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Social Protection Schemes in Pakistan: assessment of existing programs

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 ISSN 2410-3918 Academic Journal of Business, Administration, Law and Social Vol. 3
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Social Protection Schemes in Pakistan: assessment of existing programs

Prof. Yu ShuHong
Wuhan University, Wuhan, China

PhD (C.) Malik Zia-ud-din

Wuhan University, Wuhan China

LLM Khalid Mahmood Ranjha

Wuhan University, Wuhan, China

Abstract

Social protection is regarded as a basic human right guaranteed in several International

Covenants and Treaties. The Constitution of Pakistan exclusively stipulates the provision of
social security for all citizens of the country. The aim of the study is to explore and evaluate
the social protection schemes with regards to its coverage, scope and outreach. The country
has number of social security schemes that are being carried out by provincial and federal
governments for the welfare of workers like old age benefits, disablement, health and
medical facilities. However, these schemes have failed to extend their benefits to home
based, part-time, temporary or contract and agricultural workers. This paper attempts to
highlight the shortcomings of existing social protection programs that are obstructing their
benefit distribution and limiting their outreach. It underlines the challenges faced by the
implementing agencies. This paper also suggests some improvements in the structural
design of social security mechanism with special focus on the scope, coverage, outreach and
effective delivery mechanism. Since, the proper allocation of resources and effective
implementation of these schemes can ensure the assistance and welfare of the targeted
population.

Keywords: social protection schemes, welfare, social security, assessment, Pakistan.

Introduction

It is evident from the literature review that the term social protection is
interchangeable with social security. The term was first coined by the United
Nations (UN). Generally, Social protection can be described as a provision that
“society provides to individuals and households through public and collective measures to
guarantee them a minimum standard of living and to protect them against low or declining
standards of living arising out of a number of basic risks and needs.” (Pakistan Business
Council, 2011). The concept of social security is enshrined in Article 221 of the
Universal Declaration of Human Rights which specifies that every member of
society is entitled to have social security (United Nations, 1948). Social protection
schemes provide basic level of assistance to those whose earning capacity is
interrupted due to “contingencies” such as
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Universal Declaration of Human Rights § 22 states that “Everyone though national effort and
international co-operation and in accordance with the organization and resources of each State, of

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the economic, social and cultural rights indispensable for his dignity and the free development of
his personality”.

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sickness, work injury, disablement and old age. Beside the feature of sustenance to
the beneficiaries, the social protection schemes play a significant role in balancing
the essentials of demand and services and therefore overall employment level in
national economy. Effective social protection policies and initiatives increase
employment opportunities, shorten the loss of human capital, and protect people
from falling into poverty consequent to financial or economic crises (Khan, A. 2013).
Simultaneously, successful protective measures shape a significant component of
social policy and encourage societal cohesion (Kabeer & Sarah, 2010).
The aim of this study is to identify the modalities of a complete social protection
scheme for the employed labor and poor population in Pakistan. Particularly, the
primary objectives of this descriptive study are to:
 Assess the number of poor population and their socio-economic conditions;
 Assess and evaluate the existing policies and programs of social protection
including social assistance and social security schemes and their outreach;
 Suggestions about policy changes to increase the outreach of existing
schemes for the destitute and vulnerable groups.
This paper consists of five parts. Part 1 provides an introduction of the social
security and social protection with regards to United Nation (UN) and Universal
Declaration of Human Rights (UDHR) definition. Part 2 contemplates the term
Social Protection, Social Security and Safety Nets in relation to International Labor
Organization (ILO) standards; it further discusses the concept and practice of social
protection in Pakistan as well as an analysis of available social protection schemes
in the country. Part 3 assesses the existing schemes; its scope and coverage in the
country. Part 4 derives some suggestions and policy recommendations and part 5
draws some inferences from the study.

Definition of Social Protection, Social Security and Safety Nets

Before going into detail of social protection standard definition, it is significant to

distinguish terms, safety nets, social protection and social security which are
distinct from each other in their role, scope and coverage. The term social security
implies the provisions of protection provided to members of society through
various assistance schemes to balance decrease in earnings from work, as a result of
natural calamities and unidentifiable problems such as death of the bread winner,
old age, sickness, partial disablement and maternity (Shepherd A., Marcus, R., &
Barrientos, A. 2004). The provisions of social security are usually for workers who
are employed in formal sector and have social assistance, social insurance and
health insurance measures. Therefore, social security is a component of social
protection schemes. On the other hand, safety nets are mostly short-term and ad-
hoc emergency schemes such as food support, employment Program, cash transfer,
social welfare and care services to avoid people to fall below the poverty line (Irfan,
M. 2007 & Nasim, A. 2014). Social Protection schemes are designed to decrease the
intensity of risks during economic crises which can affect the people severely.
The contemporary definition of social security is based on the Social Security
(Minimum standards) Convention 1952 No 102 of International Labor Organization

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(ILO) which specifies the three fundamental components of security that a state is
required to provide and address as a matter of policy for its citizens (ILO, 2000);
1. “To offset contingencies arising out of income deprivations, either completes
cessation of income earning opportunities or reduction in incomes. The first category would
include contingencies such as unemployment, invalidity, old age and the death of a
breadwinner. The latter will include categories such as sickness, maternity (or paternity),
employment injury, etc.
2. Provision of health care;
3. Benefits for families with children; these will include provision for education as well
as child support or other child related benefits”.
The main concept of social security encompasses three significant characteristics
such as livelihood protection, health related provisions and benefits for family with
children. Most importantly, it is solely the state’s responsibility to extend and
monitor these assistance measures for its citizens through statutory schemes or
programs. The statutory schemes or programs are mostly tax-financed by the
employers as well as employees in many countries, and the benefits are granted in
case of any emergency. This social security concept is not complete without
addressing the fundamental structural features and recurrent dynamics in
developing countries. In the wake of these structural features the underdeveloped
countries are experiencing two most influential concerns such as pre-domination of
unorganized informal sector and existence of widely distributed poverty (Sayeed,
A. 2004). The formal sector employees fall within the purview of these statutory
provisions and exclude the informal or unorganized sector, because usually it is
dealt through registered public and private establishments.
Similarly, the World Bank (WB) has also focused to support the social protection
programs since 2000. The WB strategy is mainly based on the concept of Social Risk
Management which is contributed by Holzmann and Jørgensen in 2000 (Holzmann
R. and Jørgensen S. 2000). Mostly social protection progams are designed as safety
nets (ad-hoc or short time interventions), and are ineffective to increase the expected
outcome, since these programs are not initiated in time and do not have
trickledown effect to the targeted populace. On the other hand, the safety nets
designed before the occurrence of any calamity has positive impact during any
crisis, it can be further adopted as an essential part of social protection policy.

Conceptual understanding of Social Protection in Pakistan

Pakistan is one of the few developing countries that stipulate social security as
an explicit fundamental right in their constitution. Article 38 (a) (d) & (e) of the
Constitution of Pakistan, 1973 states (GoP 1973):
“The State shall provide for all persons employed in the service of Pakistan or otherwise,
social security by compulsory social insurance or other means; provide basic necessities of
life such as food, clothing, housing, education and medical relief, for all such citizens,
irrespective of sex, creed, caste, or race, as are permanently or temporarily unable to earn
their livelihood on account of infirmity, sickness or unemployment; reduce disparity in the
income and earnings of individuals.”

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Historically, the social protection programs in Pakistan have been considered as

an ad-hoc or interim interventions to the circumstances rather than a part of social
protection policy framework or were advocated by the international donor agencies
(Jamal, H. 2010 & Pakistan Economic Survey. 2009). Apparently, the commitment
made in the Constitution remained largely unfulfilled for its citizens. It has two
reasons; first, it requires huge resources to achieve such challenging commitment
which is a problem in underdeveloped countries including Pakistan. Secondly, in
the countries where constitutional violations are considered a norm, although, the
constitution promises rights and privileges to its citizens (Sayeed, A. 2004). The
social protection has been restricted for the public and formal nonagricultural sector
in the country. However, the social protection schemes for private sector were
introduced in 1970s during populist reforms at that time. Many of the schemes
are functional to date along with new schemes but the ambition to increase the
coverage of such schemes for larger section of workforce in informal economy has
been ignored. (See Annex - A)

Existing Social Protection Programs in Pakistan

The National Social Protection Strategy (NSPS) of Pakistan specifies the social
protection as “...a set of policies and program interventions that address poverty and
vulnerability by contributing to raising the incomes of poor households, controlling the
variance of income of all households, and ensuring equitable access to basic services. Social
safety nets, social insurance (including pensions), community programs (social funds),
and labor market interventions form part of social protection” (Finance Division, GoP.
2007). The strategy was adopted by the Government of Pakistan in 2007 with three
overarching objectives:
1. To patronage chronically destitute households;
2. To provide protection against inauspicious shocks;
3. To encourage investment in human and physical capitals.
The Constitution of Pakistan protects the fundamental right of Social Protection of
its citizens. Several social security and social assistance programs are being carried
out in order to fulfill the commitment of this constitutional provision and are
playing a key role in country’s poverty alleviation strategy.

Social Security

Most of the social security schemes are designed for the employed labor force and
the retirees of the formal employment sector. The existing schemes mainly provide
benefits in case of emergency, for instance illness, invalidity, old age, maternity, and
injury at workplace. A concise introduction of these programs is given below.
i) Government Servant Pension Fund: The scheme was started in 1954. It
covers the government servants from all government departments who complete
their service at least 25 years or reach the age of 60 years. It covers two important
aspects of benefits such as Pension and Provident fund (The Pension Act. 1871.
1947). The old age pension is provided by the government funds whereas the
provident

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fund is deducted at source on monthly basis from the salary of the employees. The
scheme was initiated for the workers of government departments under the colonial
inherited act named ‘The Pension Act’ 1871.

ii) Provincial Employees Social Security Scheme: The Provincial Employees

Social Security Scheme for the workers from formal private employment sector was
introduced in March 1967 under “Employees Social Security Ordinance, 1965”.
Initially, the scheme exclusively covered the textile industry workers with the main
objective to provide protection against illness, work related injuries, maternity,
invalidity and death. However, the scheme was expanded for workers from
different commercial and industrial establishments and later on in 1970 the scheme
was further expanded on provincial basis and termed as “Employees Social Security
Institutions (ESSI)”. ESSIs are managed by the provinces and are providing health
services and temporary cash benefits. The health facilities are provided to the
workers at different levels from first aid to hospitals where the workers can receive
free treatment and free medicines under these schemes. Cash benefits are also
rendered in some circumstances e.g. sickness benefit, maternity benefit, iddat benefit
(for widows), injury benefit, disablement gratuity, disablement pension, death
grants and rehabilitation benefit etc under this scheme (Employees Social Security
Ordinance. 1965).

iii) Public Sector Benevolent Funds and Group Insurance: This scheme was
purely initiated for the employees working in public sector in 1969 under the
“Federal Employees Benevolent Fund and Group Insurance Act, 1969”. The scheme is
providing benefits under nine different schemes for the employees of Federal
government and their children. The schemes cover monthly benevolent grant
(Death during services/ invalid retirement), Sum Assured (paid to the family of
employee in case of his death during service), marriage grant, burial charges,
farewell grant, lump sum grant (in case of 80% disability declared by the medical
board), education stipend (for two children of the employee from Metric to PhD),
reimbursement of semester/ annual fee and cash awards for employees children on
Essay writing competition. The scheme is financed by the contribution of federal
government employees (Federal Employees Benevolent Fund and Group Insurance
Act. 1969. 2010).

iv) Workers Welfare Funds (WWF): The WWF was founded in 1971 for the
workers from those industrial establishments which are registered with the Fund
through the promulgation of “The Workers Welfare Fund Ordinance, 1971”. The
private sector industrial establishments are required to deposit two percent of
computable income exceeding hundred thousand rupees in one fiscal year. The
fund obligates the establishments to deposit a contribution equivalent to 5 percent
of the profit of company to Workers Participation Fund after distribution of workers
share under the “The Companies Profits (Workers Participation) Act, 1968”. The Act is
applicable to those establishments which have a minimum number of 50 or more
workers, or have capital of Rs. 2 million or fixed assets amounting to Rs. 4 Million
or more. The fund can be spent for numerous purposes such as building of houses

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for workers, medical facilities, tricycle for disable workers, grant of fund for
marriage of daughters, grant

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to the families of deceased workers and grant of fund for income generating
activities (The Workers Welfare Fund Ordinance. 1971. 2008).

v) Workers Children Education Ordinance: The ordinance was promulgated

in 1972 to provide education for the workers children from all registered
establishments employing 10 or more workers. Workers Welfare Fund has given
the financial support for the construction of schools which are then controlled by
the provincial administrative boards. The funding comes from an Education Cess, a
tax given by the employers amounting to Rs. 100 (One hundred) per worker per
annum (The Workers Children Education Ordinance. 1972. 2012). It is pertinent to
mention here that Government of the Punjab Province has abolished this Cess.

vi) Employees Old Age Benefits Institutions (EOBI): The scheme was
introduced for the benefit of workers from formal employment sector employing 10
or more workers under “Employees Old Age Benefits Act, 1976”. This scheme is
mainly providing old age pension, invalidity pension and death grant. The act is
based on 7
% accumulative contributions by the employers (6%) and (1%) from employees
salary respectively. The scheme provides old age benefits to the registered
employees. EOBI is an autonomous institution and functioning under the Ministry
of Labor, Manpower and Overseas Pakistanis. The institute is administered by a
Board of Trustees which is comprised of 19 representatives from government, labor
unions, and employers.

Social Assistance Schemes

The aim of Social Assistance Schemes is to provide assistance through cash or in-
kind. These schemes target, particularly, those who do not fall in the domain of
labor market and are believed to be poor. There are several schemes and institutions
that are providing cash or in kind assistance in Pakistan, however, Zakat2 and
Pakistan Bait- ul-Mall3 (PBM) are the two most significant public institutions which
are providing support in cash or kind to the destitute and help in rehabilitation of
needy wretched individuals. A recent initiative of cash grant to poor and needy is
Benazir Income Support Program (BISP) with similar objective to provide
unconditional cash grant to the poorest household female heads. However, their
financing mechanism and target groups are different from preceding schemes.
These programs are discussed below.

i) Zakat: The department of Zakat is well established and committed for

the transfer of cash to the poor in Pakistan. The program is exclusively based on
individual’s contribution and administered by the Government of Pakistan since
1980 under “Zakat and Ushr Ordinance, 1980”. The government has established
Provincial
2
Zakat is an obligatory tax deducted annually under Islamic law on certain kinds of property and
used for charitable and religious purposes.
3
Pakistan Bait-ul-Mal (PBM) is an autonomous body which was established through Pakistan

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Bait- ul-Mal Act in 1991. The objective of PBM is to contribute toward poverty alleviation through
vari- ous poorest focused services and providing financial assistance to the destitute, widow,
orphan, invalid; other needy persons, as per eligibility criteria approved by Bait-ul-Mal Board.
The mission of PBM is to provide social protection to marginalized strata of the society.

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Zakat Councils, district and tehsile councils, and Local Zakat Committees (LZC’s).
The LZC’s are the lowest level of Zakat committees; the committees are also
responsible to decide eligibility of the receiver. The Zakat budget is distributed in
two different ways e.g. 25 percent is distributed through other institutions and 75
percent Zakat is distributed thought LZC’s (Jamal, H. 2010). This financial
assistance is disbursed under different programs such as; financial assistance
(Guzara Allowance), educational scholarships, healthcare assistance, support to
leprosy patients, Eid Grants and marriage assistance etc.
The 18th constitutional amendment devolved the subject of Zakat to the provinces
and federal areas. However, the Council of Common Interest (CCI) 4 was assigned
the duty of collection and distribution of Zakat between federal and provincial level
through Federal Ministry of Religious Affairs and Inter-faith Harmony till the next
award of National Finance Commission (NFC) under the approved CCI formula. 5
The ministry distributed Rs. 4778.18 million among the federally administered areas
and provinces during the year 2014-2015 (Pakistan Economic Survey. 2015). The
detail of disbursed fund is given in the following table.

Table. 1. Disbursement of Zakat

Disbursement Amount
Sr. No Provinces/ Other areas (Rs. Millions)

Punjab 2548.91

Sindh 1053.60

Khyber Pakhtunkhwa 614.12

Balochistan 227.08

Federally Administered Tribal Areas (FATA) 154.83

Islamabad Capital Territory (ICT) 117.53

Gilgit Baltistan 62.11

Total 4778.18

Source: Pakistan Economic Survey (2014-2015)

ii) Paksitan Bait-ul-Mall (PBM) is an autonomous body which was constituted

in 1992 under the “Pakistan Bait-ul-Mall Act, 1991”. The main objective of PBM is
to provide financial assistance to those people who are either not eligible or have
been excluded from the domain of Zakat. The Program is providing assistance to
4
Council of Common Interest (CCI) was constituted under Article 153 of the Constitution of Paki-
stan. The purpose of CCI is to resolve disputes between Federation and Provinces over sharing of
power.
5
The National Finance Commission (NFC) Award is a planned economic Program enacted since
1951. The Program is established under section 160 of the constitution to take control and observe
the financial imbalances and management of resources equally amongst provinces to meet their
expenditures.

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minorities and certain sects of Muslims. The funds are mainly provided by the
Federal Government to continue its services. It also receives funds from different
public and private authorities such as Provincial Governments, Central Zakat
Fund, National and International Organizations, NGO’s and voluntary private
contributions (Pakistan Bait-ul-Mal Act. 1991). The program distributes finances
among the needy under different categories which includes Food Support programs
(FSP), Financial Assistance to individuals, Support for Children through National
Center for Rehabilitation of Child Labor and Institutional Rehabilitation (Grant to
Non-Governmental Organizations) (Barrientos, A. 2006). PBM also provide funds to
support orphans, vocational training, educational scholarships and outreach
program for deprived parents. Dowry (Jahez)6 package is also given to orphan girls
as well as supply of wheel chairs, hearing aids and artificial limbs to needy persons
are part of PBM support activities.
iii) The Benazir Income Support Program (BISP) was launched in October 2008
as a major component of National Social Protection Strategy (NSPS) (The Benazir
Income Support Act. 2010). The objective of the program is to offer monthly cash
transfer to the poorest female heads of families and the establishment of safety net
programs, supported by transparent and effective targeting and delivery
mechanisms. The main focus of the scheme is to mitigate the negative impacts of
economic and food crises and inflation on poor particularly women with cash
assistance amounting to Rs. 1000 whose monthly income is less than Rs. 6000
(Jamal, H. 2010 & Pakistan Economic Survey. 2009). The long term objectives of this
Program is eliminating extreme poverty and empower women to achieve universal
primary education goal in pursuance of achieving Millenium Development Goals
(MDGs).
The program is considered to be a platform to provide financial assistance to the
vulnerable population recognized on the basis of poverty scorecard and is also
considered to be an exit strategy (Pakistan Economic Survey. 2008-2009). The exit
strategy comprises of providing training to one of the vulnerable family members to
maintain its livelihood. The Pakistan Economic Survey (2008-2009) reported that
BISP shall serve other social assistance programs such as conditional cash transfer
and health insurances. The main target of BISP was to bring 5.5 million families
under this program by the end of 2012-2013 (Planning Commission. 2014). Thus, the
expected target was set to cover 90 percent of the poorest, which are 20 percent of
the total population, under social safety net in 2012-2013 (Ibid). The program is
spending under four different components which include Waseela-e-Rozgar
(Technical & Vocational Training), Waseela-e-Haq (Microfinance), Waseela-e-Sehet
(Life and Health Insurance) and Waseela-e-Taleem (Primary Education) (BISP. 2017).
In order to achieve the target, the budgetary allocation was increased from Rs. 75
billion in 2013-2014 to Rs. 97 billion during 2014-2015. Similarly, the program
expects to increase its coverage from
4.6 million beneficiaries to 5 million during the financial year 2014-2015 (Pakistan
Economic Survey. 2015). BISP has further increased its budget allocation to the tune
of Rs. 115 billion in 2016-17 with its coverage extended to 5.3 million families (BISP.
2017).
6
Dowery or “Jahez” is a kind of Money or property given by bride’s parents to her husband at

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marriage. It is also considered as a gift to the groom by her parents

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iv) Public Works Program

Public Works Programs are also considered to be a prominent intervention in the
field of social protection by the government. There is a vast range of diverse
programs under different names such as Khushhal Paksitan Program (KPP and
Tameer-e-Watan Program were initiated during last military government of General
Pervez Musharraf and democratic government of Pakistan Muslim League (N). The
Program includes different varieties of interventions for ordinary people such as
electrification, roads, natural gas, health, education, water and sanitation, telephone
and transport.
The Poverty Reduction Strategy Paper (PRSP)–II considers People’s Rozgar
Program (Officially known as President’s Rozgar Scheme) as a mainstream
intervention of social protection programs. The program facilitates the
unemployed persons with access to credit on low interest rates to establish a small
business. Similarly, the National Bank of Pakistan (NBP) has started a scheme under
which it is offering funding for Community Transport, Shopkeeper Financing,
Community Utility Stores, Public Call Office/ Tele-Centers, Finance for Commercial
Vehicles and Primary Healthcare Equipment for Primary Healthcare Centers to
Medical Graduates (NBP. 2017). The Bank offers financing ranging from PKR
200,000 to 700,000 for five years period.

v) Microfinance Institutions (MFI’s)

Microfinance Institutions (MFI’s) are regarded as social safety net programs.
Microfinance and Micro insurance are very important interventions which can
be placed in the social protection category (Ziauddin, M. 2012). The Planning
Commission of Pakistan distinguishes the different programs and their targeted
population and categorizes them as poor and non-poor in the Annual Plan (2012-
2013). The categories started from the lowest; (1) extremely poor, (2) ultra poor, (3)
poor, (4) vulnerable, (5) quasi non-poor, and (6) non-poor (Planning Commission.
2013). The intervention programs target the categories 1 and 2 as safety net
programs, however, the microcredit programs are designed to target the category 3
and 4. Generally, the microfinance programs target the categories 2-5 to execute its
services and increase outreach. The primary objective of this Program is to provide
social protection to ultra poor to help them in alleviation of poverty through
microfinance services such as microcredit, micro insurance and micro savings
(Nasim, A. 2014). Therefore, Government of Pakistan has viewed it as significant
intervention for the vulnerable and deprived population as additional employment
opportunity in the Poverty Reduction Strategy Paper-II (PRSP-II).
Currently, the country has eight fully specialized microfinance banks which are
providing microfinance services specifically for microenterprises, agriculture
inputs and livestock (Pakistan Economic Survey. 2015). Many Non-Governmental
Organizations (NGO’s) are also providing microfinance to marginalized
communities of the country. The Pakistan Microfinance Network (PMN)7 has
started its operations in 1997 under a network of organizations involved in
microfinance with dedication
7
Pakistan Microfinance Network (PMN) was established in 1997 with the aim to support financial

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sector to strengthen its quality, sustainable transparent diversity to achieve overall financial serv-
ices. The network was constituted and registered under Section 42 of Companies Ordinance, 1984
with Securities and Exchange Commission of Pakistan (SECP).

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and increasing the outreach and sustainability of microfinance. The aim of PMN
is to build and assess performance, strengthen the capacity of small microfinance
institutions through contemporary training and financial transparency. Government
of Pakistan has patronized microfinance services through different institutions; 1)
The National and Provincial Support Programs; 2) Pakistan Poverty Alleviation
Fund (PPAF) and Microfinance Banks (PMN. 2016). The microfinance institutions
have witnessed significant increase in number of active borrowers, savors and
policy holders and a tremendous increase in investment during the year 2014-2015.
The following table shows the current status of active borrowers, savers and active
policy holders under different MFI schemes.
Table. 2. Current Status of Active Borrowers, Active Savers and Active Policy Holders

Detail Micro-credit Micro-Savings Micro-Insurance

Sum
Active Value Active Value Policy
insured
Borrowers (Rs. Savers (Rs. Holders
(Rs.
(Millions) Millions) (Million) Millions) (Millions) Millions)

2014-15
3.14 66,791 8,520,718 43,497 3,754,074 60,418
(Jan-Dec)

2013-14
2.83 52,092 5,977,426 34,784 3,264,832 44,182
(Jan – Dec)

Increase/
0.31 14,699 2,543,292 8,713 489,242 16,236
decrease(Net)

Increase/
10.9% 28.2% 42.5% 25.0% 15.0% 36.7%
decrease (%)
Source: Pakistan Microfinance Network (PMN)

Assessment of Existing Social Protection Programs in Pakistan

Federal ministries, provincial departments and various autonomous and semi

autonomous bodies are responsible to execute the aforesaid social protection
programs and instruments (Sayeed, A. 2004). Nevertheless, these programs and
interventions remain temporary, meaningless, flawed and unfruitful in the absence
of a clearly integrated and articulated social protection policy in a broad social
spectrum. Furthermore, flaws, gaps, overlapping and imperfection policies will also
be critically discussed and analyzed. The proceeding section of the paper
demonstrates the existing social protection programs in the country. However, this
section will discuss the demography of the country such as total population, total
number of labor force, available employment, coverage and availability, outreach,
share of total GDP for social protection programs for workers and people of the
country.
Population dynamics and trends have a greater role in the development and
strategic decision making of any country. The size of population and formation has
unavoidable impact on the economy of a country and its capability to give right
to have social protection, access to housing, food, sanitation, water, health care,
education and energy. It is therefore, imperative to discuss the population dynamics

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before conducting demographic analysis because the real picture of demography

will provide a clear understanding of the coverage of social protection programs. In
order to understand the phenomenon total population, urban and rural population
share and total labor force of the country has been discussed in the following table:
Table. 3. Demographic Indicators by 2015

Total Population (Million) 191.71

Urban Population (Million) 75.19

Rural Population (Million) 116.52

Total Labor Force (Million) 61.04

Employed Labor Force (Million) 57.42

Unemployed Labor Force (Million) 3.62

Source: Economic Survey of Pakistan, 2014-2015
Pakistan is one of the most populated countries in the world with an estimated
population of 191.71 million (Pakistan Economic Survey. 2015). The estimated labor
force of the country is around 61.04 million; 57.42 million are employed and 3.62
million are unemployed; the unemployment rate is 5.9 percent (Labor Force Survey.
2015). The indicators illustrate the total population with urban and rural
distribution and total labor force along with employed and unemployed labor force
of the country. The high participation of labor force has been witnessed in
developing countries. Most of the developing countries show lower unemployment
patterns in combination with high labour participation rates resulting in huge
number of labour force engaged in vulnerable employment and majority of them
are living in working poverty. The poverty rate in Pakistan is higher than other
counties in the region with an estimated 39 percent (UNDP. 2016). The incidence of
poverty and unemployment is higher in rural areas particularly in agricultural
sector as compared to urban areas.
The participation of labor force is gradually increasing; on the contrary, the
increasing unemployment trend is alarming, therefore, new employment
opportunities should also be created for the labor force. The population and labor
force of the country consists of about 63 percent youth below the age of 30 years
(Planning Commission. 2015). The demographic statistics show that the
employment opportunities for youth are a crucial issue. The following table
contains gender wise unemployment rates in urban and rural areas of Pakistan.

Table. 4. The percentage of unemployment rate in gender and area (2014-2015)

Area/Gender Total Male Female

All Pakistan 5.9 5.0 9.0

Rural 5.0 4.3 6.7

Urban 8.0 6.2 20.4

Source: Pakistan Labor Force Survey (2014-2015)

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Table 4 lays down the situation of unemployment rate gender wise and areas wise
in the country. The data reveals that unemployment rate in rural areas is highly
concentrated in women workforce. The women living in rural areas have less
opportunities and skills to come out of this highly discouraged environment.
Asian Development Bank recently published a report on “Social Protection Index:
Assessing Results for Asia and Pacific” which reveals that total spending of Pakistan
on Social Protection is less than 3 percent of its GDP for its poor population (ADB.
2013). The country’s score of Social Protection Index (SPI) is 0.047, which is lower
than South Asian countries average (SPI) score i.e., 0.061 (Ibid). The reason of low
spending is lack of cognizance about the availability and existence of such social
protection programs in the country. Furthermore, the complex procedure to qualify
for social assistance makes it more difficult for the destitute people to access health,
education and unemployment related benefits particularly the workers and women
employed in informal sector.
Although, the Government of Pakistan is spending a huge amount on social
security programs but the distribution mechanism is not well structured and
exhaustive therefore, it does not have trickledown effect because most of the
programs and policies lack pro-poor approach. Additionally, these programs also
ignore the poor belonging to the informal sector.. These programs are rather
fragmented, insufficient and not well designed and targeted. The allocated funds
are very limited for labor market programs such as funds for unskilled labor except
Punjab Province. Since the province has established Punjab Skills Development
Fund with the collaboration of Department for International Development, UK in
2010. The company was constituted under ‘Companies Ordinance 1984’ by the
Government of Punjab.
The country has bulk of labor force which is considered to be one of the biggest
in the region. Most of the people are residing in rural areas who are employed in
agriculture sector. Majority of these social security programs exclude informal
economy and agricultural labor force, which constitutes around 70 % of total labor
force of the country, from its scope and merely covers formal sector employees
(ILO. 2017). On the contrary, these programs are not sufficiently covering the formal
sector employees due to its design failure because the funding responsibility has
been entirely put on the employers (Sayeed, A. 2004). Generally, the funding of
these programs is solely employers based and many cases have been witnessed in
which public sector industrial units have defaulted in paying their contribution. It
is suggested that employees should also contribute for these programs for their very
benefits. Apart from the high administrative cost of several social security
programs, some impediments have been observed in the design feature of these
programs. For example, it lacks the provisions for the protection or transfer of
pension rights in case of termination from employment (Jamal, H. 2010). This
situation has been particularly faced during the privatization process of industrial
establishments. These social security programs have failed to cover all labor force
with respect to social security and social welfare. The said programs are benefiting
only 4 percent of the non-agriculture labor force (Bari et al, 2005). In addition, two
third employees working in medium and large scale manufacturing and
commercial establishments are unprotected contract labor force (Syeda, M. H. 2015).

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Furthermore, the empirical study witnessed the multiplication of several activities

by different institutions providing social security benefits for example health facility
is provided both by Workers Welfare Funds (WWF) and Employees Social Security
Institutions (ESSI). These similar programs are managed by different departments
without clear demarcation and division of responsibilities. The development of
similar programs run by different organizations is resulting in loss of focus and
financial resources which is the biggest constraint in extension of such benefits to
maximum people. This overlapping policy implies that the subsidization of such
welfare activities has no positive impact on the household’s lives as it was
envisioned. There are many reasons of unfruitfulness of these social security
programs; one of them is corruption and embezzlement especially the one observed
in EOBI (“EOBI Recovers” 2004). Some other important issues have also been
pointed out in different programs for instance, many organizations or institutions
have insufficient capability to efficiently carry out social protection activities and
functions. Moreover, these programs lack proper targeting; particularly, Zakat and
Bait-ul-Mall distribution schemes have not been able to come up with a transparent
and accountable targeting method. In reality, the main objective of these programs
is to target the needy and deserving but these programs never used targeting tools
such as Proxy Means Testing. The World Bank reported in 2007 that “around 27
percent of Guzara Allowance (monthly cash allowance) beneficiaries and 37 percent of those
receiving rehabilitation grants are not poor, accounting for 32 and 45 percent of the
resources distributed under each modality” (WB. 2007). The report also witnessed that
evidences of both corruption and favouritism have been found in Zakat distribution
system. The selection criterion of beneficiaries is not transparent and mostly the
Zakat amount is distributed to influential persons or who offer bribe. In the absence
of institutionalised and documented distribution mechanism of Zakat funds, most
often, the selection of beneficiaries depend on the relationship with local
authorities and politicians (Sayeed, A. 2004). The Local Zakat Councils mostly
depend on individuals known to them, who are renowned and influential members
of the community. Generally, most of these beneficiaries are known to the
committee members. Likewise, Bait-ul-Mall has also no particular distribution
criterion especially for food support Program. Both social assistance (Zakat and Bait-
ul-Mall) programs have severe problems in their outreach and targeting the
deserved persons (ADB. 2004).
BISP is considered to be the main player in social safety net programs in the
country. The Program has introduced multiple schemes (Conditional and
Unconditional Cash Transfers) to assist poor and vulnerable through a huge
amount of budgetary allocation. But these schemes are criticised to be biased that
the forms and funds are distributed on political basis to gather votes. The Program
can face many challenges in future in case of change in government because the
Program is receiving high level of investment which can create hurdle in its
continuity. It has been witnessed in many wide range cash transfer programs such
as Progresa in Mexico; the incoming governments can restrain the budgetary
allocation by proposing new programs with different designs. Although, the BISP
Act was unanimously passed by the parliament, the continuation of this Program

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can be suspended by some political stakeholders

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as evidenced in several federal and provincial programs which imply the lack of
political consensus.
Similarly, microfinance or microcredit has been criticized frequently because of its
investment and income generating nature and micro-crediting programs does not
ensure access to microcredit and insurance against natural calamity and adverse
shocks to the affectees and vulnerable clients (Barrientos, A. 2006). Furthermore,
microfinance services do not qualify as social safety nets because MFI’s are not
offering microcredit on discounted interest rates and it also explicitly or implicitly
lacks subsidy factor.
On the other hand, the bureaucratic hurdles and unnecessary favouritism is
hampering these social assistance programs in targeting the needy population
(Kabeer, N. & Sarah, C. 2010). Mishandling and mismanagement of cash
distribution is generally affecting the efficiency of these assistance programs (WB.
2007). People are required to have valid identity card and bank account to be able to
receive this benefit which is one of the main reasons in delaying of distribution of
these funds. However, these problems can be addressed, but it appears to be a
barrier for some people especially women in receiving this cash assistance. In
addition, the current programs have had a minimal impact on decreasing poverty of
households who are living below the poverty line (Bari et al, 2005). Similarly, the
Food Support Program (FSP) and Guzara Allowance schemes have not been
adequately addressing the requirements of the destitute households (ADB. 2004).
There is a dire need to develop a methodology to evaluate the social protection
instruments in terms of their score. The social protection programs should be
appraised on performance base criteria such as; extent of programs, degree of access
to such programs, targeting efficiently, allocation of funds for the benefits, sufficient
support, equal distribution of transfer, self financing and self progressive programs
and their positive impact on development (Pasha et al. 2000). The aforesaid criteria
has been applied in seven different social protection programs such as, Zakat, Bait-
ul-Mall, Ushr, Wheat Subsidy, Employees Old Age Benefits Institutions (EOBI),
House Financing and Microfinance Schemes. Consequently, these schemes seem to
have weak institutional framework, the funding for these programs is limited, the
targeting and outreach is inefficient. Therefore, the impact of these social protection
programs is very limited and unproductive in relation to poverty reduction (Ibid).
The historic 18th amendment was introduced in 2010 by the parliament of Pakistan.
It devolved 47 subjects of Concurrent Legislative List (CLL)8 including Labor to
the provinces (Shaukat, Z. 2011). The amendment is considered to be the historic
political development which brings decentralization of power to the provinces for
the improvement of common people’s life. However, many labor categories remain
out of the labor legislation such as, home based workers, women workers,
agricultural workers, piece rate workers, family workers, part time, contract and
internees. In addition, the current programs ignore the informal sector women labor
force, where
8
The Constitution of Pakistan is comprised of two lists; the Federal Legislative List (FLL) and the
Concurrent Legislative List (CLL). Federal Government is only responsible for the legislation of
items listed on the first list. The items listed in the second list authorize both Federal Government
and Provincial Governments to govern. However, the functions which are not mentioned in any
list will have "residuary powers" allowed to the provinces.

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poverty is persistent since generations. Women working in informal and agriculture

sectors are considered to be the most socially marginalised strata with nominal
social protection from their employers, middlemen, contractors and owners though
they pay high opportunity cost in terms of low wages and lack of bargaining power.
The Social Protection programs are required to change the structure of inequality
and alleviate poverty from the society; otherwise, the dependency will remain
unchanged for future generations. The available programs and measures from
formal as well as informal sectors have been unable to help poor to come out of the
vulnerabilities and vicious circle of poverty (Syeda, M. H. 2015).
The benefit of such assistance schemes does not cover all the deserving poor. Since
Zakat is only dedicated for the devoted Muslims and excludes other religious
minorities (Chaudhry, S. 2014). Therefore, the poor from minorities use informal
source for the social protection which increase their chances of dependency and
exploitation (Kabeer, N. 2010). These social protection programs are divided in
different segments within the society instead of elimination of poverty. These
segments are fragmented in formal and informal workers from urban and rural
areas. The social insurance schemes and pensions cover the informal sector
employees, contrarily; cash transfer schemes are designed and extended to poor and
informal workers usually from rural economy. But these programs do not cover
agriculture workers, informal sector employees, short-term or contract employees
from formal sector. Despite the fact, that the agriculture sector is the biggest sector
providing employment to a huge number of labor force in the country. The labor
force from this sector is excluded from all social security benefits and existing laws
do not cover this sector (Durr-e-Nayab & Shujaat, F. 2014).

Suggestions and the Way Forward

The above discussion on social security net recognizes some impediments in

different categories such as policy design, delivery mechanism, coverage and
adequacy of financing. Therefore, some suggestions are given below for the
Government of Pakistan to formulate and implement the social protection programs
intensively so that they can be made more effective and better results can be
ensured.
 A center of excellence should be built within tertiary institutions to research on
the policies and capacity of social protection schemes.
 The extent of implementation of current policies and national plans on social
protection should be assessed and reviewed and in the case of non-compliance,
appropriate and credible actions should be taken for their proper
implementation.
 Formation and implementation of social protection schemes on geographical
basis instead of establishment based approach.
 Initiatives should be taken to expand the scope of social security and medical
services to prevent illness and promote health.
 Civil societies should work together with the Government to create awareness
among the people about the available social protection schemes.
 A comprehensive coordination mechanism should be developed between social

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security hospitals and private/ public hospitals to refer patients in case no

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treatment facility is available in social security hospitals.

 Medical facilities should also be provided to the retired registered workers of
social security programs.
 The Government should establish an exhaustive monitoring and evaluation
procedure.
 The lacunas in the “Social Security Ordinance 1965”should be removed or
amended which are causing difficulties in its implantation:-
The issues related to social security are; i) the employed workers are mostly
bypassed from the benefit of these programs; ii) several provincial and federal
departments are intervening without necessary cooperation and coordination; iii)
the terminated employees from the EOBI have no clear provision for the transfer of
their benefits; iv) a comprehensive universal pension system for workers is
neglected.
 A comprehensive rationalization of the operations is required to consolidate all
social protection programs with increased outreach and include informal sector
workers especially agriculture sector workers, part time and seasonal workers.
 An evaluation mechanism should also be developed by the social protection
porgrammes to avoid duplication of such schemes and for their accountability.
 Beneficiaries should be selected by using Proxy Mean Test for the social
protection schemes.
 Eligibility criteria should be improved and a mechanism should be developed
to collect data of beneficiaries and their expenditures to access the impact of this
intervention.
 The government should increase the overall spending on social protection
schemes and particularly increase its benefit for the disabled and old aged
people.
 The Government should ensure the continuity of budget for these social
protection schemes and revisit the monitoring and evaluation mechanism to
ensure its transparency.

Conclusions

South Asian region is home to the largest population in the world without an
efficient social protection available against social risks and vulnerability. Pakistan is
also one of the countries in the region who is facing a daunting challenge to provide
social benefits to its workers engaged in formal and informal sector. Since the
independence, many social protection programs and development policies have
been formulated but none of the governments has successfully implemented an
effective pro-poor policy as promised in the Constitution of Pakistan. There are
numerous elements which have resulted in huge variation between the promises
made by the governments and literal situation. Less economic resources and
underdeveloped status is one of the reasons which impede the governments to
introduce a comprehensive social protection system. Although, several social
protection programs were started for many years but most of them have failed to
achieve their objectives due to their limited coverage and fragmented, duplicative
and ceremonial nature. The country’s spending is outrageously far less on social

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protection programs as compared to other countries in the region. Asian
Development Bank (ADB) reported that the coverage

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and target to the extreme poor is exceptionally low (Baulch, B. Weber, A. Wood, J.
2008). The coverage of Zakat and Bait-ul-Mal is less than 35 percent in households
living under the poverty line. However, the pension schemes only cover employees
from the formal sector which is less than 3 percent of total employed labor force
(Kohler, G. Cali, M. Stirbu, M. 2009). BISP is recognized as the main player in social
protection programs around the country. Although, the Program has introduced
multiple schemes (Conditional and Unconditional Cash Transfers) covering many
aspects for the poor and vulnerable. But these schemes are criticised and considered
to be biased due to the distribution of funds on political basis to increase voter’s
base. The Program can be suspended in future because it was started on political
basis and its continuity can be jeopardized by deferment of funds. Similarly, the
microfinance and microcredit sector has enlarged tremendously but their status as
being a key player of social safety net remains sceptical due to collateral based
credit on high interest rates.
Particularly, these schemes have failed to extend their benefits to informal labor
force which is more than 70% of total labor force of the country. Keeping in view the
incidence of poverty in the country and dependence of the majority of labor force
on informal activities, there is an obvious need to develop an efficient mechanism
to address their needs and help them in reducing their distress and risks. Although,
many social protection schemes have recognized the workers working in informal
economy who are most likely to have high frequency of risks, the existing social
protection programs often exclude the major part of labor force from informal sector
while only focusing on formal sector employees. The excluded labor force consists
of poor women, old aged, disabled and agricultural workers.
Moreover, most of the social protection programs shows gender and rural-urban
bias. The effectiveness of these programs can be significantly enhanced by establishing
a strong coordination between implementing agencies and programs. Since, many
targeting flaws and pilferage of funds have been witnessed and some particular
geographic areas are consistently covered while others have not benefited from
these programs. Therefore, all existing social protection programs should be
streamlined and must develop synergy amongst them for an effective outcome. This
would help to counter the beneficiaries who are receiving multiple payments from
different programs. Thus, a centralized system with rigorous application of the
eligibility of beneficiaries should be developed to avoid the duplication of payments.
In addition, a comprehensive monitoring and evaluation system should be adopted
to ensure the effectiveness and credibility of these programs. The country should
bridge the huge gap of social protection by introducing a combined social security
system that addresses and extends its services at an adequate level of protection for
all groups of the society. Therefore, it is imperative to stress the need of developing
a national system of social protection which is essential for the socio-economic
development and the achievement of social justice.
The 18th constitutional amendment brought tremendous confusion on the role and
responsibilities between provincial and federal governments with respect to social
protection. Therefore, the parliament should develop a clear framework for the
social protection that distinctly describes the domain to be kept with the federal
government and what should be devolved to the provinces, and rights and

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responsibilities of the provinces on this important issue.

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Annex A
Social Protection Programs in Pakistan

S.No Geographical Managed

Program Financing Type of Benefit Target Group
Coverage By

Benazir Income Married females

Support Cash as Income belonging to ultra Federal
Program (BISP) Public Funds Nationwide
Support poor households Government
Government

Provide financial
Cash as loan for services, credit to
Microfinance establishing the poor for self
Donor Funded Nationwide RSPs/MFIs
business employment and
move them out of
poverty

Cash as income Disabled persons,

support grant for invalids, widows,
Pakistan Bait- Federal
daughters’ weddings, orphans and Nationwide
ul-Mal Public Funds
food household living Government
supplement in below
education the poverty line

Provision of
electricity, gas,
People’s Works farm to
market roads, good, Federal
Program Public Funds Cash for Work Nationwide
water supply Government
and other facilities
to the rural poor

People’s Rozgar Commercial National

Financing for Selected Unemployed
Scheme Bank Financed Nationwide Bank of
businesses* educated persons
Pakistan

Subsidy on In kind as social Poor people of the Federal

Wheat, Sugar & Public Funds Nationwide
Fertilizer welfare country Government

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In kind as social Poor people of the Federal

Utility Stores Public Funds Nationwide
welfare country Government

Special levy on
bank balances Government
“Deserving/
Zakat &Ushr & agricultural Cash and Zakat
Needy” among Nationwide
output &Ushr
Muslims
Committees
Protection survival Federal &
Child Labor and Working children
development Provincial
Children facing abuse and
Public Funds and rehabilitation Nationwide
in Bondage Government,
services exploitation
Fata, GB

Employees Contributory Formal Sector Federal

Old-Age (Employers) Cash Nationwide
Benefit Scheme Employees Government

Contributory Federal
Social Health
(individuals) Cash General Population Nationwide
Insurance Government

Contributory Fund Housing,

Formal Sector Federal
Workers Welfare (Employers) schools, health Nationwide
employees Government
facilities

*: Community Transport, Community Utility Sores, Community Mobile Utility Stores and PCO/Tele-Centers with a maximum of Rs
200,000/- three new products including Commercial Vehicle, Shopkeepers and Primary Healthcare Equipments to Medical
Graduates, Science Graduates and B-Pharmacy qualified individuals. The maximum limit ranges from Rs 500,000/- to Rs 700,000/-

Source: Pakistan Economic Survey (2011-2012)

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