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Spotlight on Pakistan

Main Faisal Mosque in Islamabad capital city, pakistan

The economies of South Asia are projected to collectively grow by 7.4% in 2023, according to recent projections from Asian Development Bank. Pakistan, thanks to its central location, is poised to become the premier trade, energy and transport corridor for the region. It also serves as the gateway to the energy-abundant nations of Central Asia, the financially liquid Gulf Cooperation Council states, the flourishing Southeast Asia countries and the economically advanced tigers of East Asia. As a result, multinational companies (MNCs) are increasingly looking at Pakistan as a location for investment, expansion and hiring. 

Why Pakistan?

  • Pakistan’s economy has shown stability and resilience against the shocks of the Global Financial Crisis and the COVID-19 pandemic, which can be attributed to its progress in food production, manufacturing base, professional services and physical infrastructure.
  • The future looks bright for Pakistan for decades to come, with 55% of its population below the age of 19. The country’s middle class is also thriving, confirming the country’s potential as a test market for consumer products. 
  • The country’s investment and corporate policies have designed a framework conducive for attracting foreign direct investment (FDI). The policies have been consistent with liberalization, deregulation, privatization and business facilitation.  
  • The startup ecosystem is beginning to blossom, thanks to the country’s young, English-speaking population and increasingly tech-savvy middle class. 

What are some key principles MNCs need to know before hiring in Pakistan? 

It’s important to first have a basic understanding of Pakistan’s culture. Civil society in Pakistan is largely hierarchical, prioritizing local cultural etiquette and traditional Islamic values. These values largely govern personal and political life in Pakistan. There are also numerous ethnic groups including Punjabis, Pashtuns, Sindhis and Muhajirs. The corporate culture of Pakistan is influenced by neighboring South Asian countries, Iran, Turkey, Central Asia and West Asia. 

How are labor laws determined in Pakistan?

Labor law in Pakistan is broad and derived from several ordinances, acts, rules and regulations and other statutes relating to industrial, commercial and labor establishments. Because regulations stem from a myriad of sources, companies operating and hiring in Pakistan should make sure they seek expert advice before proceeding with decisions. 

Are there any nuances in Pakistan’s labor framework that MNCs should be aware of? 

The operating labor laws mostly apply to ‘workmen’ or employees. The framework does not specifically include white-collar workers in some of the rules and regulations, which can be complicated for cross-border HR teams who need to distinguish between workmen and white-collar workers. 

How do bonuses work in Pakistan?

The payment of a bonus is a legal obligation in Pakistan. However, it is conditional on the profitability of a company. This is also termed as Statutory or Profit Bonus, as it is regulated by law. The Statutory or Profit Bonus differs from other bonuses workers may receive on the basis of production, attendance or Eid (“the feast of breaking the fast”). 

What challenges do MNCs typically face when expanding into Pakistan? 

Pakistan sits at the crossroads of key regions of the globe, offering MNCs ideal international access as well as a young, increasingly digital-ready workforce. However, setting up shop in Pakistan can be a difficult process, with MNCs facing challenges in intellectual property protection, high levels of bureaucracy, a complex tax environment and high operating expenses. 

When hiring in Pakistan, the company’s HR and accounting teams will also be faced with learning a new tax framework, labor laws, contract regulations and other operational regulations. Failure to comply with any of Pakistan’s labor laws can cause reputation damage, fees or legal troubles. 

How does the Employer of Record (EOR) hiring model help MNCs thrive in Pakistan?

Rather than establishing a legal entity, MNCs often find the EOR model to be a more effective, nimble solution for hiring in Pakistan. 

By engaging an EOR like GoGlobal, the MNC avoids the long, arduous process of setting up a company and having the HR team learn the regulations for administering payroll in-country. 

Simultaneously, the company mitigates many of the risks, requirements and restrictions that typically come along with hiring in Pakistan – while still tapping into the country’s cost-effective, up-and-coming talent pool. 

How can partnering with GoGlobal help MNCs grow their team in Pakistan?

Despite Pakistan’s resilient economic conditions and burgeoning workforce, the country’s unique labor framework and challenging business environment often make it complicated for an international HR department to manage the payroll. When GoGlobal is hired, we take the reins and ensure each worker is hired, onboarded and managed compliantly. With our team at the helm of cross-border HR, our clients can then focus on the core business activities that help them grow a team and thrive in Pakistan – without being held back by red tape, unfamiliar regulations and cultural barriers. 

How does GoGlobal’s EOR solution operate?

GoGlobal manages the end-to-end hiring experience. Before the onboarding process begins, our onshore team in Pakistan will meet one-on-one with the worker to explain how the EOR arrangement will work. This same dedicated team remains the point of contact for both the client and the client worker throughout the employment lifecycle. 

We’re ready to answer any questions that come up in the area of payroll, taxation or benefits. We can even handle termination compliantly, if necessary. 

What makes GoGlobal’s approach to international HR unique?

At GoGlobal, we embrace a global mindset while maintaining a team of local experts on the ground in every market we serve. Our experts in Pakistan know the nuances of the regulatory environment and will stay up to date on all legislative updates. They also know the “ins and outs” of Pakistan’s business customs and local culture, which means a comfortable, advantageous experience for clients and client-employees alike. 

When we serve our clients and client-employees, we aim to bring agility, efficiency and peace of mind to the global hiring process. 

Find additional details on benefits and hiring in Pakistan, or contact us to talk with an international HR expert.