Money Matters

Taking sides

Money Matters
By Mahmood Abdul Ghani
Mon, 07, 18

Most of the political parties have announced their manifesto for July 2018 Elections, with only minimum wage politics ruling the roost. On May 1, 2012, notwithstanding labour no more a concurrent subject, in the Constitution of Pakistan, the then Prime Minister announced increase of minimum wage from Rs7,000 to Rs8,000 per month.


Most of the political parties have announced their manifesto for July 2018 Elections, with only minimum wage politics ruling the roost. On May 1, 2012, notwithstanding labour no more a concurrent subject, in the Constitution of Pakistan, the then Prime Minister announced increase of minimum wage from Rs7,000 to Rs8,000 per month.

The same day, chief minister of Punjab responded with further increase of Rs1,000 per month, announced minimum wage of Rs9,000 per month. Thereafter, the Pakistan Muslim League-Nawaz (PML-N) announced its election manifesto proposing increase of minimum wage from Rs8,000 to Rs15,000 without realising that Pakistan’s present day economy will suffer a reduction of overall employment by about nine percent with a possible increase in price, as also a possible loss of about five million jobs.

The Pakistan Peoples’ Party (PPP) in its manifesto promised Rs18,000 as minimum wage. As if not to be left behind, Jamiat Ulema-e-Islam-Fazl (JUI-F) and presently Muttahida Majlis-e-Amal (MMA) announced one tola gold value (Rs68,000 as minimum wage.

All these are political gimmickries based on whims and fancy. Raising minimum wage arbitrarily not only is unscientific but downright disastrous. It will introduce a host of negative unintended consequences.

Increase in minimum wage has both positive and negative effects. One is the intended poverty reduction effect of raising the wages for the poorest quartile of our population. The other is the more subtle effect of resultant increase in cost of such wage increase on the employer. It will also affect the current and future level of unemployment which will increase.

Furthermore, increase in wages impact will result in increase in prices, which in turn will place additional pressure on the upward trend in inflation. This is the negative consequence of the increase in wages in the manifesto. Increase in wages means more people living in poverty, willing to work for lesser wages. It will also increase expansion in the already bloated black market economy and result in fall in tax revenue for the government.

This will result in a dead weight loss scenario. Increase will compress employment and consequently gross domestic product growth. Labour economists predict that a ten percent increase in minimum wage decreases employment in the range of one to three percent.

Have the framers of the political manifesto examined the disastrous consequences of this proposal – unless the manifesto was for point scoring and for political expediency. Increase in wages without initiating it to increase in productivity will be meaningless.

In none of the political party manifestos, there are commitments to extend existing labour law legislation to entire agriculture labour, plantation labour, cattle and sheep breeding, poultry farming.

Even JUI-F and now MMA in their manifesto nowhere have laid down as to how and where the Islamic provisions will be introduced in the existing labour legislation. No party has come up with dealing the demand of labour to abolish contract system of work, or efforts to be made to regulate and abolish this system.

None of the manifestos deal with the proposed text of future labour legislations in the country. It is not within their radar or competence as yet. These manifestos are silent about the welfare and protection measures for the disabled workers and workers in the unorganised sector. No promise or endeavour is made to protect the rights of home-based workers; especially home-based women workers in Pakistan. These political manifestos make no reference to labour judiciary and to efforts aimed at expeditious disposal of cases and redressal of workers grievances, or to revamp labour judiciary. The concept of alternate labour dispute resolution is not within the purview of politicians. Notwithstanding Baldia Garment Factory disaster resulting in death of more than 250 workers, these manifestos do not make any reference as to how these industrial disasters will be avoided and how such national disasters will not be mishandled in future.

None of the political manifestos give to the working class consolation as to improvement to be made in inspection of factories and in occupational safety and health of worker. Little do our politicians realise that sound industrial relations are key to economic progress with social inclusion. They seem to be either unaware or oblivious of industrial relations problems and have neither any prospects nor solutions to offer. Emphasis on workers education finds no reference in their program, as if it does not exist. In rallies and political speeches, the leaders tend to indulge in mudslinging and empty slogans with no concrete solutions.

According to Sultan Mehmood, a Dutch government adviser on macroeconomic policy, if the PML-N and PPP are to go ahead with their proposed increase of minimum wage from Rs15,000 to Rs20,000 per month, Pakistan’s economy will suffer a reduction of overall employment by about nine to ten percent with a possible increase in prices. This is a possible loss of more than five million jobs.

Not only will it harm the very people it is intended to protect, it will cause confusion. A famous Chinese Philosopher has wisely remarked: “By three methods we may learn wisdom. First by reflection, which is noblest; second by imitation, which is easiest, and third by experience, which is the bitterest.” Imitating Barrack Obama’s proposal of increase in minimum wages in his State of the Union address, our politicians have announced increase in wages without explaining reasons for advocating raise to the level promised.

No explanation of methodology and analysis, if made any, which led them to reach this particular number has been made. Thereafter, none of the politicians, in public rallies, talk shows or even articles in newspapers have developed as to how they tend to achieve their manifesto objectives.

If the US president announced the wage increase it was based on a team of renowned economists who advised him on the issue. We have yet to find a similar team or individual of such stature and qualification who advises various parties in Pakistan on labour laws and problems and as to how these problems will be resolved, including major labour laws reforms, with possible text of proposed amendments. There are no promises made to establish National Commission of Labour to re-examine, and revamp existing multiple labour legislation nor any proposal for consolidation of labour laws both at the centre and in the provinces.

It is recalled that with promulgation of the 18th Amendment and deletion of concurrent list, including item No 26 and 27 from the list dealing with the subject of labour, each of the four provinces were to promulgate their own labour laws. When Industrial Relations Act 2008 was passed in the Assembly, the PML-N had effected a walkout instead of fighting it out, leaving the field open to pass the law without any decision.

When the decision of Air League, was delivered by our Supreme Court, decision reported in 2011 SCMR 1254, none of our legislature were aware of the decision, and without any of the respective provincial assembly passing resolution under Article 144 of the Constitution, authorising Majlis-e-Shoora to pass on Act for regulating labour legislations on their behalf, our wise, elected legislature office holders silently approved Industrial Relations Act 2012.

Law was passed both in Senate and National Assembly the same day it was presented with no discussion or objections. No doubt those who have passed Industrial Relations Act 2012 were our elected legislators. This law has been upheld by our Apex Court. We had given them power.

However Fyodor Dostoevsky, the Russian Novelist has wisely remarked: “Power is given only to those who dare to lower themselves and pick it up.”

Labour Judiciary has been left without any attempt to revamp, thus the National Industrial Relations Commission working has been ignored. Mounting litigation resulting from these institutions in the High Court and even before full bench of the commission has been left un-attending. Disgruntled and selfish professional outsiders have been allowed to mislead and misguide the workers.

No proposal has been give to avoid losses in the Pakistan International Airlines, Pakistan Steel Mills, and Pakistan Railways and other state-owned enterprises. No proposal has been made to recover earlier privatisation outstanding amounts from industrialists who have been handed over state owned enterprises.

No manifesto provides for privatisation of loss making, presently state-owned enterprises. Wilfully, these aspects are not mentioned in the manifesto for fear of loss of votes. Also our poor labour! They have been let down by false hopes, empty promises, hollow slogans and manifestos with no basis or foundation. Will our respectable politicians wake up and realise what they have left behind is a trail of misery and suffering.

The writer is a Supreme Court advocate