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Minimum wage

September 14, 2017


IN recent years, with a rhetorical flourish in the federal budget speech, the finance minister has announced an increase in the minimum monthly wage for unskilled labour. It now stands at Rs15,000 per month. The federal decision puts pressure on the provinces to also raise the minimum monthly wage for unskilled labour. But reality is very different to what the government presents. The International Labour Organisation in a report on minimum-wage setting in the garment industry in Pakistan has called for the repeal of the Unskilled Minimum Wage Ordinance, 1969, and the ratification of the Minimum Wage Fixing Convention, 1970. The aim is to update the legal framework in line with the 18th Amendment devolution and empower provincial minimum wage boards to set wages on the basis of specific criteria that put the welfare of unskilled labour at the centre of wage decisions. The garment industry, a significant employer of unskilled labour in the country, typifies the problem of labour exploitation. According to labour activists, the monthly average wage for unskilled males is Rs10,000 to Rs11,000, while for women it hovers around Rs7,500. Perhaps as little as 10pc of the unskilled labour force is paid the federally mandated minimum wage of Rs15,000.

Yet, as the ILO report clarifies and labour activists have long campaigned, the problem is not merely at the level of minimum wage implementation but also in determining what the figure should be. The Pakistan Institute of Labour Education and Research advocates a living wage of Rs31,000 while the ILO has recommended a reference wage of approximately Rs25,000 — both significantly higher than the politically determined Rs15,000 that the federal government touts as an achievement and which is barely enforced. The path to positive change is relatively clear: empower provincial mimimum wage boards; define clearly the purpose in and criteria for setting a minimum wage; and eliminate exclusions that remove, for example, agricultural workers from the ambit of minimum wage laws. But meaningful change will also depend on a change in the mindset of policymakers. Unskilled minimum wage workers are some of the most vulnerable of economic agents, their labour vital to producing significant wealth for their employers but their legal rights and social status allowing for massive exploitation. Rather than thinking simply in terms of state handouts to the economically vulnerable, should the state not ensure that hardworking individuals are compensated fairly and justly for the value of their labour?

Published in Dawn, September 14th, 2017