The Interaction of Law and Economic Growth – Phase 1: Labor Laws in Sheikhupura

In previous work on small cities a much repeated theme has been the negative impacts of labour laws and their implementation on both worker welfare and economic performance. However, it has not been possible to obtain much specificity about either the laws in question or the prevalence of their implementation or non-implementation. Nor has there been much corroborative evidence to support the various claims and contentions. A part of this gap was due to the absence of appropriate professional expertise in our team that was not put together to investigate issues specific to labour laws. The proposed project will include the appropriate personnel as it is specifically designed to investigate the interaction of labour law and economic output in the industrial small city of Sheikhupura. We will be taking a very limited view of output in terms of units of production and cost per unit produced in the formal industrial sector. In subsequent phases, we will both extend the work to the informal sector and move towards an encompassing perspective of economic welfare which may or may not include an index of happiness[1]. The production and cost indicators across industries and units will be correlated with different labour laws to assess the law’s impact on economic output. The results will be used to compile policy recommendations and suggestions that might leverage labour law to enhance economic output in secondary industrial cities like Sheikhupura. The basic relation under scrutiny requires us to look at the labour force and how it is impacted by labour law. We will generate a comprehensive list of labour laws as they exist and function in Pakistan. This will be followed up by conducting focus groups in Sheikhupura to assess which particular laws are critical to labour productivity. The focus groups would be centered on the experiences of the employers and employees to see which labour laws/issues each group identifies as fundamentally important. The critical issues and laws identified through these focus groups would then be cross-checked with a focus group of local lawyers to map how many of these critical issues actually make it to the courts and how that impacts labour productivity and growth. The laws and issues that overlap in these various focus groups will be amalgamated into a short list that will be used as our primary list of laws for analysis and assessment. We will then reach out to lawyers and practitioners to get access to the relevant departments in the local government who will give us unrestricted access to case law from the city. We next intend to contact the local chamber of commerce and industry to procure a comprehensive list of formal sector industries from the region, from which we will shortlist the participants for our analysis. We will obtain access to previous labour force and HIES surveys to better understand the variables of economic output that we expect to correlate with labour laws. Using the data and material collected in the steps outlined above, we will carry out qualitative and quantitative analyses in order to identify a set of correlatives and variables that can enable us to inform policy. The concluding steps for the project entail formulating a report that informs policy on the micro (factory/industrialist/local chamber of commerce) as well as macro (city/regional/provincial government) levels and inviting concerned actors (through the a report-launch conference) and parties to contribute to, learn from, and discuss our findings on the subject.