Our social welfare delusion

Spearhead Analysis – 09.01.2014

By Sarah Eleazar
Research Analyst, Spearhead Research – Pakistan

Prime Minister Nawaz Sharif Youth SchemesA good government is one that makes and implements decisions that serve the common good. It follows the rule of law and is truthful about its intentions. And above all it should be answerable to the people.

Political parties often base election campaigns on social policy guarantees. Sustained access to corridors of power is determined by how the agenda is then delivered.

Pakistan lacks an overarching social policy embodied within a social justice framework. A lot of the political campaigns leading up to the May 11, 2013 elections were structured around social guarantees and services. From the question of accountability of government institutions to assurances of policies dealing with poverty alleviation, social welfare was a priority matter for many parties.

The Pakistan Muslim League- Nawaz had tested several social welfare policies during its previous tenure in the Punjab. On paper, the Danish Schools project, Laptop Scheme, Solar lamp project, Aashiyana Housing Scheme, were just some of the government’s several ambitious projects to uplift the lower and middle segments of society. Most of these welfare projects did not have a long term impact. Many claimed that the government was simply trying to gain political mileage through free giveaway projects.

The question of minimum wage

The provincial government recently passed the Punjab Minimum Wages for Unskilled Workers [Amendment] Bill 2013. The 18th Amendment has devolved the Labour and Human Resources Department to the provinces, giving the provincial governments sweeping powers to decide all matters pertaining to the lower rungs of society, starting with the minimum wage earners.

The minimum wage (on paper) applies to the informal and formal sectors alike. However, considering the various problems associated with regulating and documenting the informal sector the government pays little or no attention to the wages earned in this sector.

The Punjab government introduced six amendments to the minimum wage bill. Key among the amendments was a Rs1,000 increase in minimum wage (it is now Rs9,000 per month). The second major amendment was an increase in the penalty of non-payment of the minimum wage from Rs2,000 to Rs10,000. The 400% increase in the penalty appears to be a magnanimous move by the Punjab Assembly, chock full of industrialists and landlords- basically employers who pay minimum wage.

The elephant in the Assembly, the day the Bill was passed, was the subject of whether labour inspections would be reinstated. Labour inspections allow the government to follow through on complaints regarding noncompliance of labour laws, bonded labour, child labour, etc. Without labour inspection there can be no prosecution. Without prosecution, the government could set the penalty for non payment of minimum wage at a billion rupees and it would do no one an ounce of good. Furthermore the Bill does not specify whether the penalty would apply per worker or across the board. The ambiguity in law favours the employers who can then claim flexibility in interpretation of law.

The Punjab Assembly has a vocal opposition this time. Most of the Assembly debates give one hope that the government will promulgate well thought out laws. This Bill needs to be subject to further debate and scrutiny. Labour inspections need to be reinstated, given full powers and the law needs to address the matter of political influence and bribery in the department.

Prime Minister’s Youth Loan Scheme         

It would be fallacious to compare this programme with the free giveaway Laptop Scheme. While the laptop giveaways were meant to reward students’ hard work, the loan scheme goes a step ahead and offers the youth financial capital for start-ups. The project has more scope, wider outreach and if it is anything like the Grameen Bank project, it would have lasting impact on the youth and entrepreneurial landscape of Pakistan. Except it doesn’t.

The Youth Loan Scheme has the same objectives as the Yellow Cab Scheme initiated two decade ago and once again in 2011. The scheme had been a colossal failure for several reasons including poor execution and management practices, blatantly political overtones, lack of a long term integrated approach and problems with the terms and conditions the beneficiaries would have to meet to avail a taxi.

There were several bail out possibilities for that scheme. The government could have retained the ownership of taxis and initiated a rent/lease plan for a limited period of time. This would have ensured greater outreach and, if executed with sincerity, should have been replicated in all urban centres in the country.

In the same vein, the youth loan scheme has several glaring issues as far as the terms and conditions are concerned. The fact that a guarantor is required to underwrite the Rs2 million loan with Rs3 million, narrows down the segment of society the government is trying to target with the scheme. It is not the underprivileged educated youth who would be able to avail the facility, but the upwardly mobile that have access to guarantors.

Secondly, the fact that applicants are not required to submit a business proposal as a prerequisite for the loan, makes the scheme’s rationale all the more dubious. The government could adopt an integrated approach in which instead of doling out cash, it could supplement the capital investment with enterprise development skills, business support provision and creativity and innovation development as pre-requisites for applying and getting these loans approved. The integrated approach serves two purposes: first, it acts as a filter to identify the genuineness and readiness of potential youth to take the entrepreneurial leap; second, it enables these young people to plan their business effectively and efficiently by minimising the failure risks. The government could even take universities and colleges on board with this.

The big question right now remains: will the loan scheme become just another sub-prime lending scandal?

The PML-N, in power at the centre and in the Punjab, is yet to make good its election campaign promises. So much was promised…yet how much of it has been delivered?

The twin problems of inflation and energy crisis that strike at the heart of the society remain unresolved. The Punjab government has set up sahulat bazaars in several districts that sell food items at subsidised rates, but these markets are few and cater to a limited number of the populace. The gas and electricity shortage have affected everyone regardless of social standing. While there is so much talk of solar energy projects and small hydel electricity projects, very little that is substantial has materialised. People claim to be worse off today than they were under the previous government.

The World Health Organisation has informed the Punjab Health Department that if it did not increase its polio campaign coverage immediately, Pakistan could face visa restrictions. India has already made it mandatory for Pakistanis travelling to India to show documentation on their polio vaccination and boosters.

Let’s face it, Pakistan’s aspirations to become a welfare state are far from achievable in the foreseeable future. The government needs to step back and analyse its social welfare policies in terms of pragmatic and achievable long term goals. Policies are, in part, the product of conscious human design. They can be changed to ensure that they achieve their goals more effectively. Instead of using window dressing techniques to silence the people’s gnawing hunger for relief, the government could don the hat of sincerity and reclaim the people’s trust it seems to be slowly losing.