Minimum wage, maximum rage
The writer is a senior political economist
This year’s federal budget made a high-pitched announcement of increasing the minimum wage from Rs17,500 to Rs20,000 per month. Many felt happy for the workers and appreciated the government for providing this relief. Let them ask the workers and see the rage. In reality, it is a gimmick that has found place in budget speeches for the past several years. A budget can only contain measures that it funds or legislation to deliver effectively. Minimum wage is neither. In the limited cases where the federal government can deliver, it fails miserably. Pakistan Machine Tool Factory is a case in point. Some 600 workers doing jobs of permanent nature have been treated as casual workers for many years, just to avoid the entitlement to minimum wage. In the private sector, a vast majority of workers do not get the minimum wage. Outsourcing to third party arrangements is a widespread practice to negate minimum wage. Ask any security guard his salary, and you will know the huge difference. Worse for the delivery riders. The minority that gets the minimum wage does not enjoy it. When fixed last, Rs17,500 was significantly below the cost of living. Since then, there has been a surge in prices of wage goods. The recurrent pandemic has imposed additional costs. Living costs have increased at a much higher rate than the minimum wage. Even the upping of the ante by the Sindh government leaves a gap in purchasing power of ten to twelve thousand. Minimum Wage Boards in the provinces are the right forums to periodically determine the level of minimum wage after conducting proper economic analysis. Lacking in professional capacity, these boards are usually surprised by announcement in the budgets.
The Sindh Minimum Wage Board is stated to have worked out, with no basis in evidence, the minimum wage at Rs19,000. It was ignored by the provincial government that announced in the budget a threshold of Rs25,000. Employers are up in arms against it. A petition has been filed in the Sindh High Court. The petitioners include big industrial players, Pakistan Hosiery Manufacturers & Exporters Association, SITE Association, besides key business leaders like the Employers Federation, Karachi Chamber, and the Federation of Pakistan Chambers of Commerce & Industry. These are the same players who enjoyed generous credit from the State Bank under the Corona relief package to keep the workers employed, but in fact indulged in layoffs as well as minimal wages. Now the loss of competitiveness in export markets is being invoked with no serious study of the share of wages in total cost. Generally, they themselves complain about the unbearable energy costs.
Over the years, workers resistance has declined consistently. Employers, on the other hand, defy even low minimum wage, do not contribute their due to social security institutions and EOBI, and enjoy hefty tax breaks. In the words of the celebrated Cambridge economist, Joan Robinson, workers are forced to feel that the only thing worse than being exploited is not being exploited at all. As this paper reported on June 22, a woman working as a supervisor in a company “doesn’t earn enough to justify the number of hours she puts in. But she can neither leave her job, nor file a complaint against her employer. She doesn’t have a choice”. Let’s hope that the court finds a way out of the present arbitrariness to lay down a fair and formal mechanism that regularly draws on the evidence on purchasing power and its own assessment of industrial cost before fixing the minimum wage.
Published in The Express Tribune, August 13th, 2021.
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