Saturday June 15, 2024

Fiscal pressures

By Mansoor Ahmad
May 26, 2024
A labourer bends over as he carries packs of textile fabric on his back to deliver to a nearby shop in a market in Karachi on June 24, 2022. — Reuters
A labourer bends over as he carries packs of textile fabric on his back to deliver to a nearby shop in a market in Karachi on June 24, 2022. — Reuters

LAHORE: The number of 'working poor' in Pakistan is on the rise, as the steep increase in prices during the past five years has thrown even those families into poverty that enjoyed the luxury of getting the minimum wage fixed by the state.

Working poor are those who have a job or are self-employed but do not earn enough to fulfill the minimum basic needs of their families. Most of the low-wage workers have never earned enough to even feed their families, but workers drawing the government-announced minimum wage were at least able to feed their families, though they could not afford other essential expenses.

The economic downturn in Pakistan that started in 2018 and continues to this date has further marginalized the low-paid workers. The food prices have skyrocketed during this period, making it impossible even for lower-middle-class families to afford adequate food for their families.

Poverty is otherwise on a constant rise due to lower economic activities, resulting in a historic high unemployment in the country's history. One job lost pushes 6.5 persons (average size of a family in Pakistan) into poverty; as there is usually one breadwinner in a family where 50 percent of the working-age men are in active employment while only 14 percent of the women are employed.

Meanwhile, daily wage workers have seen access to work reduced to almost 10-15 days a month from the level of 25 days in 2016. The minimum wage of Rs 32,000 per month is not enough to fulfill the basic needs of an average family size of 6.5 persons.

An analysis of the barest minimum monthly food requirements of a family reveals that a daily wager needs Rs 26,180 from his wage of Rs 32,000. Wheat is the staple food of the country. As of April 2024, the wheat rate in Pakistan fluctuates between Rs 4,550 to Rs 4,750 wheat (Gandum) price per 40 KG. This means one kg wheat costs around Rs 110 or more. According to national calculations, one person needs 10 kg of wheat per month (though the intake is much higher for the poor).

A family of 6.5 would need 65 kg of wheat per month, which at an average rate of Rs 110 per kg would cost Rs 7,150 per month. The minimum edible oil rate is Rs 500 per kg. An average family requires at least three kilograms of edible oil or ghee per month. This would add another Rs 1,500 in the expenses.

The vegetables that are daily used in the making of curry are onions, ginger, garlic, and tomato. These vegetables would cost on average Rs 100 per day or Rs 3,000 per month. Utilities like electricity, water would cost Rs 5,000 per month, and gas/LPG or any other kitchen fuel would cost a minimum Rs 2,500 for a family of 6.5 persons.

The rates of pulses range from Rs 200 per kg for the gram pulse to Rs 500 per kg for mash. Assuming that the family would reduce its pulse consumption to 250 grams per day, it would need 7.5 kg of pulses in a month. The expenses on pulses would come to Rs 2,000 per month, even if the family mostly consumes the cheapest pulse. The spices, salt, matchbox, washing, and toilet soap, etc., would add a minimum of Rs 1,000 in monthly expenses. Even half-liter milk daily for the family would cost Rs 3,750 (@ Rs 20/liter). Two kg of sugar will cost Rs 280. All these expenses total Rs 26,180.

It may be noted that this food basket does not include mutton, beef, or chicken meat, nor tea, fruits. It does not include healthcare or educational expenses. It does not include the house rent, or traveling expenses of the breadwinner to his/her office/factory. But to earn and live, some of these expenses are inevitable. For instance, he has to pay house rent and his cost for commuting from home to office and back. So the family has to cut back on the above minimum food to spare money for house rent, say Rs 7,000, and traveling expenses of Rs 1,500 (Rs 50 per day). That means even the genuine barest minimum food expenses would have to be cut by Rs 2,680 to pay house rent and commuting costs.