Minimum wages: Govt inches closer to implementing pay rise

PML-N govt approves a summary, requesting an amendment to the ordinance

Qamar Zaman October 01, 2014

ISLAMABAD: Like the Pakistan Peoples Party-led (PPP) government before it, the ruling Pakistan Muslim League-Nawaz (PML-N) has announced plans to increase the minimum wage but neither of them has enacted the required legislation to implement the decision.

What both the PPP and the PML-N needed to do was to amend the relevant laws – Minimum Wages for Unskilled Workers Ordinance 1969 – which has gone unrevised for the last six years [since 2008].

However, earlier this week the PML-N government approved a summary submitted by the Overseas Pakistanis and Human Resource Development (OPHRD) Division, requesting an amendment to the ordinance.

According to the minutes of a meeting available with The Express Tribune, the cabinet was informed that Employees Old Age Benefits Institution (EOBI) – an autonomous body of the OPHRD division, which provides old age, invalidity and survivor’s pension to the workers of private sector – had said it could not collect contributions from the employers/insured persons due to non-revision of schedule of the Ordinance 1969.

The EOBI scheme is financed through contribution of five per cent of the minimum wages payable by the employers and one per cent payable by the insured persons (employees).

The term ‘wages’ has been defined under Section 2(P) of the EOBI Act, 1976 in terms of Minimum Wages for Unskilled Workers Ordinance 1969. The last amendment was made in the schedule to the Ordinance in 2008 when the minimum wage was fixed at Rs6,000 per month, the minutes said.

However, later while the federal governments announced it would raise the minimum wage from Rs6,000 to Rs8,000, from Rs8,000 to Rs10,000 and from Rs10000 to Rs12000 per month (for Islamabad) , respectively in budgets of 2012-13, 2013-14 and 2014-15, such raises could not be implemented due to non-amendment of the ordinance.

Because of this discrepancy, the EOBI is not in a position to collect contributions from the employee/insured persons for the purpose of payments in different pensions.

“A number of employers have challenged the collection of contribution by EOBI, in accordance with the new rates of minimum wages announced by the government, in various courts,” the document said.

“The Ministry of Overseas Pakistanis and Human Resource Development [has therefore]  proposed to amend the schedule to the Minimum Wages for Unskilled Workers Ordinance 1969, through an Ordinance for revision of the minimum wages of unskilled workers…. The draft ordinance has been vetted by the Law, Justice and Human Rights Division,” it said.

Already, provincial authorities in Punjab and Khyber-Pakhtunkhwa have enhanced the minimum wages to Rs12,000 and Rs15,000 per month, respectively, whereas the governments of Sindh and Balochistan have initiated the process for increase of minimum wages.

Published in The Express Tribune, October 1st, 2014.


Mohsin | 6 years ago | Reply

These law are used only for political gain. One of the example is private school teachers , they are getting 8000 per month only ( A person who has done Masters )

ahmed | 6 years ago | Reply

These measures will make Pakistan uncompetitive. Instead, government should be focused on creating policy to promote economic activity so that more jobs are created

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