Businessmen perturbed over likely increase in minimum wages

LAHORE: Businessmen are perturbed by the likely increase in minimum wages in the federal and provincial budgets, citing low wages in competing economies.

The minimum wage in Pakistan is $124 per month (Rs13,000), which is not enough as compared to the members of an average family.

A recent report of the Planning Commission revealed that 60 million citizens in the country are below the poverty line, which means that they earn less than Rs3,030 per month. This is one-thirds of the country’s population.

Analysts said since the official unemployment rate in Pakistan is six percent, it means that families of many of those employed live in poverty. This also reveals that all those getting minimum wage and are the only supporter of the family are living much below the official poverty line along with their families.

They accused the government of deliberately increasing the minimum wage by small percentage every year so that the businesses could absorb the additional burden.

The industry and trade is fully aware that the present government is committed to increase the minimum wage by Rs1,000 every year till 2017-18 to fulfill its election commitment of taking the minimum wage to Rs15,000 by the end of its tenure.  The manufacturers said that the workers productivity in the country is the lowest in the region.

They fail to realise that by employing workers at salaries not enough to provide enough nutritional intakes that are needed to live a healthy life, is the real cause of concern the analysts said.

"When these workers are denied resources for healthy diet their productivity is bound to suffer."

This brings in to question as to why the workers productivity in Bangladesh is higher where minimum wages at $68 per month are half the wages in Pakistan.

An analysis of different situations in Bangladesh reveals that most of the industrial workforce in Bangladesh is from fair gender.

Most of them are attached with the garment industry, while their spouses work as labours, technicians and jobs in non-textile industries. This way the wife and husband supplement family income.

Moreover, the garment exporters in Bangladesh are bound by foreign buyers' conditions to ensure availability of food at concessional rates and provide all medical facilities to their workers. Garment industry is a labour-intensive sector and 90 percent of garment workers in Bangladesh are women. These women provide additional income source for the family.

In Pakistan, it is the other way around in the garment sector where 90 percent of the workers are men and women have no chance of supporting their families.

Still, garment is the most value-added sector of textile and the garment exporters could afford to pay higher wages to their workers.

According to the US department of trade, Pakistan is one of the lowest cost exporters of apparel. Pakistani exporters would have to work hard on marketing, further value addition instead of squeezing the wages of their workers. This stands true for all other sectors of the economy, as well.

The government of Pakistan should also play its role in facilitating the exporters in reducing their costs. It has been established that one percent reduction in corruption reduces the cost by two percent, it said.

Analysts said the government should ensure that all genuine refunds of businessmen are promptly refunded. It should reign in the bureaucracy by instituting a system of carrot and stick.

Good work of bureaucracy should be duly appreciated and rewarded, while it should be fully accountable for any nontransparent decision that hurts business.

The government and the private sector would have to work together in reducing the cost of doing business. The private sector should also ensure that their workers are rewarded for reducing the cost.