Dark un­der­belly

The Pak Banker - - 4EDITORIAL - Zeenat Hisam

DEMOC­RACY is a charm­ing form of govern­ment, full of va­ri­ety and dis­or­der.' - Plato AS the demo­cratic process un­folds in Pak­istan, one won­ders what kind of a hy­brid would emerge in times to come. Don't get me wrong: no sane per­son would ar­gue against the supremacy of democ­racy. But yes­ter­day's turn of events - the state shoot­ing down the peace­ful pro­test­ers at the Karachi air­port - in­di­cates this hy­brid democ­racy could be worse than mar­tial law. The dark un­der­belly of our democ­racy is marred with blood­ied re­pres­sion of work­ers' rights, the mil­i­tary call­ing the shots, co-op­ta­tion by the political elite, and a par­lia­ment that passed the dra­co­nian PPA 2014 and 21st Amend­ment with­out bat­ting an eye­lid.

In­stead of ju­di­ciously han­dling the process of pri­vatis­ing PIA, the state's hasty de­ci­sion to en­force the Es­sen­tial Ser­vices Act, and worse, to shoot the pro­test­ers in­deed bodes ill.

Pri­vati­sa­tion of state-owned en­ter­prises in Pak­istan has had a long and con­vo­luted his­tory, and of all the SoEs, pri­vati­sa­tion of PIA has emerged as the most com­pli­cated and con­tro­ver­sial.

The story of its pri­vati­sa­tion is traced back to 1988 when a Bri­tish con­sul­tant pro­posed that pri­vati­sa­tion in Pak­istan should be based on a pub­lic-par­tic­i­pa­tion ap­proach and Pak­istan's cap­i­tal mar­kets de­vel­oped by in­duct­ing hun­dreds of thou­sands of small savers into share own­er­ship. Seven com­pa­nies were short-listed for wide­spread of­fers and this in­cluded PIA. In 1990, only 10pc shares of PIAC were dis­in­vested in May 1990 at par value. Later, the plan was aban­doned.

Dur­ing the 1990s and 2000s the gov- ern­ment came up with sev­eral plans, in­clud­ing the one drawn by the World Bank, but noth­ing ma­te­ri­alised and, in 2009, PIA was dropped from the pri­vati­sa­tion list only to be taken up again. In Oc­to­ber 2013, 69 SoEs for pri­vati­sa­tion were ap­proved. PIA was one of the 39 en­ti­ties marked for 'early im­ple­men­ta­tion': 26pc of PIA's shares were to be of­fered to ' strate­gic in­vestors' by the end of De­cem­ber 2014. Then again, due to op­po­si­tion, pri­vati­sa­tion was post­poned till 2015. In Au­gust 2015, the govern­ment told the IMF it would pri­va­tise PIA by March 2016.

The govern­ment, it seems, went berserk, with dif­fer­ences within its own ranks, the op­po­si­tion from the PPP and the re­sis­tance from em­ploy­ees: in a very scan­dalous move, the 'demo­cratic' govern­ment pro­mul­gated the Pak­istan In­ter­na­tional Air­lines (PIA) Cor­po­ra­tion Con­ver­sion Or­di­nance in early De­cem­ber 2015, and later shamed by all, con­verted the or­di­nance into a bill on the last day of 2015. When the PIA unions and as­so­ci­a­tions went on strike, the govern­ment in­stead of ne­go­ti­a­tion and con­sen­sus- build­ing, used the Es­sen­tial Ser­vices Act.

One of the cru­cial fac­tors in pri­vati­sa­tion is labour re­la­tions and its im­pact on em­ploy­ment. Analy­ses of this as­pect are less fre­quently done, or shared and high­lighted in the me­dia as it is con­sid­ered highly political and a sore point by an­a­lysts, mainly be­cause in Pak­istan SoEs are grossly over­staffed due to political pa­tron­age of ev­ery political party who comes to power. Ac­cord­ing to an ear­lier fig­ure, the air­craft to em­ployee ra­tio in PIA was 1:418 as com­pared to 1:106 of the US na­tional car­rier and 1:229 of the In­dian air­line.

None­the­less, we need to re­mem­ber that an in­ter-min­is­te­rial com­mit­tee con­sti- tuted in 1991 to deal with labour em­ployed in SOEs and safe­guard their rights had got the work­ers' con­sen­sus on a pack­age of in­cen­tives for labour with work­ers' rep­re­sen­ta­tives through the All Pak­istan State En­ter­prises Work­ers Ac­tion Com­mit­tee. To what ex­tent the com­mit­ment was hon­oured is an­other de­bate.

There are valid ar­gu­ments on both sides - pri­va­tise or not. It is bet­ter to ac­cept at this junc­ture that the process of pri­vati­sa­tion in Pak­istan has gone be­yond that de­bate. Yet it def­i­nitely does not ab­solve the govern­ment of go­ing over­board and by­pass­ing due process, crush­ing the voice of the em­ploy­ees. Need­less to say, PIA's cur­rent state of affairs, ie fi­nan­cial losses, is due to the govern­ment's own flawed poli­cies and lack of ef­fi­cient lead­er­ship.

Dur­ing the cur­rent episode of the spi­ralling of com­pli­ca­tions and con­tro­ver- sies around PIA's pri­vati­sa­tion, what was amiss was in­for­ma­tion on the level of ne­go­ti­a­tion be­tween the man­age­ment and em­ploy­ees. The PIA em­ploy­ees' four­point agenda com­prises de­mands the state should have con­sid­ered and ne­go­ti­ated. Also, hid­den from the pub­lic view is how the govern­ment would re­solve the ques­tion of labour re­trench­ment, and what pos­si­ble pol­icy mea­sures it is go­ing to adopt.

There could be three op­tions. One is to de­lay re­trench­ment and spread it over a longer pe­riod af­ter pri­vati­sa­tion. Se­cond is to freeze re­cruit­ment and of­fer gen­er­ous re­tire­ment schemes. Third is to rein­te­grate work­ers into other forms of em­ploy­ment. In any case, it is es­sen­tial that the govern­ment take pri­vati­sa­tionin­duced so­cial pro­tec­tion mea­sures.

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