The Pakistan Institute of Development Economics (PIDE) here on Tuesday unveiled a landmark policy proposal aimed at transforming Pakistan’s minimum wage determination from a symbolic annual announcement into a transparent, evidence-based, and rules-based wage governance system.
In Policy Viewpoint No. 62, titled “Reforming Minimum Wage Determination in Pakistan: From Wage Announcements to Wage Governance,” PIDE scholars propose a hybrid framework aligned with International Labour Organization (ILO) principles.
The proposed methodology balances purchasing-power protection, worker-family adequacy, labour-market affordability, partial productivity sharing, and provincial implementation realities.
Applying this framework to official data from the Pakistan Bureau of Statistics (PBS) and the Ministry of Planning, Development and Special Initiatives, the study recommends a national minimum wage reference benchmark of Rs 45,000 per month for FY2026-27 – representing a 12.5% increase over the current notified wage of Rs 40,000.
Speaking on the significance of the initiative, Dr. Nadeem Javaid (SI), Vice Chancellor, PIDE and Member, Planning Commission of Pakistan, said minimum wage policy could not remain a ceremonial annual exercise disconnected from economic realities and labour welfare.
“Pakistan now requires a credible wage governance system that balances worker protection, productivity, business sustainability, and macroeconomic stability within a transparent institutional framework,” he said.
On the occasion, Dr SM Naeem Nawaz, Professor of Economics at PIDE and co-author of the study, said that a credible wage floor must be one that workers could realistically receive and provinces could realistically enforce. “That requires moving beyond CPI-only or poverty-line-only approaches toward a hybrid methodology that respects affordability, compliance capacity, and the reality that nearly 80% of Pakistan’s employment remains informal,” he added.