A case of minimum wages

Everyone should play a more vibrant role in ensuring labour rights

A case of minimum wages

Sabir provides gardening services to a couple of residential and professional establishments. Sabir’s profound skills yield him barely a minimum wage that falls short of his great contribution to the environment in a sense.

Rasheeda, a housemaid, accompanied by her teenage daughter, starts her work early in the morning providing household services to around three to four houses. Their daylong toil does not even help them earn minimum wage. There are endless stories like these.

Interestingly, the idea of minimum wage actually evolved out of a decree by England’s King Edward III in 1349 for having in place a maximum wage. In 1348, when the Black Plague reached England taking a massive number of human lives, there was a severe shortage of labour force which caused wages to soar. Gradually, it transitioned into the dictum of minimum wage which gained the force of law when minimum wage law was put into action in New Zealand (1894), Australia (1896) and the United Kingdom (1909). Minimum wage is usually defined as a statuary limit of lowest wage [rate] that an employer is legally obliged to pay workers against agreed services.

Economists around the globe have long been debating minimum-wage setting in relation to feared impacts such as swelling unemployment and have been trying to ascertain arguments in favour of and against the idea of a minimum wage floor. However, a review of the scientific arguments supported by the findings of significant meta studies carried out in economics makes it evident that minimum-wage setting alone could not be correlated to employment trends -- let alone arguing a causation thereto. These studies further suggest that the skilled labour class remains largely unaffected by minimum wage setting. On the other hand, it is the unskilled labour force that seems to be benefiting mainly from the minimum wage floor.

The ethical dimension, when added to the context, fuses the concept of minimum wage with a doctrine of social morality. Minimum wage today is, therefore, seen pivotal to the promotion of social justice and other much sought-after societal values. By now, many countries either have a legislative machinery or collective bargaining system to set and guarantee compliance to minimum wage in respective constitutional jurisdictions.

Pakistan’s legislative framework essentially recognises the need for a minimum wage floor, and we do have dedicated minimum wage fixing machineries in place.

It may be the law that ensures the enforcement itself, but the onus of enforcing the law in letter and spirit, however, rests upon the societal institutions.

In the pre-devolution era in Pakistan, the Minimum Wages Ordinance (1961) and Minimum Wages (for unskilled workers) Ordinance (1969) used to provide legislative framework for regulation of minimum wage in the country. Since the 18th constitutional amendment, Sindh, Punjab and Khyber Pakhtunkhwa had so far provincialised minimum wage laws, thereby having provincial minimum wage floors. However, Gilgit Baltistan (GB), Azad Jammu and Kashmir (AJK) and Islamabad Capital Territory (ICT) and Balochistan are still subjects of the pre-devolution federal legislative framework that constitutionally holds these jurisdictions to follow provisions of the federal minimum wage laws.

The minimum wage slightly varies across the provinces/jurisdictions that falls in proximity of Rs14,000 per month. This landscape exhibits that our laws, especially pertaining to the minimum wage floor, provide essential coverage to labourers and thus deeper access to the core issues within the labour rights milieu. However, enforcement of the laws including the one on minimum wage remains significantly below than the desired level of compliance in terms of both effectiveness as well coverage.

Minimum wage floor setting can have a great impact on the labour force distributed across varying economic domains. The largest part of our labour force is engaged in providing services across two major economic domains -- the public, and private sector. The public sector (by virtue of its comprehensive documentation), and those [mostly large-scale] enterprises that are documented constitute integral parts of the formal economy. Whereas, for the most part small and medium enterprises along with Pakistan’s massive agriculture sector remain undocumented, and hence contribute to the gigantic informal economy.

By virtue of having essential laws, the public sector and a sizable part of the private sector [read large enterprises] seem to be complying with the statuary minimum wage floor. However, the largest proportion of workforce that operates below minimum wage floor is the one that provides services in the agriculture sector and small-to-medium enterprises.

The workers that operate below the minimum wage floor are actually working under precarious contracts or work agreements. These agreements are negotiated with a discriminating mindset about gender, ethnicity and/or any of the pertinent vulnerabilities of the workforce under consideration. A worker who is a girl, ethnic minority, below the age of adulthood or a migrant always remains vulnerable to harsh working conditions and often has to compromise on minimum wage.

Also, a society with such a questionable outlook on ethical practices is further likely to create monopsony among employers and service buyers. This disposition helps create a nexus between the custodians of law and the buyers of services. Historically, in our part of the world, labour law enforcement remained a heavily politicised issue whereby a stronger enforcement function was always viewed to be in conflict with the interests of political elites -- most of whom belong to the feudal classes.

Low/no literacy levels make the already disenfranchised workers more vulnerable. Not only are they constrained in their practical ability to comprehend, but they find themselves unable to negotiate and enforce their work related agreements. The lack of adequate literacy levels further limits the effectiveness of any training and skill development schemes. Year after year, these workers remain unable to surpass low productivity levels and meager value addition.

It may be the law that ensures the enforcement itself, but the onus of enforcing the law in letter and spirit, however, rests upon the societal institutions. This could be achieved by means of strengthening the labour inspection function that is the statuary apparatus to guarantee enforcement of labour laws. This also desires that the labour union bodies too should play a more vibrant role in escalating labour rights agenda in order to hold employers and the governing institutions responsive to the needs of law enforcement challenges.

A case of minimum wages