Impact of Hiring Contractual Workers on Sustainable Supply Chain in Exporting Textile of Pakistan

Abstract

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Textile industry is one of the major sources of revenue generation for Pakistan. For the last two decade this has been the key source of the inflow of foreign exchange through export of garments and textiles goods. Many global retailers and brands like Tesco, JC Penny, Wal-Mart, and Next etc. are sourcing their goods from Pakistan. These Retailers purchase garments and textile on some specific conditions such as cheap merchandising, quality standards and social and environmental compliance.  In order to comply with social standards these multinational buyers enforce their vendors to follow the land law and their own code of conduct. The severity of issues varies from violation to violation. For example, nonpayment of overtime violations is taken as serious issues. In contrast, failure to pay legal benefits to labors as EOBI, group insurance and leaves are less threatening. Hiring contractual employment especially on piece rate is one of the core factors that lead to these non-compliances (NCs). A total of 60 unpublished social compliance onsite audit reports of textile and garment factories working with foreign buyers in Pakistan were analyzed. Chai-Square test applied to test the hypothesis. The result reflects that there is an association exists between hiring contractual piece rate workers, employment old age benefit, and group insurance and leaves violation. Current study may be helpful in exploring the major factors that may lead to overtime, employment old age benefit, group insurance and leaves violation. The findings may also help NGOs, government and global buyers to develop policies that provide better control over workers’ rights in developing countries like Pakistan for sustainable business growth.