdirectly in 2006, things had gone too far to remedy.

4.8 Workers' Age and Child Labour

The majority—57.4 per cent—of the workers werebetween 19 to 30 years of age, while 24.3 per

cent were 31-45 years old.

At the time of hiring, as reported by several workers,Saga management checked the national identitycards (NICs) or birth certificates only from those who

looked younger. Submission of personal documents,including the NIC, was not required from the majoritywho were on contract. None of the respondents of thesurvey reported his/her age to be younger than 18and according to the field team members they did notappear to be younger than 18 years. As some ofthese young respondents had worked for Saga for afew years, it is quite likely that they started work aschildren.61

Though none of the respondents indicated that chil-dren were actively involved in stitching, a few of thesurveyed workers noted that children do '…help eld-ers in a few tasks such as waxing the thread. At timeschildren are given an unfinished ball or two to stitchto completion. That's how the skill is transmitted to theyounger generation'.

Of the total 2,484 ex-Saga workers surveyed by thePILER team just six respondents reported their age as15 years and eight as 16 years. Thirteen workers toldtheir age was 17, while 75 said they were 18-year-old.

Though the number of workers under 18 years of agewas insignificant at Saga Sports, child labour doesexist in foot ball manufacturing: during several fieldvisits, team members witnessed children stitching foot-balls at home for various local vendors.

'In Ganjianwali, we visited a house identified by an

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Age Frequency Percentage15 years 6 0.2716 8 0.3617 13 0.5818 75 3.37

Age: No of 15 to 18-years old respondents

ex-Saga worker in the village. We found severalwomen and some children stitching footballs. Weasked 14-year-old Bilal and 11-year-old Sumaira ifthey go to school. They do not. It could not be ascer-tained for which brand they were working'.

Field Report, 30 May 2007, Meherunnisa

Similarly, the team members saw children (11 to 14years old) stitching footballs in Panj Grain Ghurnahand Uoncha Paharang villages.

Overall assessment of the situation, based on the pres-ent study, does not indicate widespread child labourin football manufacturing. Local manufacturers pro-ducing for big brands in large work centres do notemploy children. However, there are evidences ofpockets of child labour. These are distant and poorervillages where footballs are stitched either at mini-cen-tres or at homes. Ganjianwali appears to be one ofthese villages.

There is a need to investigate these pockets for socialfactors other than poverty and lack of schooling facil-ities. Ganjianwali has government primary schools forboys and girls and two private schools. The villagehas no government secondary school. The field teamlearned of the incidences of drug addiction inGanjianwali as reported by some of the villagers.Another important factor revealed in the study (section4.8) is adverse impact of Saga consolidation on chil-dren's schooling. The families where one or two mem-bers lost jobs were compelled to discontinue school-ing of their children and put them to labour.

4.9 Knowledge of the Nike Code of Conduct, ILO

Conventions and National Labour Legislation

Of the surveyed workers only 21 per cent saidthey were told about the Nike Code of Conduct.

The majority, 79 per cent, never heard of this wordbefore. Saga Sports had employed only 15.5 percent of its work force as permanent. The majority of itspiece rate labour worked at the official stitching cen-tres where the Nike Code of Conduct (in English andUrdu languages) was plastered on the walls.

Compared to awareness of the Nike Code ofConduct, relatively larger number of workers—31 percent—knew about the ILO conventions, particularly

the one related to child labour. The workers' igno-rance of the Code indicates irrelevance of the Codefor all three immediate stakeholders—the workers, theNike Inc. and the local vendor. The Code was violat-ed by the supplier as responses of the workers regard-ing work conditions indicate.

A better awareness of the ILO standards was due tothe ILO-IPEC project (1997-2004) for elimination ofchild labour in the sports goods sector, including itssocial protection component and the still functionalILO-IMAC monitoring.

Awareness of national labour laws was poor amongthe ex-Saga workers: only 10 per cent knew that cer-tain national laws provide safeguards to workers.None of these workers though were aware of thenational minimum wage law.

Low level of awareness of national and internationallabour standards and the company's code of conductamong workers is mainly linked to lack of unioniza-tion and organization of workers. Low level of litera-cy among workers and lack of reading habits among

34

those few who have a certain level of schooling areother factors behind workers' ignorance.

4.10 Unionisation in Saga Sports

The survey revealed that only 2. 6 per cent of ex-Saga workers were members of the registered

Saga Trade Union. The overwhelming majority—97.4per cent—of workers was neither members of theunion nor had ever heard of the existence of such aunion.

The situation at Saga Sports city-based main factorywas slightly better where only 15.1 per cent reported

to be members of the union. An ex-Saga workeremployed at the main factory observed:

'About 300 of Saga workers were members of theunion. No election ever took place. Mian Abdul

Shakoor remained president of the so-called union forten years (1997-2007).62

'I was a member of the union. I contributed Rs. 20 permonth to the union fund. I was not given union mem-bership card. Elections were never held'.63

This fact was endorsed by Mian Abdul Shakoor him-self '…there was no election. The office bearers wereelected (nominated) unopposed'.64 According to himthe Saga Workers’ Union was formed and registeredwith the Labour Department in 2000.

Of his association-employment with Saga, he said '…I belong to the beradari of Sufi sahib and had servedSufi sahib as his political secretary when he foughtand won the seat of the Member of ProvincialAssembly in 1996'. Mian Abdul Shakoor joined SufiKhursheed's company Saga Sports in 1999 as'labour welfare officer' and 'used to facilitate theprocess of SHAPE set up by Nike'.65

The pronouncements validate that trade unioniststhemselves have not imbibed the true ethos and prin-ciples of trade unionism.

It appears that Saga Sports obstructed genuine repre-sentation of workers in violation of the national labourlaw, the ILO Conventions and the Nike standard onfreedom of association and collective bargaining:

'Contractor must comply with all national and locallaws and regulations concerning collective bargain-ing and free association. As allowed by local law, thecontractor should ensure that employees have theright to join or refuse to join representative organiza-tions or associations with respect to workplaceissues.'66

That the union at Saga was pro-employer is borne outby the fact that the union and its selected representa-tion disintegrated soon after and failed to provide anysupport to the workers to access legal dues and enti-tlements.

4.11 Status of Workers employed at the Main

Factory

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Were you member of Saga

Trade Union? Frequency Percentage

1 Yes 30 15.12 No 169 84.9Total 199 100.0

Saga Trade union membership at the Main factory

Sport Sports had 1,841—24.1 per cent of its totalworkforce—'permanent'' workers at its main fac-

tory.67 In the survey, 15.50 per cent respondentsmarked themselves as 'permanent' against the cate-gories of 'contract' and 'piece-rate' workers. A 'per-manent' worker, as is understood, is the one whoseterms of services are laid out in the employment con-tract given to him/her, is registered with the state wel-fare institutions (EOBI, SSI), employed for severalyears and provided with gratuity. The survey indicat-ed this definition did not corroborate to work status ofthose who thought themselves 'permanent' as just 0.9per cent had received employment letter, 0.4 per centreported registration with social security institutionand 3.3 per cent received gratuity when their servic-es were terminated. The only aspect that tally with thedefinition of 'permanent' was the duration of work:16.9 percent had work for Saga Sports for up to 11years. It appears that majority of workers were noteven aware that a permanent work status is linked tocertain terms and conditions other than period ofassociation with any one employer.

In the survey sample, 8.9 per cent workers werefound to be employed at the main Saga Sports facto-ry located at Daska Road, Sialkot City. Of these, 99per cent had not received appointment letter and only23 per cent accessed gratuity at the time of expulsionfrom service. Neither these city-based workers werebetter informed on labour rights: 60.8 per cent didnot know of the Nike Code of Conduct; 68.8 per centwere unaware of the ILO Conventions and 81 per

cent had no knowledge of national labour laws.Socio-economic indicators of the workers employed atthe main factory in the city were also not very differ-ent: 43.7 per cent had no access to safe drinkingwater and 10.6 per cent had no toilet facility athome.

A crucial difference, however, was in the per monthsalary they drew: while 75.4 per cent of the city-based workers earned more than Rs. 3500 permonth, a much lower percentage of workers in thestitching centres earned this amount.

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Income in Rupee PercentageUpto 2500 24.12501-3500 21.93501-4500 38.54501+ 15.5Total 100.0

Monthly Income of all Saga workers

at the time of expulsion

Income in Rupee Percentage1.00 Upto 2500 14.62.00 2501-3500 10.13.00 3501-4500 44.24.00 4501+ 31.2Total 100.0 100.0

Monthly income of Main Saga

Factory workers

Data indicate women comprised one-forth (25.5per cent) of the retrenched Saga workforce.This also corroborates to the Saga employees'

list. Among females a higher proportion, 72 per cent,was of the age between 18 to 25 years compared tomales (32 per cent). Majority of these young womenwere unmarried. Predominance of young women infootball stitching indicates restricted mobility and lim-ited options for girls who have to adhere to tradition-al norms and if they work for wages, it is done eitherat home or closer premises compared to young menwho have greater mobility and options other thanstitching at village-based work centers.

The survey indicates a greater number (51.5 per cent)of women had completed five years of schooling com-pared to about 35 per cent of men. This does not cor-roborate with Gender Parity Index of 0.76 that indi-cates disparity against girls at primary level in thecountry.68 It can be explained if we consider footballstitching—a semi-skilled, low-paid work—as not anattractive option for those boys who manage toaccess higher schooling, leaving the occupation tothose not so fortunate young males. Girls, in contrast,have little options for wage work in rural milieu.Hence greater number of female stitchers who studiedupto class five.

The number of men who continued schooling till 8th

grade was almost twice (25 per cent) as much as offemales (14 per cent). Again it indicates restrictedmobility of women. As field visits revealed many of thevillages do not have secondary schools and boyshave to commute to other larger centres for middlelevel schooling. It also indicates that even for male stillmore years of schooling, at least up to 14 years, isrequired to get in to more lucrative occupations.

5.1 Saga's Machralla Community Center

Saga Sports built its first exclusive custom-builtstitching center for women at Machralla. Presently

padlocked and under litigation, the centre is an elon-gated single-storey structure spread out in a largearea. Adjacent to production halls are rows of facili-ties: babycare centre, fair price shop, medical unit,etc. The long verandah is lined with rows of fruit trees,shrubs and plants. At both ends are courtyards full oftrees and foliage. The simple structure blends wellwith the rural setting and has a certain user-friendlycoziness, a quality non-existent in the mill-of-the-runfactories or work places. Wisely, the Saga Sportsmanagement did not label it a 'stitching centre' or'factory'. It was given the acceptable and respectabletitle of the 'Women's Community Centre'.

A formal workplace was a new concept in the rural

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5. The Women Workers

Education Level Gender (% of the total sample)Male Female

Illiterate 22.3 18.2Under Primary (> grade 5) 4.2 4.1Primary (up to grade 5) 34.7 51.5Middle (grade 8) 24.5 13.8Matric (grade 10) 11.4 10.1Intermediate (grade 12) 2.1 2.1Graduate (14 years of schooling) 0.4 0.2

Education Level by Gender

milieu of Sialkot where women's mobility is largelyconfined to the private sphere (home), and at best,extended up to the boundaries of the village. In ruralSialkot, as elsewhere in rural Punjab, women do notwear burqah but do observe rules of purdah whereapplicable. Though the women had been stitchingfootball since 1980s, they did it within homes: leav-ing home or village for paid work was unthinkable.When the center opened in late 1990s, just four orfive women joined it. 'When the girls started work atthe centre, people talked and gossiped. But as moreand more girls joined the centre, the gossiping dieddown'.

There was strong resistance among men of Machrallaand the surrounding villages: men wanted women tostitch balls at home. In resisting the concept of workoutside home, the rural, semi-literate men were joinedby their urban, better-schooled and so-called 'liberal'male section of the Sialkot society. The underlyingissue, as is usually the case in sexist society was the'danger to morality' (of women). It was assumed thatthe centre would have bura (bad), or khula (open)mahoul (atmosphere).

5.2 Preference for Work Centres

Gradually, the resistance weakened as the womenfound the atmosphere at the center to their liking:

98 per cent women reported the overall atmosphereof the centre and the behaviour of the management asgood, appropriate and respectful towards women.During the peak seasons, Machralla Centre had 450to 500 women stitchers who came from different vil-lages within a radius of 40 km through Saga-provid-ed transport.

The focus group discussions endorsed the surveyedworkers' overwhelming preference for a formal workplace in contrast to home-based work. Young unmar-ried girls articulated their preference for work in a for-mal, larger work place like Machralla Center. Theexclusive work place provides them an opportunity forsocial interaction, learning and information sharingand bonding with other women. It gives them theopportunity to get away from home chores. They canfocus on work and produce more, compared to home-based work where distractions are many. Even mar-ried women with children and support system forchildcare prefer to work at a formal place. Only thosewomen who were forty plus and had no support sys-tem at home reported that they prefer to work fromhome instead of commuting to the Center.

Besides the large centre at Machralla, Saga Sportshad established--through makers' collaboration-- mini-

38

centres for women in different villages. These centres,as discussed earlier, were housed in rented premises.Women preferred even the mini-centres rather thantheir homes as workplace. For many women, asideinteraction with other women, the sub-centres hadbasic facilities (i.e. toilet) their homes lacked. At theSeoki sub-centre 25-30 women stitched football. Thecentre closed down after a year.

'We were very happy when this centre opened. It wasclose to our houses. We liked working together. It wasfun. It provided us a space to meet and talk, besidesstitching football. Away from home, we used to forgetour sorrows.'

Razia Abbas, Seoki.(Field report Nadira Aziz, 24 May 2007)

The crystal-clear preference for a formal, collectivework place refutes the common assumption, stereo-typical notion and the generalization that women pre-

fer to engage in productive activities at home becausethey can combine productive work and reproduc-tive/care work. Working collectively gives women asense of empowerment that atomized, fragmentedwork places-homes-fail to provide.

5.3 Solidarity, Collective Resistance and

Bargaining

At the center, the women had developed a senseof solidarity and camaraderie. They helped each

other in work. The participants reported that if awoman was unable to stitch a minimum of 3 balls, herfriends would sometime throw in a stitched ball to theaccount of her friend in need.

In 2002, the women in Machralla center protestedagainst low wages. One of the young womenemerged as a leader, mobilized other women and acore team of 4-5 women emerged. The team talked tothe management and asked for a higher rate per ball.The management declined and the women decided tostrike: 350 women stopped working. The manage-ment tried to talk the women out of it. It sent its repre-sentative to the house of the woman who was leadingthe strike. She would be sacked, she was told. Her co-workers vowed to quit work in case their leader wasfired. Such was the collective struggle that Saga man-agement finally raised the wages of lighter ball fromRs. 27 to Rs. 30 and of the harder ball from Rs. 35 toRs. 40.

The women also reported loan taking. However, noneof them said they were threatened or abused becauseof it. One of the women said she had taken Rs.6,000in advance to pay off the debt her father had takenfrom a money lender to buy a buffalo. The womenremembered the Saga owner Mr. Sufi with respectand warmth as it was only when he was alive that theloans were given by the management. After his deaththe management stopped giving advance to the work-ers.

5.4 Gender and Access to Information

Fewer women workers than men at Saga Sportswere aware of existing national labour laws, ILO

conventions and the Nike Code of Conduct. Just 13per cent of women knew about the Nike Code of

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Conduct compared to 24 per cent men. Knowledge ofthe existence of national labour legislation was everpoorer: only 6 per cent women knew that laws existto provide safeguards to workers. Most surprisingwas the poor level of awareness of ILO conventionsamong women: 18 per cent women had heard of ILOconventions compared to 36 per cent men. This alsoreflects negatively on the outreach of the ILO-IPECprojects and the IMAC monitoring undertaken in thelast decade.

The poor level of information accessed by women isrelated as much to their own restricted mobility andlimited human interaction as to the inferior status con-ferred on women by men who think women do notneed information related to public domain and 'hard'issues (i.e. economic, legal). It indicates extra effortsare required to educate women on workers rights andlabour compliance.

5.5 Gender and Wage Differential

Data reveals that at the time of expulsion fromSaga Sports, women were getting lower wages

than men. While a larger number of women, 37.9per cent, received up to Rs. 2,500 per month, fewer

men (19.4 per cent) earned this low salary. In con-trast, 42.7 per cent of men earned between Rs. 3500to Rs. 4500 per month while just 26.3 per centwomen reported they were given that amount.

It could not be ascertained whether women were paidless wages for similar work, that is, different rate forthe same ball, or they were given low quality, low-rateball to stitch.69 It is more likely that the management

discriminated in terms of nature of work given towomen: so-called lighter balls were given to womenwhile balls for use in professional matches were sewnby men.

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Monthly Income in Rs. Gender

Male Female

Upto 2500 19.4% 37.9%

2501-3500 21.2% 24.0%

3501-4500 42.7% 26.3%

4501+ 16.7% 11.8%

Wage Differential: Monthly Income

at the Time of Expulsion

The study reveals that 47 per cent of theretrenched workers were able to secure work asfootball stitchers for different manufacturers with-

in few months after retrenchment, that is, by the endof 2007. Forward Sports, Anwar KhawajaEstablishment and Vision were the main local compa-nies to induct a significant number of ex-Saga workersin to their stitching centres in different rural settle-ments. An insignificant number (2.2 per cent) wasable to switch to another skilled occupation-stitchingof clothes, gloves, track suits, and even lesser number(about one per cent) joined the surgical instrumentmanufacturing trade.

'I was a tailor before I joined Saga. Stitching clothesin the village doesn't bring much. I tried my luck inseveral places. Finally I got a job as football stitcherat the Saga's Kalowal center in 1999. When I gotsacked I was getting Rs.4000 per month. Now I amback to stitching clothes at home and barely make Rs.2000 per month.'

Ghulam Abbas Bhatti, Lado Pindi Village

A significant proportion—29 per cent—drifted in tomanual labour and odd jobs in the service sector (i.e.driver, guard, vendor, painter, sweeper, cycle repair).

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6. Post-Saga Employment Status

A substantial number, 21 per cent of the retrenchedworkers, was found to be jobless and in search ofwork.

'I was getting Rs. 4600 per month at Saga Sportswhere I worked for 8 years. I am now without worksince February 2007 and still searching for a job. Ihave four children. My family has run into great hard-ship. We are barely surviving on support from myfather who makes some money through peeri faqeeri'.

Aslam, Jankay Cheema Village

After Nike gave the contract to the new vendor, SilverStar Group of Companies, PILER research team facili-tated induction of retrenched Saga workers in the newproduction line. Information of the new opportunitywas disseminated through meetings in the villagesand at the PILER office. By the end of 2009, approxi-mately 1000 ex-Saga workers had been hired by thenew vendor, constituting 50 per cent of its workforceat that time.

6.1 Impact of Closure

6.1.1 Economic Hardship for the Household

The data reveals a downward slide in the earnings ofthose workers who were able to secure work after theclosure of Saga Sports. While the company was oper-ational, 24 per cent of the workers earned up to Rs.2500 per month. By the survey was conducted only

11.2 per cent workers are earning that much. Thenumber of workers who previously earned a monthlyincome in the range of Rs. 2,500 to 3500 decreasedfrom 30 per cent to 19 per cent. At Saga Sports a

good proportion, 39 per cent, workers earned asalary between Rs. 3500 to 4500. After closure, 24per cent workers were earning that much.

Decrease in wages was due to workers' loss of accessto export-oriented work. Stitching of foreign brandedfootballs pays more than that of lighter balls producedfor domestic market. Even when the stitcher was get-ting the same rate as previously, or earning a higherwage, as reported by few, the worker was still in losscompared to his/her employment at Saga Sportsbecause of the additional facilities the workersaccessed at Saga. Free lunch and tea, transport to-and-fro, basic medicines, access to fair price shops(that sold food and household stuff at low rates) wasa big support to the overall household expenses asnarrated by many workers.

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'I worked for five years in Saga at its Kalowal centre.I used to make between Rs. 3000 to Rs. 4000. But,you see, many facilities were absolutely free. I wasprovided with medicines. I was given lunch and teathrice a day. I did not have to spend a penny on trans-port. A big advantage was the fair price shop whereI could buy food stuff at low price that was deductedfrom my salary. I am married and have three children.So while working for Saga, I managed my householdof 5 members rather smoothly. Now I am working asan assistant of a mason on daily wages. I hardly get20 days of work at the rate of Rs. 300 per day. Itcomes to Rs. 6000 per month, more than what I madeat Saga. But I am worse off now.'

Mohammad Safdar, Kotli Loharan

The other reason for lower income was irregularity ofwork. Medium-size enterprises, with stable minimumproduction, achieve big contracts off and on and like-wise hire and fire piece-rate workers. Several workersreported erratic and brief access to piece-rate workavailable in the rural settlements through makers. Afew who went to the city to hunt for jobs found dailycommute to the city unaffordable with low wage andnone of the benefits offered by the city-based units.Several cited rude and disrespectful attitude of imme-diate supervisor in addition to other constraints.

6.1.2 Impact on Children's Schooling

A number of retrenched workers who could not findalternative source of income or had to settle for lesserwages were compelled to take their children out ofschools and put them to work in sectors where moni-tioring for child labour is not rigorous as in footballstitching.

'I have five children of school-going age. When Sagaclosed I had to take my eldest 13-year-old son out ofschool and send him to a surgical instrument shop toearn some money. I could not afford schooling of mysecond 11-year-old son too. I have put him to learnand earn some money from glove stitching. I workedin Saga's Machralla centre for seven years and wasmaking Rs. 2500 per month. The centre closed inMay 2007. My husband also worked in Saga in ear-lier days but he developed pain in his arm and couldno more stitch footballs'.

Shazia Asif, Mitrial Khurd

Some of the unemployed workers reported they had toshift their children from private schools (high fee andbetter quality) to low quality, low cost governmentschools.

'I got my children out of the private school and admit-ted them in government school after Saga closeddown where I was earning Rs.4,000 per month. Icouldn't afford private school fees for my four chil-dren. Though government school has no tuition fee,the teachers demand one or other kind of contribu-tion, like Rs. 10 for TB Association Fund or Rs. 15 forPaper Fund.'

Abid Ilahi, Rahang Khokhran

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The case studies and focus group discussions indicat-ed absence of community involvement in upgradingof social infrastructure. Complaints of poor quality ofeducation in government schools were voiced bymany workers but none mentioned the existence ofschool management committee system as in place insome other districts in the country.

6.2 Entitlements and Claims

Contract workers are deprived of entitlements dueto lack of documentary evidence and evasion on

the part of the contractor. The majority of theentrenched Saga workers did not receive any benefitseither from Saga itself (i.e. gratuity) or from stateworkers' welfare institutions (EOBI, PESSI).

Of the permanent workers, many were not registeredwith the Punjab Employees Social Security Institution(PESSI) and the Employees Old-Age Benefit Institution(EOBI) by the Saga management. Some of the work-ers were registered only with the PESSI and had socialsecurity cards. Very few workers were registered withboth PESSI and EOBI and were in possession of thetwo registration cards.

Several workers reported that the Saga managementtook these cards back when partial settlement of theirdues, mainly gratuity, was made to them afterretrenchment. This was an illegal, immoral act, com-mitted by Saga management as registration cards arerequired to claim benefits from respective state institu-tions. The employee registration card remains thesame even when the employer changes.

Majority of the workers in possession of either one orthe other faded, wrinkled cards were registered muchlater than their joining dates. This false entry reducedtheir tenure and thus the benefits. The workers whohad joined Saga in early 1990s were issued thesecards in 2000 or much later.

The annual accumulation of one month salary from thedate of joining, or gratuity, is paid to workers by theemployer at the end of service. According to labourlaws, contract workers are also entitled to gratuity butare deprived of this entitlement through lack of docu-mentary proof or evidence of employment. As themajority of ex-Saga workers were not provided with

the employment contract letter they could not haveclaimed any entitlements. Of the permanent workers,many were reportedly cheated by the managementthrough falsification of their joining dates.

'I worked for 10 years in Saga. My gratuity amount-ed to Rs. 43,000 but I was paid only Rs. 19,000'.70

Nasreen, ex-supervisor, Saga Machralla Centre

'I joined Saga in 1994 but the management gave methe Social Security card in 2000 and the EOBI cardin July 2006. My gratuity amounts to Rs. 75,400 butI have not yet been paid the full amount.

Yaqoob Gul, ex-driver, Main Saga factory

6.3 Registration with EOBI

Saga Sports registered itself with the EOBI in 1982.The registered employer, or establishment, pays 6

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per cent of the worker's monthly salary as contributionto the EOBI. The registered workers are entitled toclaim old-age pension, reduced pension, survivorsand invalidity pension and old age grant through.

According to the EOBI official, Saga had registered3000 workers with EOBI but defaulted on its contri-bution to the tune of Rs. 10,000,000. The figure ofregistered workers (3000) does not corroborate withfield investigations and case studies. It is likely thatthough registered by Saga, not all 3000 workerswere provided with the EOBI registration card. Only70 of the permanent employees submitted their casesfor different entitlements to the EOBI AdjudicatingAuthority after retrenchment.

'These workers were not registered with the EOBI fromthe date of their joining but contribution from theirsalaries was deducted from the date of joining.'71

Nasir Mahmud,Executive Officer Law & Order, EOBI, Sialkot

Only 150 of the ex-Saga workers are currently bene-fiting from the EOBI and receiving a monthly pensionof Rs. 1500 to Rs. 2500. Three pension cases, sub-mitted by workers, were dismissed by the EOBI asthese workers were not registered though they werepermanent employees and had documentary proof.

6.4 Registration with PESSI

The Social Security Institution offers several finan-cial benefits related to illness, injury and death to

the registered workers, beside medical facilitiesthrough its hospitals and clinics.

The Punjab Employees Social Security Institution(PESSI) official refused to share the number of ex-Sagaworkers registered with it.72 According to a PESSI,Sialkot office, Saga management had defaulted on itscontribution amounting to Rs. 45,000,000. UnlessSaga management settles its dues, PESSI is not liableto pay benefits to ex-Saga workers.

Absence of workers' genuine representation throughunionisation was the main reason the workers at Sagawere deprived of their rights. The union plays a cru-cial role in empowering workers through sharinginformation on labour laws, legal entitlements and ter-tiary benefits. The study reveals that majority of theworkers—including permanent workers—had noinformation on labour legislation, the company's rulesof service and the EOBI and PESSI procedures todemand and access entitlements and rights.

6.5 Post-Closure Claiming of Entitlements through

Legal Support

In one of the multi-stake holders' consultations heldunder the project, the manufacturers, employers,

members of Sialkot Chamber of Commerce andIndustry and civil society representatives endorsed ex-Saga workers' right to seek claims through courts incase they were deprived of legal dues.73

The retrenched workers employed by Saga in its stitch-ing centres in rural areas could not claim entitlements

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as they did not possess any documentation to estab-lish their case in the court. PILER provided legal aidonly to those workers who were registered with theEOBI and PESSI and had requisite documents.

Of the total respondents of the survey, only 162 work-ers reported they had received dues (ranging from Rs.10,000 to 30,000) at the time of lay-off. Cases doc-umented by PILER field team revealed the companymade partial payment and that too mainly to the staffother than stitchers. Details of 25 regular workers ofKalowal and Machrala Stitching Centers, whose serv-ices ranged from five to 12 years, revealed they hadreceived Rs. 471,550 against total dues of Rs.982,380 (i.e 48 per cent of dues).74

The Saga management laid off 500 regular workersfrom its main factory without notice in May 2007. Theworkers first approached the Saga Workers Unionrepresentatives who advised them to seek supportfrom PILER. A grievance notice against unlawful dis-missal was served to the company and a copy sub-mitted to the District Labour Officer. Subsequently, themanagement retracted and agreed to pay dues in

installments on notified dates.

From July 2007 up to March 2009, about 30 indi-vidual cases were submitted on behalf of the ex-Sagaworkers by the PILER team to the Wages andCompensation Commissioner under the Payment ofWages Act 1935. Several cases were settled out ofcourt, a couple dismissed due to lack of documentaryevidence while ten cases were decreed by the courtand execution notices issued to the Saga manage-ment for payment of legal dues to the claimants. PILERfacilitated the workers to submit the decrees to theDistrict Officer of Revenue for execution. In late March2009 PILER became a party—on behalf of these work-ers—to the suit filed in 2007 in the Lahore High Courtby the United Bank Ltd, Askari Bank, EOBI and PESSI,against Saga Sports for recovery of their dues.Subsequent auction of the Saga assets provided freshimpetus to the workers to claim their dues and 100workers filed their cases with the PILER support.

It was the first time in the history of Sialkot that a sig-nificant number of workers were able to access courtsfor recovery of their dues.

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Sialkot has established its reputation as a dynam-ic city, vibrant with entrepreneurial spirit, bring-ing in annually through exports more than one

billion US dollar to the exchequer.75 Manufacturing ofvarious products, including sports goods and surgicalinstruments, provides livelihood opportunities to120,000 workers in the District. The business commu-nity volunteers 0.25 per cent revenue against itsexport invoices to the development of the city infra-structure. Its active involvement in, and substantialcontribution to, the development of the district is man-ifest in two major projects which are cited as first everin Asia undertaken by the private sector. The con-

struction of the dry port at Sambhrial was initiated in1984 under the Sialkot Dry Port Trust through poolingin of Rs.10,000 by 52 businessmen of the city.76

Sialkot industrialists also sought government approvalto built, own and operate an international airport inthe city in the late 1980s and pursued the matter. Theprivate sector international airport finally becameoperative in 2007.

Sialkot Chamber of Commerce and Industry is uniqueamong the many such trade bodies in the country.Cohesive, and with a strong sense of collective identi-ty, the Chamber has proactively sought to benefit not

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7. Can Sialkot take the lead?

just its immediate members but its larger constituency.The demographic and social attributes of the city—manageable size and homogeneity of the popula-tion—and its unique economic position as majorexport centre, have facilitated the unified role of theChamber.

The Chamber also prides itself in ridding the footballindustry of child labour. Being one of the three signa-tories of the Atlanta Agreement 1997, the Chamberplayed a crucial role, along with other partners, inimplementation of the project that followed the agree-ment. In the process, the Chamber gained valuableexperience of working with the state and the civil soci-ety, learned the dynamics of a tri-partite mechanismand strengthened linkages with a number of state insti-tutions and national and international citizen sectororganizations.

Given its vast residue of lessons learnt in the process,the Chamber is best suited to address the crucial chal-lenge the Saga fall has brought to fore: complianceissues in export-oriented industries. The Chamber isbest positioned to take a lead in providing a businessmodel to the country that integrates corporate respon-sibility in its ethos and its core functions; a model thatevolves out of a holistic approach and is based on atripartite institutional framework.

It is pertinent here to briefly revisit the ground realitiesbrought to fore by this study.

7.1 Sialkot Football Manufacturing Industry: Key

IssuesThe industry is a source of employment—andthe only source of income—for the majority ofpeople in Sialkot refuting official data that categorize Sialkot population as largely 'rural';

The industry, exporting to MNCs and brandsthrough local manufacturers comprisesinformal subcontracted labour;

Violations of national labour laws, ILO labourstandards and companies codes of conduct are widespread;

Lack of freedom of association, genuinerepresentation and collective bargaining

even to formal, factory-based workers is the norm;

Low wages, lack of access to the (state) socialsecurity/old-age and the companies' benefits(i.e. bonus, gratuity, holidays, doubleovertime rate) characterise labour relations;

local manufacturers, the ILO and the state labour bodies have intervened exclusively against child labour and the ILO-Pakistan work in Sialkot have so far excluded seven out of the eight ILO core labour standards;

Local manufacturers/business houses lack professional management systems andinstitutionalised mechanisms for maintaining labour relations;

Research and development (R&D) componentis missing from the industry;

The workers' lack awareness and access to information, on labour rights in the context ofnational legislation, the ILO standards and the companies codes of conduct;

Workers prefer a formal, institutionalised work place instead of informal 'stitchingcentres';

7.2 The Way Forward: The Sialkot Model

The business community in Sialkot is fully cognizantof ground realities and the rigors and emerging

demands of global supply chain. Exporters of surgicalinstruments are bracing up for compliance in responseto the regulatory framework (Ethical Procurement forHealth) put in place in 2008 by the UK's NationalHealth Service, one of the biggest buyers of Sialkotproducts. It is gradually dawning that the concept ofcorporate responsibility as an unwanted cost is out-dated. Corporate responsibility is being recognizedas an intrinsic component of a successful business,linked to smooth industrial relations.

The suggested ingredients that could go in to the mak-ing of a successful business model in Sialkot are as

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follow:

7.2.1 A Rights-based and Holistic Approach

An approach based on the norms set by national-con-stitutional and international standards of human andlabour rights is increasingly being considered asessential for responsible business in today's globaliz-ing economy characterized by free market and cut-throat competition. A flourishing business does nothappen in a vacuum: it is linked to larger economic,social, political and natural environment. Businessgrowth needs an enabling environment at all levels. Inturn, responsible business can facilitate enabling envi-ronment only when it integrates rights-based norms inits plans, policies and processes. A rights-basedapproach comprises affirmation of rights, accounta-bility, empowerment and participation of the peopledirectly or indirectly involved with the businessprocesses. These are also the elements of the codes ofconduct of many multi-national companies currentlydoing business in Sialkot. A growing number of theseMNCs want codes of conduct strictly in place by theirlocal partners.

7.2.2 Workers' Representation

Workers' role in production makes it incumbent thatthey have a voice in the sphere of work. This voice isneeded not just for workers' own interests—to negoti-ate over wages and benefits—but is essential for feed-back on the production processes, for monitoring andevaluating work practices and policies as these haveimpact on productivity.

Workers' representation rights are enshrined inPakistan Constitution and in national labour legisla-tion (particularly in industrial relations law) and in theILO Convention No. 87 and Convention No. 98, rat-ified by Pakistan. Though constitutionally the workerscan organise and form unions at plant level, practi-cally there are many hurdles and workers cannotunionise. Businessmen and industrialists in Sialkot arewary of unions, and so are their global counterparts.

Yet, multi-national companies are not totally averse toworkers' representation and participation and havemade this condition an element of their respectivecodes of conduct. Though sounds contradictory—being averse to 'unionisation' but willing to grant rep-

resentation to workers—it can be explained as follow:the word 'union' is synonymous to 'empowerment' ofa 'large number of workers' as union is a member-ship-based organisation. Due to mistrust between thetwo partners in the production process and severalother historic reasons in Pakistan and in Sialkot, thebusiness community erroneously considers 'unionisa-tion' of workers to its detriment.

Till trust is restored between the manufacturers andworkers in Sialkot and unions become a viableoption, an existing legal mechanism—a middleground—can be utilized for ensuring workers' repre-sentation. Instead of allowing formation of a 'union',a limited number of workers' representatives, or shopstewards, can be elected through a prescribed proce-dure under Industrial Relations Act 2008 (sub-section33) to act 'as a link between labour and manage-ment' .

The mechanism of workers' representation throughshop stewardship has been put in place, and is work-ing smoothly, at the Silver Star Groups, the new ven-dor in Sialkot for Nike Inc. The elections for shop stew-ards in different departments in the factory were heldin October 2008. About 720 workers cast their votesin secret ballot—supervised by a tri-partite commit-tee—and elected 17 shop stewards who were edu-cated about their roles and responsibilities. The elect-ed shop stewards, who are now trusted by both—workers and the management—work as mediators.As a result the number of workers directly approach-ing the HR Department for the resolution of problemshas declined and the worker-management relationshave improved.

The success at the Silver Star proves that the existinglegal mechanism for workers' representation can bereclaimed effectively by local industrialists and bemade a part of future business model.

Just as workers representation at the plant or factorylevel, in the form of union or other mechanism, isimportant to safeguard workers' interests and to main-tain smooth management-labour relations, similarlyalliances or federations of unions on industry basisplay a vital role in industrial relations and in industri-al development. Unfortunately, national labour legis-

49

lation has obstructed growth of industry-wise workers'federations. Had such a football workers' tradeunions federation existed in Sailkot, it would havehandled the ex-Saga workers entitlement claims effec-tively.

7.2.3 Industry-based Employers' Associations

The presence of dynamic and strong industry-basedmanufacturers-employers associations is essential forhealthy business growth. Industry- or sector-basedassociations are best positioned to take up not justpolicy issues but can play a critical role in workforcedevelopment as well as facilitate R&D initiatives in thesector. In the developed countries, the employersassociations have credible history of providing muchneeded services—relating to financial-managementsystems development and human resource develop-ment—to their members companies. Sector-basedemployers associations have also taken the lead andfacilitated state machinery in formulation of demand-led skills policy to address technological changes andmeet the emerging skills needs.

Employers' association are also strategically placedto educate and advise member companies on the con-texts and interpretation of universally agreed corelabour standards and national labour legislation andon how these standards and laws can be translatedinto meaningful benchmarks for company practiceand codes of conduct.

In Sialkot, there exist a number of employers associa-tions in major sectors—sports goods, surgical instru-ments, leather garments—but at present their scopeand nature of services are limited. Pakistan SportsGoods Manufacturers and Exporters Association, reg-istered since 1959, liaises with Trade DevelopmentAuthority of Pakistan.78 It supports its 400 memberscompanies, of whom 62 are members of SCCI, toaccess international markets through participation intrade fairs. The Association provides input to tradeand other relevant policies—mainly advocating forsubsidies and tariff reduction.79

There is a need to broaden the scope of theAssociation to embrace the entire gamut of servicesand to devise innovative approaches in addressingchallenges, particularly related to social compliance

and skill development.

7.2.4 Tripartism at Local Level

The Atlanta Agreement 1997 was a tripartite contractbetween the Sialkot Chamber of Commerce andIndustry (SCCI), UNICEF and the International LabourOrganisation. Though the stimulus for the contractwas international, its implementation was achievedthrough the Pakistan offices of the two internationalorganisations, the ILO and UNICEF (who have nolocal ownership) and the SCCI. The other local stake-holders, state and civil society, extended full support,and were partners to the project processes that fol-lowed the contract. The framework for the futureSialkot Model needs to be rooted on strong local tri-

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partism, with the state—Labour Ministry, labour wel-fare institutions, local Labour Department—playing akey role, along with elected local representatives (i.e.councilors), and local citizen sector organisations andresource institutes.

There already exist cordial and supportive relationsbetween the state and the SCCI due to the Chamber'sbest practices in infrastructure development. What isneeded is a multi-layered formal mechanism to reachconsensus on issues and to seek creative solutions outof existing legal and governance structures. Forinstance, the issue of labour inspection needs to dis-cussed and addressed at local level. Revival of labourinspection—transparent, fair and corruption-free—is

in the interest of local business as it facilitates moni-toring of compliance.

As labour inspection was halted through a provincialnotification following the Punjab Industrial Policy2003 on the insistence of local industrialists, its revivalneeds to be sought by the industrialists themselvesunder the changed requirements of global supplychain and the demand for compliance.

7.2.5 Strong State Labour Institutions and Mechanisms

The SCCI can play an active role, along with localtrade unions and citizen sector organisations, to tapthe existing state resources and in the processstrengthen the state institutions and mechanisms.Strong and trusted state labour institutions benefit boththe management and the workers.

The manufacturers and employers in Sialkot pay 7 percent to the Punjab Employees Social SecurityInstitution and 5 per cent to the Employees Old-AgeBenefit Institution, in addition to 1 percent income taxof total annual exports and special contribution of0.25 percent of their export revenue to the districtinfrastructure development. They also contribute to theWorkers' Welfare Fund and the Workers' ChildrenEducation Cess.

The SCCI have strong linkages—with both federalMinistry of Labur and the Provincial LabourDepartment—and requisite political clout to lobby forexpanded scope and coverage by PESSI and EOBI toaddress the workers' social protection needs (i.e. con-tingencies of sickness, work-related injury/death,invalidity, maternity, old-age). A secure, protectedand healthy workforce will have greater potential toperform better and enhance productivity. The SCCImembers can facilitate expansion of coverage by reg-ularising contract workers in their enterprises as thiscondition is being increasingly sought by the MNCsdoing business in Sialkot.

7.2.6 Research and Development

Technological change is a determining factor, besideslabour compliance, that has impacted the local indus-try the most in recent decades and will continue todirect the future course of local football industry.Technological changes in football design and manu-

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facturing are moving ahead at a fast pace. Thermallybonded, seamless, machine-pressed ball replaced thehand-stitched ball in 2006 World cup and since thenthe bulk of football manufacturing orders are turningto Thailand and China—the countries to seize theopportunity due to better infrastructure, better adapta-tion to technological change and the presence of astrong research and development component in themanufacturing sector.

Lack of adaptation to technological changes has costdearly in the past. Sialkot sports goods industry lostbusiness in tennis rackets when raw material switchedfrom wood to composite material. Now hockey sticks,golf clubs, fishing rods, billiard cues and other sportsgood equipments are all made from composite mate-rials.

A weak R & D component in Sialkot industrial basecalls for sustained and effective collaboration of stateand employers/corporate sector.

There are several state initiatives in R& D such as therecently established Sports Industries ProductDevelopment Centre, Sialkot, that has come up as aSMEDA project. The Product Development Centre(PDC) is mandated to '…provide technical know-how,trained labour force, testing facilities, prototype devel-opment and mould making services to the sportsgoods sector.'80

The Sports Goods Association can play the role of acatalyst—through sustained and systematic involve-ment—in the evolution of PDC in to an effectiveresearch and development institute for the industry.

7.2.7 Human Resource Development

The global switch of demand from hand-stitched ballto machine-made ball has cut down 30 per cent ofSialkot football exports. The sector thus needs anurgent mechanism to move and upgrade manual-skillsthrough a sequence of initiatives and processes todevelop skills for machine operation. This can bedone through mobilising existing state mechanismsand structures. These include TechnologyUpgradation and Skill Development Company, (estab-lished under the Ministry of Industries andProduction), Skill Development Council, Islamabad(constituted by the Ministry of Labor, Manpower &Overseas Pakistanis, with an active participation ofEmployers Federation of Pakistan), GovernmentVocational Institutes (administered by provincial edu-cation department), Vocational Training Centres andApprecentice Training Centres (run by provincialLabour Department),

Human resource development is ultimately linked tothe norms of social justice and equity and needs struc-tural changes at macro level to sustain it as an on-going process. The business community in Sialkot,however, needs to focus on initiatives—at microlevel—that connects with each other and feed in to thelarger goal. Responsible business and social compli-ance, i.e. adherence to labour standrards is the firststep towards social justice. A holistic approach thatties up the component stated above—workers repre-sentation, dynamic employers association, public-pri-vate partnership that strengthen state labour, and R&D institutes—finds synergy with human resource orworkforce development strategies.

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1Beavorton,Oregan ,Nike PressRelease, May 24, 2007.2Saga Sports Employees List provided by Matrix.3Worker in an informal meeting with the PILER team members.4The term 'foot loose labour, coined by Jan Breman.5The Sports Goods Sector in Pakistan, September 2007, ITC, UNIDO, WIPO6Sialkot Economic Alternatives: Assessment and Recommendations, MercyCorps, September 25, 2006(unpublished document)7Ibid.8Pakistan Logistic Cost Study, Final Report, June 2006, Logistic Consulting Group, website:http//www.nttfc.org9Ibid.10'the state shall make provision for securing just and humane conditions of work…' (Article 37c), and 11Internationally Recognised Core Labour Standards in Pakistan, Report for the WTO General Council Reviewof Trade Policies of Pakistan, ITUC, Geneva, 16-18 Jan 2008.12The ETI code of labour practice: Do workers really benefit? Summary of an independent assessment for theEthical Trading Initiative, IDS, University of Sussex, 2006.13Does monitoring improve labour standards? Leassons from Nike, MIT Sloan Working paper No.4612-06,July 2006 (http://ssrn.com/abstract=916771)14Looking for a Quick Fix: How weak social auditing is keeping workers in sweatshops, CleanClothCampaign, 2006 (Study was conducted in 8 developing countries, including Pakistan).15Aly Ercelawn, Promoting Universal Compliance with Core Labour Rights: Labour Standards and SmallEnterprises in Pakistan, 2005, PILER. 16Sources: Pakistan Labour Force Surveys 1996-97 and 2005-0617Labour Force Survey 2005-06.18EFA Global Monitoring Report 2007: Strong Foundations: Early Childhood Care and Eduction.19The List of Hazardous Forms of Child Labour, devised by the Ministry of Labour Manpower and OverseasPakistanis in 2002 after the ratification f the ILO convention on the Worst Forms of Child Labour (No. 182)by the government of Pakistan in 2001. The list was revised in December 2006.20Two studies noted in this regard: How the West Was Won? The Dark Side of Institutional Entrepreneurship(Farzad R. Khan & Kamal A Munir, 2006, LUMS), Representing Children: Power, Policy and the Discourseon child Labour in the Football Manufacturing Industry of Pakistan (Ali Khan, 2007, OUP)21Child Labour and Poverty, G.K. Leiten, in Working Children Around the World: Child Rights and ChildReality, ed. G.K. Leiten, Institute for Human Development, Delhi, 2004.22Sialkot's Entrepreneurial Spirit, Dr. Jawaid A. Ghani, Working Paper No. 96-10, September 1996 LUMS,23Nike initial input to the "Atlanata II Agreement" discussion in Islamabad, February 21 and 22, 2008 (Nikeofficial document)24Baseline Survey Report on Child Labour in Surgical Instruments Manufacturing Industry Sialkot, ILO-IPEC TBPProject,2004, AKIDA Management Consultants.251998 Population Census, Government of Pakistan.26Agricultural Census 1990 & 2000.

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References

27Agricultural Census 2000.28The Sports Goods Sector in Pakistan: Export performance and potential-Implications of the WTOAgreement, September 2007, ITC, UNIDO & WIPO29Comments by industrials during consultations and informal interviews.30Ibid.31Multi-stake holders consultation in Sialkot held in January 2007.32Does Labour Regulation Hinder Small Enterprise Growth? A Ercelan, Karamat Ali and Umar Abbas,Discussion paper, PILER 200533Ibid.34The Sports Goods Sector in Pakistan, September 2007, ITC, UNIDO, WIPO35Social Development in Pakistan: Growth, Inequality and Poverty, SPDC Annual Review 200136Trade Development Authority of Pakistan, Export News 04-2007, www.tdap.gov.pk37A Desk Study of the Sialkot Soccerball Project, Child & Social Development Organisation, SCCI Building,Sialkot38Ibid.39Nasir Dogar, Chief Executive IMAC Sialkot, in a meeting in his office on 3 September 2007.40Ibid.41Unstructure interview with an ex-ILO monitoring team member, 31 August 2007.42Ibid (words in italic by the author)43Personal communication from a former ILO official.44Saga Sports Centres List provided to PILER by Just Solutions Network45Unofficial memo by Executive District Officer, Sialkot..46Saga Sports union’s representative in a multi-stakeholders' consultation facilitated by PILER and held inSCCI auditorium on 7 January 2007.47Zafar Shaheed, The Labour Movemebt in Pakistan, Oxford University Press, Karachi, 2007.48List of Trade Unions of District Sialkot as on 21-12-2008, District Officer Labour, Sialkot.49Notification of District Government Sialkot, labour Department, No.125, dated 6 Feb, 2006; EOBI officialletter No.HO/B&C/DRC/SLKT/07/P-201; Office Order, Directorate of Education Punjab Workers WelfareBoard, F-A-/1 Kyber Block, Allama Iqbal Town, Lahore, dated March 2002.50Ali Khan, Representing Children; Power, Policy and the Discourse on child Labour in the FootballManufacturing Industry of Pakistan, 2007, OUP Karachi.51Pakistan Social Living Measurment: Household Integrated Economic Survey 2005-0652Focus group discussions.53Field notes from Ugoki, dated 30 May 2007.54Source: MIT Sloan Working Paper No.4612-06, July 200655Nike representative's statement via email to the Just Solution Network.56Ibid.57Ibid.58Ibid.59Focus group discussion with women at Machralla, 13 August 2008.60Nike rep's email.61Ibid.62Ex-saga worker in an interview.63Waris Ali Khan, ex-Saga worker.64Interview with Mian Abdul Shakoor, 28 Oct, 2008.65Ibid.66Management (Labor) & ESH Code Leadership Standards, Nike document.67Nike official list of Saga Sports employee

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68The Education system in Pakistan: Assessment of the National Education Census. Dr. Douglas Lynd, 2006,UNESCO69This information gap is due to missing question in the survey form. While designing the questionnaire, theresearchers could not foresee the issue of 'soft' and 'hard' balls and different wages associated with the two.70Field report, October 2007.71In a meeting at EOBI with field team on 31 Jan 2008.72Field team visit to Director PESSI, Ali Ahmad Chaudhry, dated 12 Feb 2008.73Promoting Decent Work through Tripartite Consultation and Action, Project Progress Report, PILER July2007.74Field report.75News report, Business Recorder, 17 Jan 200976http//www.sdpt.org.pk77Industrial Relations Act 2008, sub-section 33.78http://www.pakboi.gov.pk/pak/xdetail.asp?ComID=4129279Business Recorder report, 20 June 200980http://smeda.org.pk

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