To protect labour force, a state takes guard and marks a minimum level on each pocket. Employers pull their precious earnings out of their moneybags and begin to put them into empty pockets of their labour. However, in Pakistan, the state sleeps during this flow. Only a petty and insignificant amount gets transferred. The floor breaks yet another policy stays unimplemented. In the consequent exploitation, the hungry poor feed the rich. The poor low-income labour force deserves more than just peanuts, at least their legal right: minimum wage.
Pakistan does set a minimum wage but does nothing more. Minimum wage is displayed on finely decorated banners, listing inspirational laws, promising quotes and displaying the premier’s smile while it witnesses open defiance and outright rejection. Both miscued definition and half-hearted enforcement have led to a futile minimum wage. A juvenile and unskilled worker in Pakistan is allotted between Rs 12,000 to Rs 13,000 per month. The same level is mistaken for guarding skilled labour too. However, each province is required to devise minimum wage levels separately for skilled labour. Still, the minimum wage set for unskilled labour never loses relevance. According to the Pakistan Labour Force Survey 2013-2014, an unfortunate 57.48 percent of the labour force earned below Rs 10,000 per month, while 18.21 percent extracted only Rs 10,000 to Rs 15,000 out of their employers’ pockets. Mapping these findings on the minimum wage grid would find more than 57.48 percent of Pakistan’s labour force to be juvenile or unskilled, a contradiction indeed.
The proponents of minimum wage term it as a barrier to exploitation. It regulates employers on social responsibility. A binding minimum wage puts basic necessities in the common man’s pocket. However, its efficacy is largely debated. Employers thrive to maximise profits. They refuse to pay minimum wage if it remains higher than its expected value addition. Forcing out a segment of labour force seeking employment pushes up unemployment. However, gradual increases in minimum wage dampen this unemployment effect.
In the past decade, due to surging prices and stagnant growth, the basket of goods that minimum wage buys is barely sufficient. Below optimal GDP growth has consistently multiplied unemployment. Declining investment has shrunk labour demand. The gap between labour demand and supply elongates. The disappointed, frustrated and needy offer themselves for peanuts as the powerful roast labour laws. If small businesses stretch this gap, a debate on their purpose may be justified. But their acts never will. More disappointing is the contribution of draconian corporations in stretching this gap. These money making machines stand firm between employees and their due benefits. Then emerges an informal economy cloaked under deprivation. Lack of reporting further escalates misdirected minimum wage definition and enforcement.
Despite seeming splendid on paper, relevant legal provisions remain hollow. Their observance is non-existent. The essence lies in fulfillment of purpose, not in satisfying watchdogs. Many employers interpret laws to their benefit. Achieving clean chits in audits and evaluations drives their abeyance. Salary slips show due employee benefits. However, they resemble under-reported income on tax returns. They are wholly unrealistic and can never buy the intended for the employee. The auditors and relevant government agencies remain least concerned after selling their mandatory concerns. As government fails to deliver quality health and education to its citizens, it performs even worse in confronting employers for disobedience of labour laws.
Under prevalent financial distress and rampant dissatisfaction, a minor increment in minimum wage amplifies employees’ satisfaction. Benazir Income Support-like programmes ride on a similar logic. However, Pakistan must prioritise welfare programmes having permanence in impact. Also, paying the right wage and increments improve worker focus, in turn improving productivity and multiplying revenue. This devises a built-in compensating mechanism for additional costs.
Developed countries such as the US, UK, Japan, etc. put basic necessities in an employee’s basket and price it as the minimum wage. A common man’s meal then has health, education, accommodation and travel. State subsidised quality healthcare and education receives priority. The private sector in these countries is tied to extend medical and other benefits to employees. Ready access to basic necessities breeds a lowest income group that is satisfied. Anything exceeding the minimum amplifies their happiness levels but its absence hardly succumbs to frustration build-up.
Commodities are facing a slump across the globe. Sluggish consumption has alarmed deflation concerns in developed markets. Pakistan too is going through a severe energy crises and investment vacuum. Governments across the world are supporting gradual increases in minimum wage. They intend to drive consumption and force corporations to forward minted revenue to their employees. Pakistan must learn. It needs to redefine minimum wage: set its right levels and pursue gradual increases. It must protect labour rights. Ridding off its workforce from disappointment and frustration will stir the economic revival it yearns for.
The writer is a freelance columnist