Tuesday January 18, 2022

The wage outrage

December 05, 2021
The wage outrage

LAHORE: It is true the entire world is grappling with inflation, the basic difference between inflation in developed economies and Pakistan is the former have fewer poor, while the latter is loaded with poor.

Inflation impacts all segments of the society differently. It affects lower income groups disproportionately. It all relates to the consumable surplus that each family is left with at the end of the month.

For families still having some surplus it is relatively easy to absorb the price increases. But the low-income families cannot bear any increases as they almost always struggle to make ends meet even before the attack of inflation.

Another drawback for the Pakistani poor is wages do not rise in line with the increase in prices. There are so many workers running after few jobs available in the market and this gives an edge to the employers to engage them on wages of their liking.

Due to low wages Pakistani workers whether qualified, overqualified, or underqualified are mostly going through the motions of performing their duties without much enthusiasm. These workers despite hard work are unable to look after their families properly as years of regular inflation has badly eroded their buying power.

They feel dejected and worries back home impact their productivity. The employers are mostly not happy with the general performance of their workers. The general low productivity of our workers justifies employers’ dissatisfaction.

Minimum wage mantra they added has also contributed to the inefficiencies of the workers. There is no rationale in increasing wages without improvement in productivity. The minimum wages are announced for unskilled workers, but these wages are applied to the skilled workforce as well. There are workers in each concern that were engaged years back at the then minimum wage.

After each yearly increase in minimum wage the wages of these workers increased automatically. But the problem is a worker employed at Rs10,000/month a decade back is now getting Rs20,000/month. This speaks volumes about the way wages have increased.

The cost of living has quadrupled in the last ten years. This can be judged from the rates of wheat, sugar, edible oil, mutton, chicken meat, beef, etc a decade back, as well as the tariffs of power, gas and prices of petroleum products and LPG. This is certain that the workers with ten years’ experience getting this low wage are unlikely to survive comfortably. On top of that the law mandates any new hire would also be employed at the minimum wage. How can the law equate between experienced and raw hands? There is no reward for experience. Some employers may reward their workers for experience, but it is not binding on them as far as the law is concerned.

The minimum wage fixed by the state is not inflation-adjusted. Anyone drawing minimum wage is poor. In Pakistan, majority of workers do not even get minimum wage as the government lacks the will to implement it. The wage system is loading our system with poverty.

Even the government recognises that, and the minimum wage workers are entitled to the Ehsaas programme dole-outs.

The unemployed pool is so large that we do not employ the right worker for the job that results in wastage of talent. Thousands of persons apply for a clerical job in the public sector that requires a minimum qualification of high school certificate, but the applicants also include graduates or masters.

The overqualified get recruited both in the public and private sector but after some time these workers realise they are overqualified for the job and ask for additional responsibilities usually denied.

This impacts the efficiency of the worker. Labour markets in Pakistan have not kept pace with the ever-increasing shift in the global economy. Workers, inefficiencies have taken their toll on the competitiveness of Pakistani products. Our industries need willing and efficient workers that enjoy their work.

To increase productivity, the entrepreneurs must stop finding talent through normal advertising or HR experts, who have made labour markets in Pakistan dysfunctional.

They should recruit talent at decent wages much above the minimum. Many organisations are now looking for suitable workers at online talent platforms like LinkedIn and others that effectively connect individuals with work opportunities.

One advantage of online talent platforms is their ability to inject transparency and dynamism into job markets.

Developed economies and even Indians are benefiting from these platforms. We could make our labour markets work through right investment and innovation by the private sector.