The absence of strong trade unions and elimination of labour inspections are blamed for widespread non-enforcement of the minimum wages for workers of industrial and commercial establishments in Punjab.
“There are two ways of forcing employers to comply with the minimum wages. Either the workers are mobilised in the form of strong trade unions to influence their employers or the government has effective administrative machinery to force the owners to implement the law,” says Mohammad Yaqoob, a prominent labour leader from Lahore.
“Since trade unions are weak or non-existent in the industrial and commercial establishments, the owners easily get away with the violation of the law,” he adds.
A campaign launched by the Trade Union Action Committee on Minimum Wages, which is an initiative of several labour organisations, this month to mobilise workers of the industrial, commercial and other establishments to demand implementation of the minimum wages reveals that only a very small number of owners are enforcing the minimum wages across Punjab.
“We have received complaints that majority of the workers are still getting wages in the range of Rs3,000 to Rs4,500 per month in spite of the issuance of notification by the federal government re-fixing the minimum wages for an unskilled worker at Rs6,000,” says the committee’s coordinator, Ilyas Khan. He says women workers get paid even lesser than what their male colleagues are getting.
The government had increased the minimum wages in the budget for this fiscal year.
“Apart from industrial and commercial establishments, most banks and some provincial government departments are also reluctant to pay their unskilled workers the minimum wages,” Khan says. “We receive scores of calls from labour from different cities in the province complaining that their employers were refusing to pay them the minimum wages,” he says. “This is because of the failure of the labour department and other government agencies to get the law implemented.” Yaqoob says the elimination of inspections by labour department officials has encouraged the employers to flagrantly violate labour laws. “The fear of labour inspections had always played a crucial role in influencing the employers to implement the laws and pay minimum wages to their workers even in the absence of trade unions. But now the situation has reversed; the employers can and do violate the labour laws with impunity in the absence of government oversight,” he says.
He acknowledges that the labour inspections too did not help total enforcement of the minimum wages as the labour inspectors would accept graft from the employers for not reporting violation of labour laws. “Still the situation was much better than it is today and many owners would enforce the minimum rather than pay the graft,” he says.
The labour inspections were abolished in Punjab in 2003 by the government of Chief Minister Pervaiz Elahi, who believed that the “official interference in industrial and commercial activity was proving counterproductive and preventing investment in the province”.
Punjab Minimum Wages Board chairman Habibur Rehman acknowledges that the abolition of labour inspections is a major snag in the way of implementation of minimum wages. “Besides, we don’t have adequate workforce to ensure that the workers in all industrial and commercial establishments get minimum wages,” he says.
Khan says most workers aren’t even aware of the concept of minimum wages because the government has not done much to spread awareness. “Now the Committee is trying to reach out to maximum number of workers across the province to educate them about their legal rights, especially on the minimum wages issue,” he says.
He says the workers invariably complain that their employers discourage formation of trade unions, refuse to give them employment letters, or register them with the social security department or the Employees Old-Age Benefits Institution, and force them to work longer hours. “They just don’t know where to turn to for remedy.”
The legislation related to minimum wages was first introduced in 1961 in order to improve workers’ living standard.
In a research report, a leading economic expert Shahid Kardar argues that the minimum wages legislation covers a very small percentage of the labour as agriculture workers, government employees and informal sector remain outside the ambit of the law. “More importantly, the implementation of the legislation and its coverage remains patchy at best. Just a small percentage of workers are effectively covered by the legislation even in the formal sector.”
But, he says, in spite of the limited coverage of the wage policy it plays an important role in the allocation of labour in the economy, and in influencing the wage structure through wage policy instruments -- the minimum wage legislation and the treatment of non-cash benefits -- and the institutional framework that conditions wage-related decisions.
He points out that employers are opposed to minimum wage floor because this increases the rigidities in the labour market and imposes significant costs on them. “Though there is recognition of the need for a minimum level of income, the employers are reluctant to have that notion legislated upon and imposed through law. Some feel that this outcome will follow automatically if there are well-functioning labour markets.”
On the other hand, he says, labour demands a comprehensive and effective minimum wage floor. “The proponents of minimum wages argue that since markets cannot ensure an effective minimum, there is need for government intervention. They, therefore, argue for a comprehensive and effective minimum wage regime that covers all sectors and all enterprises and is set at a level that guarantees a certain minimum standard of living to all.
They dispute claims about the negative effects of minimum wage legislation, and have shown research to establish that imposition of such legislation can have salutary effects on skill development, employee morale and productivity, wages, and even employment under certain conditions.” implementation of a minimum wage regime presumes important preconditions -- the presence of strong trade unions with capacity to mobilise workers and influence the level and content of minimum wages, and administrative machinery that has the capability and will to ensure compliance.”
Since these preconditions are almost non-existent, it is hard to be optimistic about the prospects for raising the living standards and working conditions of the poor through enforcement of statutory minimum wages, especially since severe adversity and deprivation compel workers to accept any wage for survival,” he says.