Sindh proposes 20% wage increase

Proposal to raise minimum wage evokes mixed reaction

KARACHI:

The minimum wages board of the government of Sindh has proposed a 20% increase in the minimum wage.

“After detailed deliberations, the board unanimously approved recommendation of 20% increase in the minimum wage of all categories of workers in respect of 42 industries,” said minutes of a meeting of the minimum wages board held earlier this month.

The board made the decision keeping in view the high inflation rate, hike in prices of basic commodities, rise in pay of government employees in the budget for 2020-21 and the capacity of employers to pay wages.

In a statement on Monday, Employers’ Federation of Pakistan (EFP) President Ismail Suttar rejected the “arbitrary and unwarranted notification” issued by the government of Sindh in which it proposed a 20% increase in the minimum wage.

“During the current difficult times arising from the pandemic, retaining existing workers has been an arduous task and such notifications can rightly be termed antiindustry,” he said.

He argued that the 20% increase in minimum wage would trigger a new wave of unemployment of unskilled workers because the employers would reduce their numbers in the wake of rising costs.

He elaborated that such workers had been hired by businesses as extra employees and were mainly given the position of peons, loaders and messengers.

EFP Vice President Zaki Ahmed Khan said that the proposal would trigger a multiplier effect because the employers would be forced to enhance wages and salaries of even those employees who were paid more than the minimum wage.

“This will obviously add to the burden on employers and hike the cost of doing business substantially,” he said.

However, economists and labour leaders have a different opinion on the matter.

Despite the drastic increase of 20% in wages, the employers would not lay off the employees and instead they would retain them, said economist Muzammil Aslam in comments to The Express Tribune.

“Compliance with minimum wage is next to none in the country,” he said.

“More than 80% of the workers are paid less than the minimum wage and there is no one to take notice of the situation.”

He highlighted that all those who worked as employees in shops, servants in houses and bus conductors, deserved the minimum wage but their employers paid them below the minimum level.

The economist elaborated that the employers paid such workers in cash and since most of them were non-filers of tax returns, the government was unable to catch them.

Pakistan Institute of Labour Education and Research (PILER) Executive Director Karamat Ali was perturbed about opposition to the minimum wage proposal. “People are so short-sighted in our industry that they are opposing such a meagre increase,” he remarked.

“When salaries rise, labour productivity soars, which subsequently boosts the output of every industry.”

Considering the expenses of an average person during present times, the minimum wage should at least be Rs35,000, he emphasised.

He said over 72% of Pakistan’s population was malnourished due to contraction in real income, and women and children were the common victims.

He lamented that the minimum wage in Pakistan was set arbitrarily without considering any data on the ground.

“If one takes a look at the increasing house rents and utility bills, this minimum wage is insufficient for just these expenses,” he said.