Minimum wages: issues to consider

The article was published on 16 June 2014 by the DAWN.

Minimum wage can help reduce gender pay gap. With higher education levels, women are reducing this gap, but it is still high, particularly in low skilled occupations.


IS Rs12,000 enough as minimum wage? The answer lies with the poverty line, which is estimated as the equivalent of 2,350 calories per adult per day. It was estimated as Rs944 per month for 2005-06. After that, no government publication mentioned poverty line as clearly.

However, economists have individually estimated poverty lines, and the latest, most reliable estimate is Rs1,825.46 for 2010-11. Considering the fact that Pakistan currently has a family size of 6.8 and 1.5 earning members per family, this translates into a monthly income of Rs18,000 (Rs2,647 per person per month). Comparing the poverty line with the newly announced federal minimum wage, it seems as if the cure for poverty has already been discovered.

The question is, do people really earn that much in our country? According to the Labour Force Survey 2012-13, 60pc of employed people earn less than Rs10,000 per month (20pc earn up to Rs5,000 and 40pc between Rs5,000-10,000). Only 22pc lucky employees earn more than Rs15,000 per month. It must be also be considered that only 38.8pc of the labour force earn wages, while 60pc are either own-account workers or contributing family members (vulnerable forms of employment). Who are these 20pc employees who are not even getting half of the minimum wage?

Provincial governments also fix minimum wage rates for different industries in their respective regions. The industries range from 30 in Khyber Pakhtunkhwa and Balochistan, to 40 in Sindh, and 51 in Punjab. Certain new industries need to be brought under the purview of minimum wage law (like the electronic media, if not covered under the Newspaper Employees Act). Similarly, the list of industries also needs to be updated, as there are certain industries that have become nearly obsolete (like bidi making), but for whom minimum wages are still announced.

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