WageIndicator - Pakistan Handout
WageIndicator - Pakistan Handout
WageIndicator - Pakistan Handout
Wages in Context in the Garment Industry in Asia, April 2016 - WageIndicator Foundation – www.wageindicator.org
2. MINIMUM WAGES
Pakistan’s minimum wage system has been complicated by multiple applicable laws and
ordinances, for instance the Minimum Wages Ordinance 1961 followed by the West
Pakistan Minimum Wages for Unskilled Workers Ordinance 1969. The latter is the basis
for a centralized minimum wage-setting procedure which does not require consultation of
the social partners. The experts noted that at national level a Wage Determination
Committee is in place. However, they regarded its role as rather unclear. According to
the experts’ experience, the government has the final say on minimum wage fixing. A
separate minimum wage rate for the garment sector does exist. After the increase of the
minimum wage for unskilled workers in 2013 to PKR 10,000 per month, there have been
no further minimum wage hikes in Pakistan.
3. COMPLIANCE
According to the experts surveyed the limited bargaining capacity of garment workers
was related to their lack of alternative employment opportunities and to the easy
availability of new workers at the present level of wages and conditions. Moreover
workers face formidable barriers to unionization like authoritarian factory regimes, and
discrimination and harassment against union activists and workers who raise concerns
against employer practices. Collective bargaining in Pakistan exists mainly at factory
level, albeit on a limited scale.
The experts assessed Pakistan’s labour legislation as too permissive. On top of this, the
labour inspection system was seen to be weak. Compliance with the minimum wage was
low as well. There were no proper mechanisms in place to ensure compliance. Poor
governance, corruption and highly politicized decision-making all played a role in this
outcome. The most dramatic expression of weak compliance took place in September
2012, when a garment factory in Karachi caught fire, resulting in the deaths of 262
workers and injury to at least 55. Factory management had violated six building by-laws.
Wages in Context in the Garment Industry in Asia, April 2016 - WageIndicator Foundation – www.wageindicator.org
4. WAGES IN CONTEXT IN PAKISTAN
Figure 1 presents wage data for Pakistan: the monthly amounts of the living wages, the
minimum wages, the total wages in Pakistan according to WageIndicator and ILO data,
and the wages of garment workers. The LIVING WAGE section comprises the estimated
living wages based on the WageIndicator Cost-of-Living Survey for an individual and for
a typical family, with lower and upper bounds. The WAGES section comprises two 2015
minimum wage levels, the lower bound (national minimum) PKR 10,000 and the upper
bound (skilled workers) PKR 13,900. Based on WageIndicator 2015 data average wages
are presented for medium- and high-skilled workers, both with lower and upper bounds.
The total average wage level based on the ILO Wage Database 2013 is included. In the
GARMENT WAGES section we present the average garment wage based on the 2013-14
Labour Force Survey (LFS).
The figure and the underlying data show that the 2013-14 average garment wage based
on LFS data is 2 per cent below the lower bound minimum wage and 40 per cent below
the upper bound MW. The average garment wage is also substantially lower than the
overall wages for the medium- and high-skilled worker categories based on the
WageIndicator. It is also 20 per cent below the 2013 overall average wage as found by
the ILO. These indications point in the direction of relatively low garment wages. The
2013-14 average garment wage is some 10 per cent lower than the estimated lower
bound of the living wage for an individual worker; the upper bound equivalent is 1.8
times higher than the garment wage. The lower bound living wage for a typical family is
over three times the average garment wage and the lower bound minimum wage.
Figure 1. Living wages, minimum wages, total wages and garment wages in Pakistan,
monthly amounts in Pakistani Rupee (PKR)
Pakistan
60000
50000
40000
30000
20000
10000
Source: Wages in Context in the Garment Industry in Asia. Amsterdam: WageIndicator Foundation, April 2016.
Wages in Context in the Garment Industry in Asia, April 2016 - WageIndicator Foundation – www.wageindicator.org
5. PAKISTAN COMPARED
Figure 2 shows wages in context: the distances between the various wage levels
calculated for the nine countries, setting the lower bound statutory minimum wage as
100 and relating this to the garment wages derived from official surveys as well as the
estimated lower bound living wages for individuals and for typical families. In all five
countries with official garment wages available, these wages are not far from the lower
bound minimum wage; in two out of the five they even settle below that minimum wage,
in Cambodia substantially and in Pakistan slightly.
In the eight countries (all except China) for which based on the WageIndicator Cost-of-
Living Survey living wages could be estimated, the relative levels of the lower bound
living wage for individuals vary widely. Cambodia is the only country with this living
wage settled below the lower bound minimum wage; for the other countries the
individual living wage values range from 8 per cent (Pakistan) and 14 per cent (India)
above the lower bound minimum wage up to 29 per cent (Bangladesh and Myanmar),
146 per cent (Sri Lanka), 174 per cent (Indonesia) and 219 per cent (Vietnam).
Figure 2 Wages in Context: Lower bound statutory minimum wage (=100, blue bars)
related to the median garment wages (yellow bars), the lower bound living wage
for individuals (green bars), and the lower bound living wage for typical families
(red bars), nine countries
600
Wages in Context
500
600
400
500
400
300
300
200
200
100
100
00
Bangladesh Cambodia
Bangladesh Cambodia China
China India
India Indonesia Myanmar
Myanmar Pakistan
Pakistan Sri
SriLanka
Lanka Vietnam
Vietnam
100_minwage_lowerbound_WIF
minwage_lowerbound_WIF wage_garment
poverty_line_typfamily_WB
livingwage_individual_lowerbound_WIF
livingwage_typfamily_lowerbound_WIF livingwage_typfamily_lowerbound_WIF
wage_garment
Source: Wages in Context in the Garment Industry in Asia. Amsterdam: WageIndicator Foundation, April 2016.
Wages in Context in the Garment Industry in Asia, April 2016 - WageIndicator Foundation – www.wageindicator.org