By: Dr Amtul H Mumtaz
We live in a societal setup that is highly stratified according to caste, class, and cultural and regional variations, all of which have implications on the opportunities provided to women. Thus researchers have suggested that policymakers should take into account women’s experiences of gender systems across the country. In Pakistan, human development indicators for women are weak and experts search for solutions both in terms of the religious-cultural framework and the lack of political will to modify systems.
Participation of women in the labour market is increasing over time in developing economies. This increased participation is mainly due to push as well as pull factors. The push of growing urbanisation, larger demand for consumer goods and low wages has forced a greater number of women to participate in the labour force. Similarly, rising literacy rate and growing educational attainment and the desire for economic sovereignty among women has produced the necessary pull towards remunerated work.
Industrial sectors namely garments, pharmaceuticals, plastic and food are based on relatively high levels of women’s employment and are likely to be the important centre for women’s employment in future.
One would expect that incomes by working in the registered large scale manufacturing industry would be higher than in the informal sector (both small manufacturing units and home based work). The wage rates in the informal sector are one-fourth less than the wage rates prevailing in the formal sector. However the disparity in the capital-labour ratio and in labour productivity between the two sectors is much higher than the likely wage differentials.
It is observed that nearly 70 percent of working women in the informal sector work below the minimum wage. The assessments with the minimum wage condition within the informal sector show that there is a considerable variation between those working in small factories and home-based workers. The median wage disparity between small-scale industry and home-based work is also approximately one-fourth within the informal sector.
Further, in small-scale enterprises, 61 percent of women earn below the minimum wage compared to more than three-fourths of home-based workers.
The fabric industry of Pakistan contributes 54 percent to the total export earnings of the country. The fabric and clothing industry accounts for 46 percent of total manufacturing and provides job opportunities to 38 percent of the manufacturing labour force. It provides entry level employment for women with limited income opportunities.
The textile industry of Pakistan has prospects for expansion in labour productivity, research and development, manufactured goods diversification and branding. In 2006, the United Nations Development Programmme in alliance with the private sector of Pakistan launched its direct initiative Gender Promotion in Garment Sector through Skills Development with an aim to widen a cadre of skilled women to increase productivity and job creation for semi urban and urban women.
It is found that salaries in the pharmaceutical and garment sector is 30 percent higher than those in plastics and the food sector. In pharmaceuticals, higher wage rates prevail since the work is more capital and skill intensive compared to other sectors.
Garments, however, present a somewhat different picture. Higher productivity in this industry is determined partly by its internationally competitive nature and partly by the relatively higher skill intensity of work. It helps explain the relatively better wage structure in the industry rather than across the formal-informal divide. In fact, if we analyse the detailed data across the formal and informal sectors within garments, the wage disparity is the narrowest in this industry.
The food and plastics sectors are comparatively unskilled and mostly cater to the local or national market. The food sector is predominantly interesting. Even though the contribution of large scale manufacturing in the food sector is more than it is in plastics and garments, the median wage rate in the sector is the lowest. The nature of the industry – where the capital-labour ratio is the lowest – appears to explain lower wages.
It appears that skill and technology intensive industries, where the value of product is very important, provide better wage rates than industries, which need less skill concentration. Structure of industry matters but a much more important determinant of wage disparity is the industry in which he or she is employed.
In addition, roughly 75 percent of the workers in plastics and food work at lower wages than minimum wage rates while the proportion in pharmaceuticals and garments is somewhat higher than 50 percent.
Attributes of human capital are also anticipated to determine earnings of workers. Human capital (in terms of schooling and experience) has a positive association with earnings. As anticipated, literate women contribute the highest share (about 84 percent) of work in large scale manufacturing followed by small-scale (65 percent) and home-based work (54 percent).
According to a study conducted recently by Sayeed, Khan and Javed in major cities of the country, the average rate of return of one additional year of schooling is 8 percent whereas an additional year of experience results in 3 percent increase in wage rate. The negative coefficient of experience square indicates that the returns to experience marginally decline. In particular, earnings grow at 2.8 percent for one year of experience, two percent for five years of experience and one percent for 10 years until it reaches zero after 15 years of experience.
In the informal sector of the economy, more experience does not lead to higher wage rates. Since women in the informal sector perform highly labour intensive and least skilled functions, this implies that attainment of more experience over the years does not impart a positive impact on wage rates. This explains the unregulated nature of the informal economy where labour laws are generally not practiced. Since women in the informal sector are less educated than those working in the formal sector, contractors would prefer to hire relatively more educated women as they are considered more efficient and productive. For instance in the plastics sector, women are found to be performing the least skilled job such as cleaning and sorting of raw materials while in pharmaceuticals, women workers are usually engaged in the wrapping of drugs and medicines. Likewise, in the food sector, women are generally working as packers of processed food stuff such as toffees, sweets, chocolates and biscuits etc.
The garment sector is the only exemption where women are found stitching clothes and other attire accessories. It seems that having more experience in such activities does not lead to increase the returns on labour.
Hence, the earning profile of women is expected to be greater in the large-scale formal sector industry than the informal sector. In the informal sector, earning profiles are higher for those women working in small-scale industry as compared to those involved in home-based work. The more capital and expertise oriented the industry, the higher the wage rates. Therefore, it is necessary to pay serious attention to improve the skills of working women particularly those working in the informal sector.
The writer is a researcher