Labor in Developing Economies

By Walter Galenson

This title is part of UC Press's Voices Revived program, which commemorates University of California Press’s mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1962.

• Language: English
• Publisher: University of California Press
• Release date: Mar 29, 2024
• ISBN: 9780520319561

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Labor in Developing Economies

A Publication of the Institute of Industrial Relations University of California

Labor

in Developing

Economies

EDITED BY WALTER GALENSON

Berkeley and Los Angeles, 1963

UNIVERSITY OF CALIFORNIA PRESS

UNIVERSITY OF CALIFORNIA PRESS BERKELEY AND LOS ANGELES CALIFORNIA

CAMBRIDGE UNIVERSITY PRESS LONDON, ENGLAND © 1962 BY THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

SECOND PRINTING, I963

LIBRARY OF CONGRESS CATALOG CARD NUMBER: 62-8491

MANUFACTURED IN THE UNITED STATES OF AMERICA

Foreword

During the past eight years, the Institute of Industrial Relations has participated in the Inter-University Study of Labor Problems in Economic Development, which has been supported by a generous grant from the Ford Foundation and more recently by a second grant from the Carnegie Corporation. Conducted in cooperation with industrial relations centers at Harvard, Princeton, the Massachusetts Institute of Technology, and the University of Chicago, the project has been directed by Clark Kerr, John T. Dunlop, Frederick H. Harbison, and Charles A. Myers. Their book, Industrialism and Industrial Man (1960), includes a list of all the participants in the project and of the numerous publications that have resulted from it.

Included in the plans for the Inter-University Study from an early stage was the preparation of two volumes of essays on the labor movement and industrial relations in selected countries, to be edited by Walter Galenson. Although the more highly industrialized countries were, for the most part, to be excluded, the essays were to deal with countries in various stages of industrialization. An effort was made to include a large enough group of relatively underdeveloped countries to provide a wide range of illustrations of patterns of labor relations likely to emerge in the course of economic development. Another important consideration in the selection of countries was the availability of experts who had acquired substantial firsthand knowledge of their respective countries or areas.

The first of the two volumes, Labor and Economic Development (published by John Wiley & Sons, Inc., 1959), included chapters on India, Japan, Egypt, French West Africa, and the British West Indies.

vi I Foreword

The present volume contains essays on Argentina, Brazil, Chile, Indonesia, Israel, Pakistan, and Turkey. Together, the twelve countries whose labor relations have been analyzed provide examples of stages of economic development ranging all the way from a backward area such as French West Africa to the far more mature economies of such countries as Israel and Japan. The distribution of essays between the two volumes, however, followed no particular pattern and was influenced largely by the writing schedules of the individual authors.

Walter Galenson, the editor, is Professor of Business Administration and Economics at the University of California, Berkeley, and a member of the Institute research staff. He is widely known for his many previous publications on comparative labor movements, labor history, and labor productivity.

Arthur M. Ross, Director,

Institute of Industrial Relations

Contents

Contents

Chapter 1 Introduction

Chapter II Pakistan

Chapter III Indonesia93

Chapter IV Brazil, Argentina, and Chile

Chapter V Israel210

Chapter VI Turkey247

Index

Chapter 1

Introduction

WALTER GALENSON

The seven nations covered by the essays in this volume vary tremendously in terms of almost any index that can be devised. They range in size of population from Indonesia, with its 90 million inhabitants, to tiny Israel. The great land mass of Brazil dwarfs even as large a country as Pakistan. In resource endowment, the natural wealth of Indonesia stands in sharp contrast to the relative poverty of Pakistan and Israel. Most of the great religions of the world are represented. The political institutions run the gamut from the autarchies of Pakistan and Turkey and the guided democracy of Indonesia to the exuberant democratic processes prevailing in Chile and Israel. Not even the stage of economic development provides a common denominator; some of the countries are well over the hump on the road to industrialization, while others are still taking the first steps.

In the light of this environmental variation, it is not surprising that the institutions and practices of the labor market show great diversity. Indeed, a casual reading of the five essays that follow tempts one to remark that each country is unique and let it go at that. On closer examination, however, certain uniformities can be discerned. These are more in the nature of tendencies than exact correspondences. Unfortunately, they do not fit into a neat theoretical pattern which would enable us to predict and control. But they do throw a great deal of light on the labor market arrangements that are likely to prevail in economically immature nations, other things being equal.

Trade Union Power in Underdeveloped Nations

Trade unionism is not a very hardy flower; it is particularly susceptible to the winds of politics and to economic adversity. One does not need too long a memory to recall the time when collective bargaining was not part of the American way of life. It is small wonder that nations which are unstable politically and struggling desperately to develop their economic resources do not exhibit powerful, well-functioning labor movements. Democracy in the factory usually lags well behind democracy in civil life generally.

In underdeveloped countries, trade unions face the fact that the industrial worker is a minority group, sometimes a very small one. In Pakistan and Turkey, for example, three-quarters of the labor force is engaged in agriculture, and only a small percentage of the remaining quarter consists of wage earners in modern industry, the group most susceptible to organization.

There are exceptional cases where trade unions have participated in the struggle for national independence, and thus gained general public esteem. This is true in Indonesia, where, despite the overwhelmingly agrarian character of the economy, the trade unions have played an important role in the country since the attainment of independence. The Israeli labor movement, the Histadrut, has been in the same position, although there it has also served as colonizer and entrepreneur, and prior to statehood was perhaps the chief rallying point for the aspiring nation.

The Latin American countries considered in Professor Alexander’s essay provide interesting examples of the vicissitudes in trade union fortune as economic development proceeds. Brazil, Argentina, and Chile have all had a long history of labor organization, and, given their stages of development, one would expect to find fairly stable unions. But this expectation is fulfilled only in Chile. Argentina, the most highly developed nation of South America, had a Western-style labor movement for many years, but the Perón era seriously weakened it. The situation is even worse in Brazil, where the labor movement is just beginning to recover from the corporate state introduced by Vargas, and is hampered, moreover, by the country’s continued inability to move forward economically with any appreciable speed.

It is not only a potentially small constituency that confronts the aspiring labor organizer in an underdeveloped country. Unemployment and underemployment are antithetical to the cause of unionism. Once having secured a job, the worker is extremely reluctant to incur the displeasure of his employer, who, for his part, is generally not averse to using his economic power to keep out what he regards as an alien, radical force. Discrimination, the blacklist, outright force are typically part of the employer’s antiunion arsenal. Organizational progress is usually feasible only when the government steps in to provide protection; after all, it required the Wagner Act to pave the way for the unionization of heavy industry in the United States. But the governments of underdeveloped countries are not likely to welcome unions for the new recruits to industry. At best, they constitute annoying pressure groups for higher real wages and more advanced social services than the economy can afford at a time when investment is the critical need. At worst, they may be led by political radicals dissatisfied with the existing system of government. The line of least resistance, the one followed in all too many cases, is to deprive the unions of independence of action, if indeed they are permitted to exist at all.

This has been pretty much the story in Pakistan, Turkey, and Brazil. Pakistan inherited a not inconsiderable trade union base when it split from India, but the movement failed to make any progress because of employer hostility and government indifference. When the constitutional government was overthrown in 1958, the military authorities instituted an absolute ban on strikes and made union operation difficult generally. Professor Weatherford observes: Persons high in planning circles in the government are frank to admit that union encouragement must ‘make haste slowly,’ only after careful study shows that union growth will not impede economic development. Similarly in Turkey, the activities of unions are so circumscribed by law as to exclude them from any effective role in industrial relations. They do not enjoy the right to strike, or even to handle grievances at the factory level. The Brazilian trade unions became social welfare organizations under the Vargas dictatorship, and, although there has been a great deal of relaxation of government control in recent years, they still tend to be dominated by government officials.

Indonesia seems to be in quite a different category, but it is not inconceivable that things may eventually turn out the same way. The Indonesian government has been prounion since the country gained its independence, not least because so large a part of the entrepreneurial class was foreign. But now that management has become largely Indonesian, and the problem of development has reached so critical a stage, it may not be long before the government finds that the presence of a dozen fiercely competing labor federations is inimical to progress. The military are already playing an important role in industrial relations, and there is always the temptation to take the ultimate step of suppressing unionism altogether, or of incorporating the unions into a national front.

Once a trade union movement becomes really firmly rooted in a society, however, it has a great deal of staying power, as the Argentine experience demonstrates. Perón did not attempt to smash the movement, for that might have imperiled his regime. Instead, he strengthened it and adapted it to his own purposes, achieving an invaluable adjunct to his machinery for political control. Employers were obliged to recognize the unions and bargain with them. Loyal Peronistas were infiltrated into key union positions and could thus control union policies. So successful was this tactic that Peronism outlived Perón in the trade unions, and this remains one of Argentina’s chief political problems. The Argentine unions have probably raised labor costs above what they otherwise would have been, and thus hindered development. They have enormously complicated the attainment of a stable price level, and have contributed in no small measure to persistent inflation. But, as Professor Alexander points out, they have tended to assure the worker that he will not be considered merely a ‘factor of production,’ but will be treated as an individual, with certain prescribed rights and duties, and the resultant gain in social stability may more than offset the possible loss in investment.

The case of the Histadrut in Israel is a very special one, though several other countries have shown interest in it as a developmental model. The Histadrut generates 25 per cent of the national income and provides 30 per cent of national employment through its industrial, construction, and commercial enterprises. All this is in addition to its collective bargaining function, for the Histadrut is the only labor federation in the country and represents the workers who are employed in private enterprise. In the past there was some question of whether the Histadrut or the Israeli state itself was the more powerful body, but in recent years the Histadrut is becoming increasingly subordinate to the state, though it still remains an important independent center of authority.

Trade Unions and Politics

In a companion volume published several years ago, I made the following observation about the political roles of trade unions in a different set of underdeveloped countries: … it should be apparent that the outlook for nonpolitical unionism in the newly developing countries is not bright. We may expect, rather, a highly political form of unionism, with a radical ideology. Indeed, so strong is the presumption that this will be the prevailing pattern that, when it is absent, we may draw the conclusion that unionism is, in fact, subordinated to the employer or to the state, i.e., that we are dealing either with company unionism or a labor front. ¹ Does this generalization hold up against the present set of countries, or are modifications necessary?

Three of the cases with which we are concerned offer no threat to the validity of the thesis. Indonesian trade unions are more aptly described as divisions of political parties than as independent economic organizations. The country’s largest federation is under the control of the local Communist party. In Chile, where the Communists also control the major federation, the intensely political nature of Chilean trade unionism has been a disturbing factor in labor relations for several decades. Strikes are not infrequently called more for the consolidation of the political group in control of a given union than because they are justified economically. Communism is not an issue in Argentina, but the peculiar kind of radicalism represented by Peronism is. Argentine unionism was highly political in character long before Perón, and it remains so to this day.

The Brazilian case is not quite so clear, for unions there have undergone several transmutations. Under Vargas they were essentially a labor front for the government. They are still subject to considerable government influence, but their greater independence now makes them a more attractive target for the political parties. It can hardly be said, however, that they are either independent or politically neutral.

Israel again presents a peculiar situation. The Histadrut is supraparty but not nonparty. All of its governing bodies are elected from slates presented by the various political parties which cater to workers, of which there are half a dozen. Mapai, the party which has been at the head of the government coalition since the achievement of statehood, has a majority in the Histadrut, and this provides a very close government-union link. Policy is made within the Histadrut along party lines, and even when the party members in Histadrut feel that the decision taken is antithetical to their Histadrut interests, they obey. Surely this would not qualify the Histadrut as a nonpolitical organization. Its dominant ideology is a mild socialism.

There is a clear distinction between Pakistan and Turkey, on the one hand, and all of the foregoing nations on the other. In neither Pakistan nor Turkey is there an alliance between unions and parties, and the unions are not operated by the government. They seem to be genuinely apolitical, with a diversity of views among the leadership, which is quite conservative on the whole. We have here, certainly, an exception to the generalization stated above. But whether this situation will continue remains to be seen. The unions in both countries have thus far been so impotent as to make them unattractive for colonization by political parties. Moreover, in Turkey quite consistently, and in Pakistan at least since the institution of martial rule, there has been little scope for parliamentary democracy. The unions could go either way, but they are not likely to remain in the present limbo. If political democracy is restored, and the unions are permitted to grow, they will probably become more highly political. If, on the other hand, the trend is toward authoritarianism, it is not unlikely that they will become part of the government s control mechanism. Professor Rosen has summarized the situation very well: If decentralization of the decision-making process is not introduced at the appropriate moment, the state will have no alternative but to create a vast bureaucratic apparatus for dealing with industrial disputes; in such a system unions would be little more than appendages of the state. The crucial decision-making period is not far off. Unless it is given the chance and the wings for flight, Turkey’s union movement is likely to degenerate and decline. …

Collective Bargaining

A viable system of collective bargaining takes many years to develop. It requires the establishment of attitudes of mutual forbearance, and the realization by employers that they are playing a game rather than seeking the extinction of their opponents. For successful collective bargaining, there must be at least approximate equality of bargaining power, and the willingness of the parties to forget the lacerations caused by the bargaining process. These ingredients are rarely to be found in underdeveloped countries. The bargaining power of trade unions is apt to be political rather than economic; they can cause demonstrations and riots, and alarm the government into action with the urgency of their demands, but they lack the ability to run sustained work stoppages. Discrimination and blacklisting are facilitated by the existence of pools of strikebreakers from among the unemployed or the rural underemployed.

Nor is the weight of government influence likely to be thrown on the side of the trade unions, even in the most favorable of circumstances. Wage determination is too closely geared to growth potentialities to be left to bilateral settlement. Labor market negotiations will be closely supervised, and agreements scrutinized for their impact on the economy. Even in the United States, we are beginning to realize that bilateral bargaining on a sectional basis may endanger national objectives. The amount of slack in an underdeveloped country is much less, and tolerance accordingly quite narrow.

By and large, these observations are borne out by our sample of seven countries. Very few Pakistani employers are willing to recognize unions, and where collective bargaining has been accepted, government officials control the outcome, either informally or through compulsory arbitration tribunals. Turkish employers display an even greater hostility to the idea of collective bargaining. Prevailing legislation, moreover, allows unions to raise demands only on wages, and these must be resolved through compulsory arbitration. In Brazil, the prevailing pattern is for unions to present wage claims to labor courts, which hand down final decisions, although collective bargaining is beginning to find its way into the picture as the spirit of corporatism recedes.

In Indonesia, it is not the strength but the weakness of employers which necessitates government intervention. There is also the fact that the government itself supplies a substantial proportion of available employment. Professor Hawkins describes the situation in that country as follows: … a few pieces of labor legislation have been adopted, the most important of which provides for tripartite arbitration of labor disputes. This system has tended to be a substitute for free union-management negotiations. … It is unlikely in the near future that the government will take its hands off labor relations or give up its power to arbitrate disputes or to declare strikes illegal in times of emergency.

A collective bargaining system appears to have become fairly well stabilized in Argentina and Chile, by virtue of a longer industrial experience in these countries. However, there has been repeated government intervention (apart from the Perón experience in Argentina, where bargaining was completely centralized under government direction) in the interest of price stability. The Chilean government in 1956 limited the maximum wage increase in any year to 50 per cent of the previous year’s price rise, and has taken other steps to cope with mounting inflation. Determination of relative wages and prices has been a thorny political problem for every Argentine government since the downfall of Perón.

Finally, the close intertwining of government, political parties, trade unions, and management that characterizes the Israeli scene makes the unions more sensitive to the national welfare than to the sectional interests of wage earners. Wage restraint rather than increase has been the order of the day. According to Professor Sobel, the Histadrut has been opposed to any general wage increases since governmental economic policy, which Mapai members of the Histadrut Executive must adhere to, has been one of wage restraint so that productivity ultimately will catch up with wage rates and social benefits.

Wage Differentials

It is generally believed that wage differentials, particularly those relating to skill, are large in early stages of industrialization and tend to diminish as development proceeds. Skilled labor, the argument runs, is in short supply initially, so that the price will be bid up by employers attempting to fill their short-run needs, while society will condone the maintenance of a high premium for skill in order to encourage its acquisition. Once training gets under way, and the general level of education is raised, a better balance will be achieved and the differential will narrow.

Not all the essays in this volume deal with this issue, but those that do throw considerable doubt on the validity of this theory. For one reason or another, narrow rather than wide wage differentials seem to prevail in underdeveloped countries. In Pakistan, the skilled-unskilled ratio is about two to one, roughly the United States ratio a quarter of a century ago. The premium for skill in Indonesia is only about 50 per cent, while Israel has one of the most compressed wage and salary structures in the world.

Since the authors are all economists, and the facts fly in the face of their strong preconceptions, they tend to put the blame for what they regard as an uneconomic state of affairs on sociological factors. In Pakistan, it is apparently due to the force of tradition and humanitarian considerations that the wages of unskilled labor exceed marginal productivity. In Indonesia, the importance of payment in kind, again on social grounds, keeps real differentials narrow. In Israel, it has been trade union policy to provide the lowest-paid workers with a Western European standard of living, which has meant that very little is left over for groups with higher productivity. Pakistan has apparently had some skilled labor shortage as a result, though no corresponding problem is noted for Indonesia. Israel started with a surplus of skilled labor as a result of immigration of refugees from Western Europe, but with rapid industrialization and a change in the character of immigration, skill bottlenecks have begun to manifest themselves.

This whole issue calls for much closer scrutiny than is made in this volume, but at least some doubt is thrown on the inevitability of a particular natural history of wages in the course of economic development. There are simply too many other variables, in addition to supply and demand, to permit the drawing of any simple conclusions. Moreover, it is not at all clear that the pure economic variables are the most critical ones, even from the point of view of developmental success. The Pakistani worker, for example, is as much motivated by traditional values of prestige and honor as by monetary incentives, and if the non- pecuniary incentives can be properly utilized, they may mitigate the severe impact caused by introducing a pure wage incentive system into an economy not yet geared to the generation of a sufficient quantity of consumer goods. The idealism and self-sacrifice that have been the mainsprings of Israeli life may permit the deployment of the labor force on the basis of uneconomic wage differentials for some time to come.

I have yet to see a single well-documented case in which the lack of labor skills prevented development, or even provided a serious hindrance. Caution should be exercised in insisting that wide differentials are necessarily correct for underdeveloped countries. At low absolute levels of living, wide differentials may impose severe hardships on the unskilled, and unless they prove absolutely essential, it might be the better part of valor to avoid them.

A Critical Choice

Many other subjects are discussed in the thoughtful and stimulating essays that follow. Among them are the problems involved in the conversion of a backward peasantry into an industrial work force; the manpower aspects of the management cadres; the social service dilemma, i.e., the problem of reconciling adequate welfare minima with the capabilities of an underdeveloped economy; the recruitment of capable trade union leaders; and the financing and structure of unions.

But there is one issue which transcends all the others in importance, and because of their preoccupation with individual cases, the contributors to this volume may not have given it sufficient emphasis. There are, in the final analysis, two great conceptions of labor market organization confronting one another in the world today. One of them, that prevailing in the Communist bloc and in countries with corporate systems, such as Egypt and Spain, regards the interests of labor, as well as of other social groups, as subordinate to the interests of the state, which is conceived of as the only legitimate representative of parochial interests. Trade unions, or similar bodies, are regarded accordingly as administrative arms of the state, charged with the primary responsibility of maintaining discipline and furthering productivity. They are permitted to distribute welfare benefits as a substitute for direct state payments, but their wage function is limited at most to minor individual adjustments. They are not permitted to exert any real pressure for shorter hours or higher wages, since the state is presumably improving these conditions as rapidly as the development of the economy will allow.

The second conception, that which is held in the West, starts with the basic assumption that sectional interests may on occasion diverge from the national interest, and permits the establishment of organizational means by which parochial interests may be furthered. It is recognized that the assertion of individual and group interests may inflict damage on the economy, but the long-run interests of society are regarded as being advanced by the clash of conflicting group desires. Collective bargaining, reinforced by the ultimate right to strike, is the classic modus operandi of trade unionism in a society conforming to this conception, though political action may be a complementary means. For this concept to be meaningful, trade unions must be basically independent of state and employer influence, or they cannot function as genuinely representative institutions.

Every country which is now in the process of determining its ultimate institutional arrangements will have to opt for one or the other of these systems. There are many shadings within each, and sometimes it is not even easy to distinguish one from the other. But in any specific case it is usually not too difficult to determine where the line has been drawn. For example, all of the countries in our sample appear thus far to favor the Western concept, though the final balance has not been struck in every case. There is no doubt at all of Chile and Israel. Brazil and Argentina are still recovering from the traumatic experience of native corporatism, but independent unionism seems to have a secure future. Pakistan, Turkey, and Indonesia are the most doubtful cases. They face quite different economic problems and political perils, but the eventual governmentalization of labor organization is by no means an impossibility in any of them.

All of us who have worked on this book, and on the larger project of which it is a part, are convinced that independent trade unionism and satisfactory economic development are by no means antithetical. On the contrary, we believe that independent unions can make a major contribution to development by giving the individual worker a sense of personal dignity and a means of redressing his grievances. It is quite understandable for government leaders who are concentrating on the achievement of economic goals in the face of what must sometimes appear to be impossible odds to be impatient with intractable, irresponsible representatives of workers. There is an ever-present temptation to silence them and to substitute paternalism for bargaining and conflict. But the price may be very high indeed: the loss to the nation of the creative energies of free men who feel themselves masters of their own fates rather than cogs in a vast, impersonal machine,

1 Labor and Economic Development (New York, 1959), p. 8.

Chapter II

Pakistan

WILLIS D. WEATHERFORD, JR.

Five underlying influences are shaping the current economic development of Pakistan. Some knowledge of these forces is essential for an understanding of contemporary labor problems in this recently independent country.

Background Factors

RECENT EMERGENCE OF PAKISTAN AS A NATION

Since the turn of the century Hindus and Muslims of British India had worked side by side for self-government, but between 1937 and 1940 friction between the two groups mounted to such a pitch that Muslim leaders called for a separate state of Pakistan to be formed when the British granted self-rule. Thus with independence in 1947 came partition, establishing a new state which combined British constitutional processes with an ideology inspired by the Koran. The new state had five provincial governments already operating, but a central government located at Karachi had to be formed de novo, Pakistan’s planning for economic development and labor utilization has been considerably slowed because many of her able leaders have been so engrossed in establishing the new political entity.

To compound the difficulties of forming a new state, there was a mass migration of seven million Muslims into Pakistan from India, and a similar number of Hindus fled into India from Pakistan, during three months of arson and murder in 1947. Relief of these many unsettled refugees has constituted a major drain on the country’s economic resources, which otherwise could have been used for economic development . In addition, the one-tenth of the population which is refugee has had no firm geographic or occupational roots and has tended to unsettle the labor force and placed special strains on industrial relations.

The heritage of Pakistan when the British left India was a difficult one. Pakistan was born as a divided nation with two areas separated by nearly a thousand miles of Indian soil. Both East and West Pakistan were Muslim majority areas; they were united by a strong determination to create a new state based on the principles of Islam, but in other respects they were totally different. In the East, more than half the population lives in one-sixth of the country’s total area, crowded into one of the most densely populated alluvial plains in the world. Here jute and rice are the major crops, and drainage of swamps is a major problem. In West Pakistan, less people live in an area five times as large, on land which was arid sand and rocky hills before irrigation schemes made the desert bloom with wheat and cotton. Agriculturalists in the East are desperately poor, while in the West they live on at least a subsistence level. People of the East speak Bengali, while those of the West speak Urdu and several local languages more closely related to Persian. Bengal has for centuries been a seat of Muslim culture and literature, while much of West Pakistan supported only a nomadic population until the advent of irrigation. The differences between East and West Pakistan have made political as well as industrial unity difficult. The old Indian province of Bengal was a cultural unit, but partition divided it between the two emerging nations. East Bengal became the only province of East Pakistan, so the two terms are used interchangeably in this discussion.

Political tensions have created economic difficulties. Ever since partition, Pakistani politicians and parties have been unable to give the nation that political stability needed for economic planning and development. Political life has been a scramble among individuals undisciplined by adherence to established party lines or stable ideology, while corruption within provincial governments has been a byword. Political control has been in the hands of professional politicians in parliamentary parties unresponsive to the voice of the people, since provincial elections had been held but once and national elections not at all up to the declaration of martial law in 1958. Much of Pakistan’s ability has been drained into fruitless political bickering instead of being devoted to building the new nation.

Up until 1954, the Muslim League party held undisputed sway among politicians and people. It had fought against British and Hindus for an independent state, and was held by many to be synonymous with Pakistan. Its platform was independence; but once this was achieved, it had too many divergent elements to last. In the fall of 1956 it lost control of the Central Legislature, and the Premiership passed to another party. The Awami League, standing slightly to the left of the Muslim League but having many elements within its ranks, emerged from the United Front as the strongest party of East Bengal and made a bid for membership in the West. It was the only large party in Pakistan which stressed building up grass-roots support. Since the advent of martial law the activity of political parties has been eclipsed by administrative developments.

HUMAN AND NATURAL RESOURCES

Pakistan with its 94 million people is the seventh most populous country of the world. East and West Pakistan are so different that any discussion of population relative to resources must separate the two areas. River basins have determined population concentration since time immemorial: East Bengal sits astride the lower Ganges and Brahmaputra rivers and has been densely populated for centuries. With 777 persons per square mile, it is one of the most crowded areas of the world. East Bengal, with over one-half the nation’s population, must earn its living from only one-sixth of the land area; there is only.55 acre of cultivated land per rural person. Although the alluvial deposits enrich the land annually and the omnipresent waters conspire with the heat to give good growing conditions for paddy and jute, the rice yield is one of the lowest in the world. The overburdened land can support the population only on a bare subsistence basis, and Bengal has always been a fooddeficit area, although 83 per cent of her people are agriculturists.¹ Nevertheless, Bengal furnishes Pakistan with its most important export and dollar earner, since it grows most of the world’s supply of jute. Perhaps it is a blessing that Bengal, being one of the poorest areas of the subcontinent, has one of the lowest rates of natural increase.²

West Pakistan was peopled primarily by wandering herdsmen until irrigation works were introduced around the turn of the century, and large-scale migration from heavily settled areas of India started only after the First World War. The 41 million people of West Pakistan are thinly scattered over a vast area of sandy, rocky soil, but are concentrated mainly around the river Indus, its tributaries, and the canals, which form the most extensive irrigation system in the world. Since over half the cultivated area is irrigated, West Pakistan enjoys a slight food surplus in good years, but not enough to overcome the deficit of East Bengal. Because of irrigation, yields of the principal crops, wheat and cotton, are above those of other areas of the subcontinent, but are low in world comparisons.

Although inadequately fed at present, the population is growing rapidly. The Punjab in particular has for several decades been one of the most prosperous areas, but also has a very high rate of natural increase.³ The population for the whole of Pakistan is growing at the rate of 2.2 per cent, or about two million people, per year, placing an ever larger strain on the limited land and water resources. To feed this growing population, very little additional land is available in the crowded East, while in the West the bottleneck is water.

The human resources of the nation are abundant, but the low standards of education and health reduce their effectiveness. Although 19 per cent of the people can read, only 4 per cent are effectively literate in being able both to read and write, and only 1 per cent have received more than ten years of schooling. The stamina and strength of the work force is undermined by the inadequate diet and widespread disease, particularly in East Pakistan, where the debilitating effect of malaria is prevalent.

Pakistan’s lack of large power and mineral resources places her at a disadvantage, and her development must be planned accordingly. She is particularly deficient in coal, oil, and iron ore.

THE AGRICULTURAL NATURE OF THE ECONOMY

Nine-tenths of Pakistan’s population is rural and depends on agriculture directly or indirectly, 76 per cent of the labor force is engaged in agriculture, and 60 per cent of the national income is agricultural in origin. Only 7 per cent of the workers are engaged in mining and manufacturing, while less than a million workers are engaged in modern organized industries. 4 Thus the welfare of the country is dependent on agriculture both for subsistence and for foreign exchange.

Pakistan’s golden fiber and primary foreign-exchange earner is jute; cotton is a close second. These two cash crops are each found alongside a major food crop; jute and rice are