Extending social protection to Pakistan’s diverse, growing informal economy
is a challenge. This study contributes to the policy discourse on extending
social protection coverage to informal workers. It also provides insight
into some pervasive factors that impede the extension of social protection
to informal workers. Central to this study is a survey of 202 informal workers
employed in three subsectors of Pakistan’s small and medium-sized enterprise
sector (construction, garment manufacturing, and street vending). Most
workers surveyed are uneducated and live in rural or semi-urban areas. Members
of their households lack adequate employment skills and have incomes that are
too low to support savings. Thus, they remain vulnerable to transitory poverty
and economic shocks.
Around half of the workers surveyed receive monthly payments that amount
to less than, or around, the minimum wage. About 45.0% of respondents have
no employment contracts, and of those that did, only 21.6% have written
contracts, while the rest have only verbal contracts. The study finds that
overall working conditions in the informal sector to be unsatisfactory. There is
little evidence of factory owners ensuring safety measures for workers exposed
to hazardous materials or providing appropriate safety equipment. Women are
particularly vulnerable because of their concentration in home-based work
with lower wages and limited access to social protection. Trade unions are
largely absent from the informal economy, and there is also a general lack of
awareness among informal workers about their basic labor rights. This study recommends hiring only from registered contractors, applying
recommended minimum wage rates for domestic workers, and introducing
adequate labor welfare standards for factory workers. Informal workers need
government support, such as a basic level of economic security through regular
work or wages, to integrate into mainstream social protection schemes.