Our minimum wage line is broken!
14 May 2023
Every year on the 2nd
of May like clockwork, the city pages of
almost all major newspapers in Pakistan
carry the picture of a labourer. It doesn’t
matter who that labourer is, what their name
is, or what they are doing. It could be a
man carrying bricks in the sweltering sun or
a woman picking cotton in a rural area but
the point is always the same — the irony of
the labour day holiday.
While most people use the labour day public
holiday for a long weekend, most daily wage
labourers continue to toil. This, of course,
is not the point. The state of labour rights
in Pakistan is abysmal and it is not just to
do with wage labourers. Sub-contracting, no
protections, and a complete
absence of unions make workers a deeply
vulnerable class of people in the country.
And the most at-risk group of workers in
Pakistan are those working either on daily
‘dihari’ or those working on minimum wage.
The problem with Pakistan’s minimum wage has
many faces. Not only is the wage understated
and miscalculated, but even if it were an
honest representation of subsistence in the
current economy, the enforcement and
awareness regarding minimum wage has
lightyears worth of work to do, if it is to
reach global standards.
Economics of minimum wage line
The term minimum wage is self-explanatory.
Legally, minimum wage is the minimum amount
an employer is allowed to pay to a
worker for their labour. In economic theory,
it is taken as a level wherein anyone who
earns minimum wage is living a livelihood,
good enough to take care of their basic
human necessities. In fact that is the
entire reason minimum wage exists.
In a market economy of
supply and demand, labour supply will mostly
exceed labour demand. Meaning that a country
where the majority is not educated, or not
skilled will have an abundance of people who
would want to take up menial jobs. This
would lead to a scarcity in jobs and more
and more people will be willing to work for
Unchecked this will go on to a point where
people will start working for peanuts, and
the quality of life will become abysmal. Why
will they do it? Because something is still
better than nothing. So to avoid such a
circumstance, minimum wage is set, as a
baseline. So that despite any saturation or
competition. The quality of life of the
citizens of a state is not compromised upon.
The process to figure
out the minimum wage, however, is
contentious. In general, governments
consider a range of factors when setting the
minimum wage line, including the cost of
living in an area, the level of inflation,
and the overall health of the economy. They
consult with experts and
stakeholders, such as labour unions and
business groups, to gather input and
feedback on the proposed minimum wage line.
Once that is settled minimum wages are set.
Where does Pakistan go wrong?
So apparently, apart from the definition,
the calculation, the maths, the enforcement
of minimum wage and the very definition of
quality of life, the status quo is pretty
set in stone.
In Pakistan, the minimum wage laws are set
by the federal government and are enforced
by the provincial governments. The minimum
wage rate varies by industry and sector and
is periodically revised based on inflation
and other economic factors.
Section 4 of Minimum Wage Ordinance, 1961
allows Minimum Wage Boards, for each
province, to recommend minimum wage rates
for adult unskilled workers and juvenile
workers employed in industrial undertakings.
Let’s now look at the problems with the
minimum wage level.
The monthly nature
Pakistan uses a monthly minimum wage system.
As compared to most of the developed world,
Pakistan does not have hourly wages. Mostly
this wage is taken up to a 26 day month.
As per the time of this scribe, Punjab has a
minimum wage of 32,000 while Sindh
Balochistan, KPK and federal all have a
minimum wage rate of Rs25,000. Even a bill
to increase the minimum wage in Sindh
assembly has been tabled, no results have
There is not a lot that is wrong with the
monthly wage rate. Not so much as there is
wrong with using it as the umbrella wage
Merely using a monthly rate may not account
for fluctuations in work hours, which can
vary from week to week or month to month.
This means that some workers may earn less
than the minimum wage on a per-hour basis
during slow periods, which can make it
difficult to make ends meet. But this is the
least of the problems.
Another big problem is that a monthly
minimum wage may not adequately account for
differences in living expenses across
different regions or cities. For example,
the cost of living in Karachi will be much
higher than in a rural part of Jamshoro, but
the monthly minimum wage is the same for
both locations. This is of course a
principle problem with monthly wage rates.
In reality what is being paid to a rural
worker in Pakistan, is something you would
not wish upon your worst enemies, thanks to
centuries of feudalism and bonded labour.
It is important to note that the Minimum
Wages for Unskilled Workers Ordinance 1969,
wages have both the fixed and variable
components. The variable components include
dearness allowance, house rent, conveyance
allowance, cost of living allowance and
special allowance. However, such
“unimportant” details are often overlooked
whenever the minimum wage levels get
revised. Any rates or allowances, sans the
monthly level, which were ever applied, are
no more applicable.
Now that the principle flaws have been
talked about we look at the substance of the
already defined rate.
The understatement problem
If you asked any Pakistani 2 years ago, they
would have told you that 25,000 is not
enough money to lead a respectable
lifestyle. In an average household of 6
people, 25,000 barely covered the food and
shelter costs. Things like electricity, gas
had to be saved up and things like education
and health were put on the back burner. But
2 years ago, the minimum wage was not even
Let’s now come to the present day. Inflation
has soared high as year on year inflation
has breached 35%. This essentially means
that if your income was 25,000 a year ago,
it needs to be well over 33,000 right now
for you to wield a similar level of
purchasing power. The minimum wages were
raised 10 months ago and since then Pakistan
has seen a cumulative total of 30% more in
But even that is not the complete picture.
With core inflation lower than the headline
inflation, energy and food prices have gone
up with a significantly higher multiple than
other things. Infact, the food inflation
alone in April stands at more than 48%. This
means that a household’s bottomline is more
difficult to protect in the current
The Exec. Director, Pakistan Institute of
Labour Education and Research (PILER)
recently projected in an interview that each
worker should be given a minimum of Rs50,000
a month to afford essential things and
services such as food, drinking water,
education, and healthcare services.
Open social media and you will see that
various people have come up with various
numbers, when it comes to estimating what
the minimum income should be. However, none
is even close to the 25,000 mark that is
prevalent right now.
As per the World Bank, $2 per day is the
minimum a household requires to meet its
necessities. However, it was the World Bank
that reported about 18 months ago how 83% of
Pakistanis do not have access to this amount
on a daily basis. Since then the dollar rate
has almost doubled. This is to clarify that
the levels at which minimum wage has been
set has never been enough. It is not just
about the current inflation. It has always
left room for labour exploitation.
Now let’s for a second assume that the
aforementioned problems with minimum wage do
not exist. Let us hypothesise a world in
which minimum wage levels were defined
precisely and were comparable with the
dollar equivalent of other global minimum
wages. It would still be a problem. Why?
Because of the enforcement of these laws.
The enforcement problem
According to PILER, an estimated 80% of
unskilled workers are not receiving the
minimum wage of Rs25,000 per month, which
was awarded a few months ago. And this is
where the crux of the problem lies.
Talking to Profit; lawyer and labour rights
activist Umar Gillani stated how the
enforcement is all over the place.
“The biggest glaring error exists in the
enforcement of the minimum wage laws. It is
not that good mainly because it is a
complaint driven mechanism.”
He informed that in his experience, most of
the people who were being underpaid did not
possess the means to turn on their employer.
And that makes sense, a person who knows he
will be replaced the moment he steps out of
line is highly unlikely to go against his
PILER's Karamat Ali sees no mechanism in
place to ensure implementation of the
government order or to check which
industrial and commercial houses are paying
their employees what.
Factor in the lack of public education and
basic civics, the person might altogether be
unfamiliar with the very existence of
minimum wage laws. Of course it is not to
say that those who do know about their
rights have a secure working environment.
And can willingly seek protection from
Talking to Profit, a utensil factory owner
from Rawalpindi stated that it is not in
best interest to hire adult men. “These men
have families to take care of. Not only are
they not willing to work the proper (after)
hours, they also expect a salary of more
than 20,000. 20,000 is what we give to our
experienced workers”. The factory owner also
made a compelling case for hiring younger
boys instead. Adult boys who were not
expected to contribute significantly at
The awareness problem
They say that ignorance is bliss, but not in
this case. In fact one of the very reasons
as to why employers are able to exploit
labour in Pakistan is because they are
Unionisation is actively discouraged and any
work that is done to raise awareness amongst
the masses. According to Mr Ali, Pakistan
needs to carry out a rigorous awareness
campaign across various media much like the
UK government did in the year 1990.
Awareness comes hand in hand with another
thing and that is education. A lot of the
labour would not be unskilled to begin with
if it was for education. But that is just
the tip of the iceberg.
Many workers, for instance, are unable to
take legal action because their contracts
are not renewed once they expire, and they
lack proof of employment. Without the proof
of employment it becomes easy to lay them
off if they want a better wage.
Of course awareness can only do so much. The
power that the rich wield in a country with
polarity in power structures makes it
impossible for the poor to take up arms
against the rich. It is perhaps this very
reason that stops this topic from being on
the agenda of assemblies and on the
manifestos of political parties.
Due to the systemic problems prevalent, the
situation is many times worse than can be
seen on the infographic. Pakistan may be
above the 0$ mark but the countries below us
are only those that do not even have a
requisite minimum wage.
Minimum wage is important to talk about
because it highlights the urgent need for
action to address poverty and inequality in
Pakistan, and to ensure that workers are
paid a fair wage for their labour. It is a
reminder that behind the statistics and
numbers are real people with real struggles,
hopes, and dreams. Something that should
take a far greater precedence over power
And the minimum wage is not just about
money. It’s also about dignity and respect.
When workers are paid a fair wage, they feel
valued and appreciated for their hard work.
They can provide for their families and
contribute to their communities. And when
everyone is paid a fair wage, it creates a
more just and equitable society for all.
When we talk about
minimum wage, let us not forget the human
cost of poverty and the urgent need to
address it. Let us not turn a blind eye to
the suffering of those who are trapped in
its grip, but instead, let us work together
to create a brighter future for all