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flag Pakistan Pakistan: Operating a Business

In this page: Setting Up a Company | The Active Population in Figures | Working Conditions | Cost of Labor | Social Partners

 

Setting Up a Company

Sole Proprietorship
Number of partners: One shareholder.
Capital (max/min): No minimum capital
Shareholders and liability: Unlimited liability
Partnership
Number of partners: Minimum of 2 with a maximum of 20.
Capital (max/min): No minimum capital
Shareholders and liability: Liability of the partners is unlimited
Private Limited
Number of partners: Minimum number is 2, while as the maximum number is 50.
Capital (max/min): Minimum paid up capital of PKR 100,000
Shareholders and liability: Limited liability to the amount contributed.
Public Limited
Number of partners: Minimum number is 3, while as there is no limit on the maximum number of members/shareholders. Listed Public Limited companies must have at least 7 members.
Capital (max/min): Minimum paid up capital of PKR 100,000
Shareholders and liability: The liability of a member is limited to the face value of the shares he owns
The Competent Organization
The Board of Investment.
The Registration Department of the Security and Exchange Commission of Pakistan (SECP).
 
Setting Up a Company Pakistan South Asia
Procedures (number) 10.0 7.0
Time (days) 21.0 19.0

Source: Doing Business.

 
Business Setup Procedures
Consult Doing Business Website, to know about procedures to start a Business in Pakistan.
Trade Register

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The Active Population in Figures

20112012
Labor force 58,640,00059,210,000

Source: CIA - The world factbook

 
200920102011
Total activity rate -54.30%53.40%
Men activity rate 84.90%83.30%83.30%
Women activity rate 21.70%22.40%22.70%

Source: UN - United Nations

 

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Working Conditions

Legal Weekly Duration

48 hours, 54 hours for seasonal factories.

This applies only to factories/offices employing ten or more workers.

Retirement Age
60 years
Working Contracts

Employment contract (also called Appointment letter) is regulated by Industrial and Commercial Employment Ordinance of 1968 Every employer in an industrial or commercial establishment (with more than 20 workers) is required to issue a formal appointment letter at the time of employment of each worker. The appointment letter should necessarily mention the main terms and conditions of employment, namely nature and tenure of appointment, pay allowances and other benefits.

There are specific rules for termination of an employee. Terminating an employee is not always so easy.

Labor Laws
Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.

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Cost of Labor

Minimum Wage
PKR 7,000 per month (source: ILO, 2011).
Average Wage
Gross average monthly wage of men: PKR 10,211 (source: ILO, 2011);
Gross average monthly wage of women: PKR 6,422 (source: ILO, 2011).
Social contributions
Social Security Contributions Paid By Employers:

Governed by Employees social security ordinance of 1965.

Employer’s contribution: PKR 210 for an employee drawing upto PKR 5,000 per month. The workers once covered under this scheme remain secured even if their wages exceed Rs. 5,000/- per month.


Social Security Contributions Paid By Employees:

Governed by Employees social security ordinance of 1965.

Employee’s contribution: PKR 20 per month.

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Social Partners

Social Dialogue and Involvement of Social Partners

The labor relations in Pakistan are controlled by the Industrial Relations Ordinance of 2002 gives industrial workers the right to form trade unions and bargain. However the union organizers are generally subjected to a variety of restrictions that hinder their activities and effectiveness.

Moreover the country’s petroleum sector is subject to the Essential Services Maintenance Act. The Act bans strikes, limits workers’ rights to change employment, and affords little recourse to a fired worker, but allows collective bargaining. However, this Act is not applied very frequently.

The government of Pakistan has ratified 34 ILO conventions relating to human rights, workers' rights and working conditions.
Unions
Pakistan Workers Federation
All Pakistan Trade Union Congress
All Pakistan Trade Union Federation
Unionization Rate

10% in industrial labor force.

5% in total labor force.
Labor Regulation Bodies
Ministry of Labour and Manpower
The representation of the International Labor Organization in Pakistan

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Last Updates: October 2014