Almost every year we hear that the government has raised the minimum wage, below which private sector employers are not allowed to pay their workers. Recently, the Punjab government has increased it for unskilled workers, from the existing Rs15,000 per month to Rs16,5000 per month, which will be applicable from July 1, start of the new fiscal year.
The federal and the rest of the provincial governments have not yet announced a raise in minimum wage for this year. The existing minimum wage is Rs15,000, except Sindh where they raised it to Rs16,200 last year. The rationale for fixing a minimum wage is to stop exploitation of labour force.
Anyhow, this concept is being challenged locally and abroad for the reason that in most places minimum wage is ridiculously low and must be replaced with a living wage that can ensure a decent living. Different stakeholders in Pakistan, including labour unions and civil society organisations (CSOs) have come up with this demand. The problem is that in our part of the world even implementation of minimum wage is a challenge.
How is minimum wage calculated and implemented? There is also a need to look at the reasons why a large segment of the country’s workforce remains uncovered under this law and the lacunae that stop government machinery from implementing it across the board.
According to legal definition, minimum wage is the wage set by the government, either after consultation with social partners, i.e, worker organisations and employer associations or unilaterally, below which it is illegal for employers to pay their employees. It is worked out and implemented at the federal and provincial level according to certain laws.
For example, there is the Minimum Wages Ordinance, 1961 which is applicable at the Centre and in Balochistan and has also been adapted in Punjab through an amendment in 2012. Then there are the Khyber Pakhtunkhwa Minimum Wages Act, 2013 and the Sindh Minimum Wages Act, 2015.
Khalid Mahmood, Director Labour Education Foundation (LEF) — an organisation working on labour rights, tells TNS that Minimum Wage Boards (MWBs) comprising representatives of the government, employers and workers are formed by respective governments to come up with suggestions on increasing minimum wage. “But actually, instead of making independent suggestions they give a pre-decided figure that the government wants to announce. Can anybody prepare a monthly budget below Rs15000 for a family?” he asks.
Mahmood is also skeptical about the impact of minimum wage because the informal sector workers remain uncovered. “Besides, there are exemptions in our laws like coalmine workers, agricultural workers, etc, who are not covered under the minimum wage laws.” He believes that instead of looking at the government and demanding implementation of minimum wage, workers need to be educated and unionised so that they can bargain good wages collectively. He says living wages will remain a distant dream in the absence of strong labour unions.
What Mahmood says and suggests is seconded by Baba Latif Ansari, Central President of Labour Qaumi Movement (LQM), based in Faisalabad. He tells TNS they have to use their numbers and collective strength to get the demands of workers met and on many occasions face coercive measures like registration of fake criminal cases against them by the police.
“LQM gets minimum wages implemented through negotiations with employers, even those in the informal sectors of economy. For example, they sit with the representatives of the sizing industry in the textile sector every year and convince them to increase wages according to the raise announced by the government,” he says, adding, “They employ the same formula with employers in the brick kiln industry and power loom sectors in the district. If the negotiations fail, LQM goes for other tactics like strikes, lockdowns, sit-ins outside the houses and factories of employers, etc. In fact, it is the collective power that works.”
Since the passage of the 18th Constitutional Amendment in 2010, the subject of labour has been transferred to provinces. During that year, the minimum wage for unskilled workers was Rs8,000 per month in all provinces. Since then it has risen gradually to the existing figures. There is no disagreement over the fact that the minimum wages fixed by the governments are too little as compared to needs. So, what should be the way forward for campaigners of labour rights?
Kabeer Dawani, a researcher at the Collective for Social Science Research in Karachi, has worked on the concept of living wages in Pakistan and done some calculations as well.
“One must understand the difference between a minimum wage and a living wage. Both have the same objectives; that workers shouldn’t live in poverty. But minimum wage is required by law, while a living wage is a voluntary concept, unless a government chooses to tie the two together (which many governments have done globally).”
Dawani believes minimum wages are set fairly arbitrarily are increased roughly every other year in the budget, but again the increases are usually ad-hoc. “Even though the civil society has been raising this issue for many years, there has been no policy or legislation on living wages.”
He says Pakistan People’s Party is the first major party in Pakistan to include living wages in their manifesto, but says so far there has been no direction to move towards incorporating it into policy. Broadly, however, they have the right idea: to use a living wage as a benchmark for the minimum wage, and then over the years increase the minimum wage such that it moves towards a living wage incrementally. “This will ensure that the gap is reduced over time, and also importantly, does not burden employers suddenly with large increases in wages. We don’t want to raise the minimum wage too much so that it leads to reduced employment.”
One major reason for lax enforcement, he cites, is what economists call the reservation wage — that is, the lowest remuneration at which workers will be willing to work — is lower than the minimum wage.
He says that he and his colleague, Asad Sayeed, have used the Anker Methodology to produce the first estimates of a living wage in Pakistan for North Eastern Punjab, focusing on Sialkot and adapted to the local context. The findings can be accessed by visiting the link http://researchcollective.org/project_info.php?id=C_069. “Elements of a living wage include food, housing, health, education, transport, clothing and other essential needs, including a provision for emergencies,” he explains.
Muhammad Naeem Chaudhry, former director, Labour Department, Punjab, says there are challenges like poor record keeping on the part of the employers, non-maintenance of appointment letters, contracts with labour, shortage of staff with labour department and mode of payment of salary. “Now the government has amended the law and employers are bound to pay through banks. This is a good move as everything comes on record.”