Pakistan is facing a grave challenge in ensuring the effective implementation of minimum wage laws. Weak enforcement of the Rs32,000 minimum wage has led to rampant exploitation of workers in general, and particularly those in low-wage professions or at very early stages in their professional lives. This has far-reaching consequences for the country’s economy and society.
Poor people also save less because they have to spend much higher shares of their incomes on necessities. At the macroeconomic level, this means that giving poor people more money will lead to more economic activity and increase GDP more than giving the same amount to rich people, who may save the money and thus ‘remove’ it from the economy. Unfortunately, not only are many workers paid below the minimum wage, even those who are paid in line with the law often do not receive their salaries on time. While some exploited workers may protest and go on strike, too many others are either afraid or cannot financially risk taking such industrial actions.
Recent efforts in Rawalpindi Division show the extent of the problem — only about 10% of factories and businesses surveyed were in full compliance with wage laws. Civil society organisations and trade unions can play a vital role in raising awareness and advocating for the implementation of minimum wage laws. Local administrations have started a simple but potentially effective approach — placing banners explaining minimum wage laws near industrial and commercial areas.
But knowledge without power is a carrot without a stick. It will not help workers — the government needs to make it easier to complain about wage violations and be more proactive in punishing offenders. It should also work closely with employers to ensure they are aware of their obligations under the law and provide them with the necessary support to comply while also increasing the penalties for non-compliance. Moreover, the government should also establish an effective monitoring and evaluation system to ensure the implementation of the law.
Published in The Express Tribune, December 22nd, 2023.
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