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Faisalabad Email:firstname.lastname@example.org Faiz. M. Shaikh Assistant Professor SZABAC-Dokri Email:email@example.com
Amina Riaz Department of Economics
Lahore University of Management Sciences (LUMS) Lahore, Pakistan
ABSTRACT The primary objective of this study was to investigate the economic impact of child labor. It also provided clearer empirical evidence on this issue through a survey. This study isolated many channels through which child labor may have important effects on adult’s labor market, family poverty and aggregate growth. This research tried to explore the serious problem of poverty and child labor in Pakistan. This problem exists because poor people find it best reponse in unbearable economic conditions. A sample of 300 child respondents from all 4 provinces of Pakistan was collected through questionnaire to measure the poverty and child labor. Child labor and poverty strengthen each other: if the parents are poor, children must not go to school rather to work and ultimately become poor like their parents. Two factors of child labor are very important: First child labor increases too much when financial markets are imperfect and the cost of sending a child to school is higher than the immediate benefit of sending him to work. Second, the people who bear the cost of child labor than the people who get benefits. Child labor can be reduced if the school going children are subsidized. In this report we are discussing the causes, effects, and issues involved in child labor. It was revealed that child labor in Pakistan continued to rise. Government should initiate actions against the various organizations to stop hiring child labor. Keywords: child labor, human capital, household economics INTRODUCTION Child labor harms the children physically, mentally and by blocking access to education We cannot find a universal definition for child labor. Different international organizations, trade unions and no-governmental organizations define it in their own way. While defining child labor, speakers are writers donot specify mostly which definition are they using and that mostly creates confusion. Actually all kind of work is not bad for children but some kind of work may be completely harmless according to some social scientists. For example a child a child can earn
money and learn how to work by delivering newspapers in the morning. But a child is being exploited if he/she is not being paid. Eunice’s State of the World’s Children Report (1997) explains it, "Children’s work needs to be seen as happening along a continuum, with destructive or exploitative work at one end and beneficial work - promoting or enhancing children’s development without interfering with their schooling, recreation and rest - at the other. And between these two poles are vast areas of work that need not negatively affect a child’s development." Acceptable and unacceptable work has been defined with slight difference by other social scientists. Activities such as prostitution and soldiering are defined as child labor by international conventions but everyone is not agrees with this. According to some child workers illegal work (like prostitution) should be excluded from the definition of child labor. According to these workers: they should be respected for their legal work like others workers as they have no choice other than to work. The employment of children under an age defined by custom or law is known as child labor. Many international organizations and countries consider this practice as unfair. Until the beginning of universal schooling, child labor has been utilized at various levels. Child labor reduced with the beginning of the concept of workers and children’s rights. it is also considers as child labor if a child works in factory or mining or quarrying, agriculture, having one’s own small business or helping parents in their business. International Labor Organization (ILO) estimated that around 256 million children aged 5 to 17, excluding child domestic labor are in child labor worldwide. Child prostitution and military use of children are the most commonly rejected forms of child labor while work as child actor or singer as well as agriculture seasonal work are considered as less controversial or legal with some limits. LITERATURE REVIEW Economics hardships are considered as the most common reason of child labor. Many children enter into the labor market to pay for their education or support their families in financial matters. Attending school with a light work load can be compatible. Vietnam is a good example where children attend the school along with working in the agriculture sector. Fundamental phenomenon of the development of child labor is inadequacy imposed upon a group of people due to structural circumstances. These circumstances involve the economic, political and social relationships. Among them economic relationships are considered as base upon which others rest. (Ake, 1981: 1). This economic relation is referred to as social relation of production. At the production level, the cooperation of all members of the family including women and children is essential (Marx, 1867:3.72). Cruel heritage of poverty transfers from one generation to the other. Poor parents cannot educate their children or provide opportunities for better health. A poor family or individual stays poor and this poverty increases the risks of illness and restricts them from education and mobility. As hours of work increase, school becomes less and less affordable for them. Enrollment in a school does not ensure the time is spent in the class. Moreover, working reduces the children’s energy to study properly. In addition to work and school, the children are also involved in activities like Ravallion and Wooden as leisure. Edmonds and Turk (2002) conducted a study in Vietnam discovered the decline in child labor after 1990s. Moreover in Ghana and Vietnam, children in rural areas are more likely to work than the children in urban areas.
Grootaert (1998) discovered that all income levels responded to the recession by increasing the labor participation rate of the male adults. While in poor families the labor participation rate of children has also been increased. The overall participation rate of children increased fro 18.5 % in 1985 to 19.3 in 1988. In case of very poor families it increased from 30.6% to 43.9% during the same time period. Oruwari (1996) and Okojie (1987) studies that the child labor also relates to the social status of the family, these children belong to. He found three identifiable groups of such families which are the small farmers, the petty traders, the under employed and unemployed (Okojie, 1987: 75). They are considered as poor and they were doing this to maintain their minimum socially acceptable status in terms of income and consumption (Townsend, 1992). To check the degree of poverty among women, Okojie, (1987) mentioned five factors such as housing, illiteracy rates, unemployment/underemployment/low incomes, possession of consumable durable and inability to cope with needs of members of households. This study focuses mainly on last two factors. DATA COLLECTION Data were collected from cross Sectional data of 300 child respondents from all four provinces of Pakistan and Questionnaire was the basic tool for measuring the poverty and child labor problems. ORIGINAL SCENARIO IN PAKISTAN Before going in depth of child labor with due respect to the economics I would like to tell here a few words of very interesting story of a carpet waver industry owner Mr. Siddique. He was the man saying to his workers always to bring there children to his firm for their best future by telling them his own a false tale that he belonged to very poor family and his father gave him opportunity to work in very small age instead of taking education. And as a result today he is owner of a firm. One day he told his one employee Mr. Mirza to bring his elder son Nadeem to his factory for work. If he gets education he will be going to get nothing of it. But if he comes to Siddique factory he will be having a bright future. As he will be going to have more skills learned with in five years and his pay will also be going to increase. Economics tells us here that Nadeem is having here two choices whether to do work or to have education then he will be looking at the opportunity cost. He will be looking that whether he should working or he should be having education or to devote more time to education or more time to working. That is cost constraint concept comes here.1
CL in Pakistan by Jonathan Silvers
The above figure shows the different combinations for the two choices Mirza having for his son. So if child is taken fully to the working he will not be having better future so he will have to move with the getting education as the opportunity cost of getting education is more long term as compared to working at Siddiqui Firm he also compare the relation of poverty. CURRENT SITUATION Many deprived families in poor countries mostly depend on their children for continued existence, and even some times the labor of their children is the only source of income. This type of work does not exist in industrial sector so it is often hidden away. Child labor is employed in subsistence agriculture and in the urban informal sector; child domestic work is also important. In order to benefit children, child labor prohibition has to address the dual challenge of providing them with both short-term income and longterm prospects. Some youth rights groups, however, feel that prohibiting work below a certain age violates human rights, reducing children's options and leaving them subject to the whims of those with money. The reasons a child would consent or want to work may vary greatly. A child may consent to work if, for example, the earnings are attractive or if the child hates school, but such consent may not be knowledgeable consent. CHILD LABOR IN PAKISTAN In collaboration with ILO Federal Bureau of Statistics of the Government of Pakistan conducted the National Survey of Child Labor in 1996. According to this survey the total number of children in Pakistan aged 5-14 in the country were economically active. This number accounts for 8.3% of all children. Out of this figure, 73% of child workers were boys and the remaining were girls. Country’s largest province was suffering the most where 58.6% or 1.96 million children were working. Distribution of child labor by economic sector is shown in Figure 1.
Figure 1: Distribution of child labor (N03.3 million) in the labor force of Pakistan
Further it was discovered in the survey that children involved in work in rural areas were eight times more than the children in urban areas. Moreover only one third of them were literate and the children in urban areas were more educated than the rural ones. By broad categories, around 70% of working children were unpaid family helpers. Even in this way the children working in rural areas were suffering more than the urban child workers. Only one out of four working children were being paid family members, while in urban areas the proportion was two out of three. A good number of children were working 56 hours per week but around 46% of working children worked more than 35 hours per week. According to the parents of these children, children were working in order to assist in household businesses. STATISTICAL PROFILE OF CHILD LABOR IN PAKISTAN Approximately 3.6 million children are involved in child labor in Pakistan now a days. These children get low wages but over worked. Most of the child labors remain hidden from statistical and planning procedures because they are working in the invisible sector of the economy. The child workers do not enjoy basic needs of life. Figure 2: The Percentage (in rate) of children going to school and working.
Source: Bales, Kevin. 2000. Disposable People: New Slavery in the Global Economy. University of California Press.
WORLDWIDE CHILD LABOR 246 million children aged 5-17 are child workers throughout the world. Figure 3: Child Labor in world
Source: IPEC Action Against Child Labor: Highlights 2002. 2002. Geneva: International Labor Organization. Source: UNICEF. <www.unicef.org/protection/index_childlabour.html> (May 2, 2004).
CAUSES OF CHILD LABOR The main reason why children work at inappropriate jobs at their ages is poverty. But there are other reasons as well such as: Employer’s selfish attitude. Public decisions which encourages child labor. Child abuse. Family traditions and expectations. Limited options for women. Limited good schools and day care. Limited health care and other services.
BAD EFFECTS OF CHILD LABOUR Child labor has many harmful effects. These include: Low Wage Rate: Most of the time children are paid very less than the adult labors. In some cases even they get one fourth of adult wage. Child labor also causes reduction in wages for adults. Due to child labor completion for jobs increases which results into low wage rates for adults Long working hours: At some place children and young people work for long e.g. 12-16 hours in a day. Decline in educational activities: Child labor not only shrinks the amount of school going children but also children realsises that their performance at school is affected badly. Physical Damage: Working children may cause physical harm in many ways. For example: they are prone to accidents because these children work in such environment where little attention is paid to safety.
Assault: These children often face violent behavior in the workplace from adult staff and even from managers. Moreover the children working in the streets are also at risk of physical violence from police officers and other authority figures. Risk of Health: This risk is faced by street vendors due to poor hygiene and exposure to bad weather. They also face bad effects of pesticides. Sexual abuse: Rape, unwanted pregnancy, sexually-transmitted infections and HIV infection and included in this abuse. Exploitation: This includes prostitution, slavery, trafficking, debt bondage and forced labor. The above results also conclude that girls are more vulnerable to these bad effects of child labor than boys. THE ECONOMICS OF CHILD LABOUR It involves the supply and demand relationship of child labor at three levels in general. The first one is at national (and international) level, second at firm level and third at family level. But this relationship does not present the complete picture because political economy varies from the prediction of formal demand and supply mode. Suppose a country outlaws the child labor. This will result into the decrease in family (economy) income, supply of labor will reduce resulting into shortage of labor and increase in wage rate and finally the opportunity cost of children’s working time will increase. Number of schools will increase, children will become more skilled and would become more productive labors and hence will increase the family welfare. According to the survey conducted, the following factors were discovered mainly responsible for the child labor: Populated areas with high growth rate of population. The countries where three fourth population lives in rural areas and unpaid family workers in agriculture sector. Low productivity with higher poverty level. Limited schools for children Social discrimination attitude towards females.
Figure 4: Child labor in a vicious circle
The problem of child labor is co related along various socio-economic conditions. CHILD LABOR IMPACT ON LONG RUN GROWTH AND DEVELOPMENT We have discussed the short run and long run economic impact of child labor at family level. In this section we will discuss the long run economic impact of child labor on growth. It has six channels through which child labor may have negative effects. It starts from human capital accumulation and ending at gender inequality (see figure 5) Figure 5
The channels like human capital, health and inequality shows a country’s level of social development. It means child labor also directly affects social development. Moreover, child labor also affects indirectly social development through long run growth because higher per capita incomes contribute to social development. ASSESSMENT OF THE EMPIRICAL LITERATURE ON THE ECONOMIC IMPACTS OF CHILD The basic purpose of this paper was to provide empirical evidence on this issue. It also highlights the economic impact of child labor. The channels through which the child labor may have effects on family poverty, aggregate growth and Adult labor market have been identified. Figure 6: Channels of child labor
CHILD LABOR DUE TO THE GOVERNMENT During our analysis of furnace’s in Gujranwala, We found that how government is the cause of child labor. We analyzed that there were 3 child labors in every 10 employees in one furnace. That means on average there are 42 furnaces in Gujranwala employed 4000 workers, lead to the result that almost 1200 children are working in furnaces regarded as child labor according to the Pakistan Child labor Law. The analysis of furnaces shows us that how Government is the cause of the child labor we found following results. First Reason:The first thing we analyzed and also told by the owner of one furnace is given in the following diagram.
Increase in Taxes
Increase in Cost of Production
Increase in prices of goods
Decrease Buying power of employees
Increase in Child Labor
Above figure is telling about how the government is the cause of child labor. Let us see how these factors are acting in increasing the child labor. Increase in taxes government had changed the policy of taxes for furnaces in December of 2008. In which they had increased taxes for the furnaces and fixed it on the 15٪ of there sales, which results in the close of 42 furnaces in the Gujranwala. Then furnace owners agree to pay tax after the contract with Government that they will increase the prices of goods and pay the taxes on the previous prices. The increase in prices creates inflation in the market and ultimately prices of all goods increased. When the taxes increase the Cost of Production also increased as illustrated in the previously, so rise in taxes lead to the rise in Cost of Production, which will cause rise in Inflation. Ultimately with the rise in prices of goods the buying power of buyers decreases. As people will be having no money to buy the goods they will require more hands to earn money then they will be asking there children to do work. And thus the child labor will increase. Second reason:On the other hand we can also see that Government is not providing the sufficient facilities to people with the increasing inflation rate in Pakistan so people took there children to do work. As a result due to the poor policies of Government of Pakistan, Child labor is increasing. Third Reason:As we had analyzed in Furnaces of Gujranwala and other industries that owners are giving pay to children that is less than the pay fixed by the Government. So Government is not having any proper check on such industries. And firms are paying children less then the pay fixed by the Government to earn more profit. Our analysis shows that in some furnaces like some cooking utensils making factories, they are paying only 2500Rs per month to the children working there. The time limit and duties are also same as that of other adult workers getting pays 6500Rs per month.
Figure 7: Demand Curve for child labor
This thing shows us that with the increase in cost of production the demand for child labor also increases because one owner replied to my question that “the cost of production is increasing day by day that’s why we try to find cheap labor. Children are cheap and can do more work” Forth reason:For the Child labor is that while fixing the floor pays for the employees they are not considering that how much one family is having members. When children in one family are more EFFECTS OF CHILD LABOR As a cause child labor is having some effects on the economy of Pakistan from which some are given below. The first effect of child labor is low literacy rate of country. As a result the economic figure of country looks very bad, which ultimately results in bad view of country in whole world. Similarly effect of child labor is also on the society. Because if the society is having illiterate people in its society they will be creating poor society. Thirdly these children are the future of country as they will not going to get education they will not going to have better future. Similarly any country may have a lot of more negative effects of child labor. But there are some positive effects also there. Firstly it can help to reduce the poverty from the country. As we know that inflation increases in Pakistan but income doesn’t increase with such rate. Secondly, it helps those children not having resources of getting education, to get experience for there better future. And similarly Positive effects also go on. RECOMMENDATIONS 1. Increase awareness in the general public. 2. The production processes of goods should be question regarding the use of child labour. 3. The contracts made at government and institutional level must be ensured to free of child labor. 4. The employers who are working to eliminate child labor from the society should be supported. 5. Make ground for the approval and implementation of UN, ILO declarations and conventions.
6. Convince international and national bodies to eliminate the factors which contribute to child labor 7. The projects creating favorable environment for children such as education, minimum wage rate legislation etc should be supported. 8. Promotion and development of codes of conducts of workforce. 9. Cooperation to protect children at national and international level. 10. Promote basic trade union rights for all workers, including the right to a safe work environment. 11. Further research on the side effects of child labour. SOLUTIONS TO MITIGATE CHILD LABOR Can be in different order: 1. Family incomes enhancement 2. Educate children, it will help the children to increase their skills and hence earning 3. Promotion of social services (shelter and help in crises) to help the families and children. 4. Control the family size to minimize the children burden on the family. CONCLUSION Along with the findings from other countries, this study confirms that there is a strong relationship between poverty and child labor. Poverty is considered as an important factor of child labor or in other words we can say that profile of child labor is mirror image of profile of child labor. Further it is confirmed that poverty and child labor are more common in rural areas, agriculture sector and in families where household head is less educated or illiterate. This study also discovered that child labors are poorest among children. We also found in this study that child labor is not a complete dimension of child labor but there are also other divisions which do not relate to poverty. It also supports the idea that there is a cruel cycle of child labor and poverty. The suppliers of child labor and mostly heads of poor families with no or little education. So the working children grow poor. So there is strong probability that when these working children will become heads of their families, they will also send their children in the labor market. REFERENCES Ake, C. 1981. A Political Economy of Africa, London Longman. Evidence on Behavioral Responses to an Enrollment Subsidy, Policy Research Working Paper No. 2116, World Bank, Washington, DC. Edmonds, Eric and Carrie Turk (2002), Child Labor in Transition in Vietnam, Policy Research Working Paper No. 2774, World Bank, Washington, D.C. Grootaert, Christian (1998), Child Labor in Côte d‘Ivoire: Incidence and Determinants, Policy Research Working Paper No. 1905, World Bank, Washington, D.C. Ibadan, May, 3-4 Article on Child http://www.theatlantic.com/doc/199602/pakistan Labor by Jonathan Silvers
Marx, K. 1867 Cited in Anikpo M. 1984. Is Poverty an Urban Phenomenon? Proceedings of
the National Conference on Urban Poor in Nigeria: I – Okojie, C. E. 1987. Income Generation in Occupational Structure among the Urban Poor: The case of Women in Benin City, (pp. 75-90) in P. Makinwa and A.O Ozo (eds.), The Urban Poor. Ibadan. Oruwari, Y. 1996. Children and the Built Environment in Nigeria who should Defend Their Interests in Housing Provisions? (pp. 155 – 67) in Y. Oruwari (ed.), Gender, Sustainable Development and the Urban Poor in Nigeria. Port Harcourt: Hisis Press Prado, R. and D. Tobi. 1994. Notes on Poverty focus in Country Program. Paper presented at the UNICEF Workshop on the Urban Poor. CEDC/II Ravallion, Martin and Quentin Woodon (1999), Does Child Labor Displace Schooling? Townsend P. 1992. The Meaning of Poverty. British Journal of Sociology, 13: 210-227