Thirty-eight-year-old Saira Feroze works from home in Karachi. A few years ago, she used to earn Rs 4,000 to Rs 5,000 a month after working six hours a day on an average. But as inflation rose, his income fell while his working hours increased. Because his employer cut his wages under the pretext of running the business in view of the current economic situation in the country.
“I and people like me have no choice but to accept it if we want to survive,” said Feroze, who is the general secretary of the Sindh United Home Based Workers Union. The sector of work, whether formal or informal, defining regularity and exploitation. “Although we are skilled workers, we earn significantly less; a fourth of the current legally mandated minimum wage of Rs 25,000. Not to mention, this is also inadequate.”
She belongs to the lowest wage earners group in the country. The majority of women in this group, 61%. “We work like our male counterparts, yet we are paid less than them and treated less than them,” she lamented, pinning her hopes on institutional measures that would address gender equality. It can help eliminate discrimination and reduce the wage gap. “We have been fighting for a long time. There is a law that gives us the right to minimum wages. Yet there is zero implementation.”
‘The Minimum Wage Argument’
Berlin School of Economics and Law Professor Dr. Hans-Jörg Herr in his working paper “The Argument for the Minimum Wage” opines that labor markets are important for the stability of the economy and leaving labor to market mechanisms and flexible wages. Being “the worst thing. It could happen.” Hare added that this would lead to instability in the price level and an explosion of inequality. They argue that minimum wages can play an important role in curbing the volatility of labor markets.
Hare argues that raising the minimum wage squeezes the wage structure downward and leads to redistribution among wage earners and an increase in the wage share. He rejects the notion that raising the minimum wage will lead to unemployment. Instead, he emphasizes that minimum wage policy can play an active role in the macroeconomic management of the economy and society.
Wage determination process
Since 2010, the issue of labor has been handed over to the provinces. However, the federal government still exercises its power in this domain in the capital region. There are two mechanisms for setting minimum wages: through wage boards and through collective bargaining agreements. The minimum wage covers all workers in industries and commercial establishments except public sector employees as they are subjects of their respective employers.
Although workers in the informal economy are not excluded, minimum wages generally apply only in the formal sector. Pakistan has a large informal sector, accounting for 56 percent of total GDP, which employs the most vulnerable workforce.
Each province has its own wage boards. They are tripartite structures. Their permanent members include a chairman, who is a government official, and representatives of workers’ and employers’ organizations. Additional members are included when deciding wages for skilled workers, but this is usually not the case.
Therefore, the wages of skilled workers are determined by the market. Governments retain the power to announce minimum wages and are not bound to follow the board’s recommendations or to give any reason for their setting.
The wage fixing laws neither prescribe any formula nor prescribe any economic indicators to be used for the purpose. Also, laws are silent on the objective of a statutory minimum wage and there is no conceptual agreement among stakeholders on it. Generally, the minimum wage is revised every year at the time of budget announcement which takes place in June. Furthermore, the government’s own data show a widespread underpayment of wages, suggesting that the minimum wage does not serve as a binding floor wage.
No meeting was held for wages in Sindh.
Home Based Women Workers Federation General Secretary Zahra Khan represents the workers in the Sindh Minimum Wage Board. With a week left for the budget announcement, he said the board had not called a meeting on the matter. “Maybe, they will think about it after the budget,” laughed Khan. “Actually, the government doesn’t consult workers. They just listen to people from capital. That’s how it works.”
He reiterated the fact that there is no minimum wage fixing mechanism and the process is verbal. He proposed that the minimum wage should be set in line with the Consumer Price Index and the rate of inflation and should cover the cost of living while leaving some room for savings.
A minimum wage can play an important role in curbing the potential for instability in labor markets.
“In the current economic conditions, a person needs at least Rs 80,000 to meet his monthly household expenses. Punjab has announced a minimum wage of Rs 32,000 while Sindh has announced a minimum wage of Rs 44,000. Both figures are insufficient,” he said.
“A decent minimum wage is very important. When an individual or a family can afford a square meal, transportation and education, they are able to think about other social and political issues,” he said and “I think not giving people their right to wages is a tactic. The ruling elites keep them away from politics and other social issues,” he added.
He said that since the pandemic, the size of the service sector in the informal economy has been increasing. “We need to adapt to the changes and formulate our policies accordingly. But in the absence of data, this is not possible. And all policies become useless,” he added.
He also questioned the validity of the Labor Force Survey. He said the survey seems to be based on assumptions. “I have never seen any government authority collecting data on workers. They only add one percent to the labor force every year relative to the size of the population. We need real data to make real changes.
A living wage, not a minimum wage.
Nasir Mansoor, General Secretary of the National Trade Union Federation suggested that the minimum wage should be called the living wage and the basket method should be used to fix it. The basket should cover the cost of food, education and health for an average household consisting of one adult and two children. He cited the Asia Floor Wage Alliance’s estimate of the living wage, which is Rs 67,200 for Pakistan.
Mansoor said that due to the increase in the exchange rate of the US dollar, the wages of workers in Pakistan have decreased by 70 percent in the last few years. “Inflation is at an all-time high. The social safety net is nonexistent, and everything is being privatized. It’s outright wage theft,” he said.
He said that the government is still using outdated methods to deal with the problems of modern times. “We need to use banking channels so that every transaction can be recorded. Industrialists’ excuse is that workers are reluctant to open bank accounts. They are trying to avoid taxes and social security contributions.”
He added that the minimum wage was for unskilled workers, who constitute about 5 to 6 percent of the total workforce. “The rest of the workforce is skilled, and their wages are high. There should be a scientific approach to deal with this issue.”
Syed Nazr Ali, Secretary General of Employers Federation of Pakistan said that rising inflation and high cost of living are not the only criteria for determining minimum wages.
Ali said, “You need to look at economic conditions including business/industry growth needs and environment, comparative productivity, cost of doing business, employment situation, and above all the industry’s ability and ability to pay. Is.”
He said that the current economic crisis including high inflation, strict policies and import controls has resulted in mass unemployment due to industrial closures, retrenchments etc. He added that the increase in minimum wage should not come at the cost of employment.
Lobby on labor
Economist Qaiser Bengali said that having no minimum wage formula was politically convenient for the rulers. “It does not extend to the informal sector and is not implemented de facto in the formal sector. It is not something that can be addressed by any policy initiative. However, trade unions ensure its implementation at the shop floor. can make
To correct the situation, he gave the example of America where banking channels are used for payments. “Every employee needs a Social Security number; they can’t even get a job without it. We have a cash-based economy and it’s impossible to keep track of. We need to make Social Security numbers mandatory for every worker.”
He further said that policies are being made for certain lobbies in Pakistan. Tariff policies for industrialists, tax policies for agriculturists and the most favored in the present era is real estate. In order to improve the condition of the common people, the state needs to decide who it represents.
The author is an interactive media journalist, specializing in labor policies and globalization. He is currently pursuing a degree at Internationale Filmschule Köln, Germany. He tweets @zubairrashraf.