Pakistan: IFC watchdog probes deeper dam workers’ complaint following mass termination

Workers at the Karot Hydroelectric project in Northern Pakistan have won the right to a full investigation regarding a complaint it filed before the International Finance Corporation (IFC) on violations of freedom of association, health and safety and other labour rules. The decision to conduct a more thorough investigation came after 2,410 workers were terminated in December 2021 without prior consultation with the union or the Pakistani labour department.

The said workers are members of the Awami Labor Union, part of the BWI-affiliated Pakistan Federation of Building and Wood Workers (PFBWW). PFBWW General-Secretary Aslam Adil said that they did not receive any explanation for the mass layoff other than the contractor reporting that 25 Chinese managers have “fallen ill with COVID-19.” 

“For years, workers have raised their voices on the way they are being treated. Even though many of our members contracted COVID-19, work has never stopped for them. There have been consistent violations of Pakistani labour law, international labour standards and IFC labour rules.” The illegal mass termination of workers was the latest of these abuses. We are at a loss for words for the workers who were left without employment and income in the middle of a pandemic,” Adil said.


Karot is a 720MW hydro project being built by a local subsidiary of the China Three Gorges Corporation, co-financed by the International Financing Corporation, the private equity arm of the World Bank. 

The initial compliance appraisal has identified substandard living conditions in worker accommodation, poor workplace safety practices, discrimination between Chinese and Pakistani workers and limitations on the right to freedom of association, consistent with those raised in the PFBWW and BWI complaints.

The PFBWW and BWI complaint also highlighted how the company derailed the registration of the site union, while a pro-management union that didn’t represent workers was speedily registered, preventing the ALU union from representing workers. 

ALU members and officeholders were also repeatedly threatened by management. A significant military presence onsite gave extra weight to these threats and made it difficult for workers to raise other worksite and living standards issues that they were facing. 

The complaint alleges violations of the IFC’s “performance standards”, rules that firms working on IFC projects must comply with, covering social and environmental standards. Performance Standard 2 covers Labor and Working Conditions.

“The decision of the IFC watchdog, the Compliance Advisor Ombudsman (CAO), to fully investigate the treatment of workers at the Karot dam project is welcomed. This will strengthen its credibility as an international investor in major infrastructure projects,” said BWI Asia-Pacific Regional Representative Apolinar Tolentino. 

However, BWI is concerned that the awaited remedy from the probe will not be provided to the project workers in time. It explained that CAO guidelines require that the draft investigation report to be completed within one year.  However, there are only 3 months left before the project is fully completed, making it difficult to contact workers, many of whom are internal migrant workers. 

As a response, BWI called on Makhtar Diop, Managing Director and Executive Vice President of the IFC, to immediately direct appropriate improvement and remedy to the labour and working conditions of the project, including legally entitled termination benefits to the workers wrongfully dismissed, considering that it is to be completed before the first semester of this year. 

CAO guidelines require the draft investigation report to be completed within one year and circulated to complainants and the IFC, who can submit comments before the CAO submits its final report to the IFC Board and Management. If the CAO finds non-compliance with the Performance Standards, the IFC must explain how it will address these issues.