Real wages

With inflation on the rise, real wages in Pakistan have been on a decline for the past couple of years. The rising price hike demands that the wages of people in the country also experience a similar uptick to offset the increasing stress on families. But, according to reports, a majority of Pakistanis are finding it difficult to afford their basic necessities of life such as groceries and utility bills. An average household in the country has come under tremendous pressure as their real wages have decreased substantially. Throughout the outgoing fiscal year, a family of let’s say six persons, found it hard to buy wheat flour whose prices increased from Rs850 per 20kg to over Rs1,100 for the same weight. The same applies to ghee for cooking which rose from Rs1,200 per 5kg to over Rs1,700. Pulses, rice, sugar, and tea, all posted high prices compared to the previous year, resulting in an evaporation of real wages just to consume bare essentials.

A rough estimate shows that the real wages have declined in terms of the purchasing capacity of average families which just want to live on subsistence, not counting expenses for their children’s health or educational needs. While the real wages of the country’s citizens remained stagnant or in most cases declined, the families were unable to even pay for minimum electricity and gas bills on a monthly basis. An average family of lower-middle class status receives utility bills in the range of five to six thousand rupees, and at least double that amount is the rent of a just two room dwelling in a lower-income area.

Even if the government makes sure that a minimum wage of Rs20,000 becomes mandatory for all workers, that amount is much less in real income terms with increasing inflation. In economic parlance, real wages are nominal wages adjusted for the effects of inflation. During the outgoing years, an estimated nine to ten percent decline has occurred in real wages across the country. Even if you look at the official data compiled by the Pakistan Bureau of Statistics (PBS). The prices of chicken and eggs have increased by 50 to 60 percent in just one year, whereas a 20 percent to 30 percent increase has been witnessed in the prices of flour, ghee, onions, pulses, and sugar. With this backdrop, when the government increases just 10 percent in pensions and salaries of government employees, their real wages appear to be declining. The situation is even worse for those who do not have a government job or pension. A majority of people in Pakistan do not have any social security in terms of their emergency needs. Pakistan’s inflationary pressure calls for a comprehensive strategy to tackle food insecurity and dismal state of utility services provided by the government, if at all.