THE International Labour Organisation (ILO) has urged Pakistan to repeal the Unskilled Workers Minimum Wages Ordinance, 1969, “in order to avoid inconsistencies in wage-setting mechanisms for unskilled workers”. And it wants the federal government to ratify the Minimum Wage Fixing Convention, 1970, (No. 131), and to bring agricultural workers and those in the informal sector of the garment industry within the ambit of the minimum wages act.

Some background is needed here. When the West Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969, was enacted, its purpose was defined as fixing the minimum rates of wages for unskilled workers employed in certain commercial and industrial establishments in the western wing. A minimum wage of Rs140 per month was fixed; it remained unchanged until 1993 when it was increased to Rs1,500. A group of employers went to court but lost the case. Minimum wages under this ordinance continued to be increased in the country until 2008, when it was fixed at Rs6,000 per month.

Pakistan would do well to heed the ILO’s advice.

No increase was made under this ordinance until February 2016 when the minimum wage was retrospectively increased for four consecutive years from July 1, 2012, to July 1, 2015, by the centre that raised it from Rs8,000 to Rs13,000 per month. The centre had been facing a dilemma following the 18th Amendment, when labour legislation was devolved to the provinces in 2010.

The employers’ contribution to the Employees Old-Age Benefits Institution was linked with the increase in minimum wage under the 1969 ordinance. After devolution, the operation of this ordinance was confined to the Islamabad Capital Territory and the centre was left with no authority to increase minimum wages in the provinces. When the EOBI notified the employers to pay contributions at the enhanced rate, they filed writ petitions in the high courts challenging the increase and got stay orders. The matter is currently pending adjudication before the Supreme Court.

Although Pakistan has not yet ratified the 1970 convention, the factors to be considered by the provincial minimum wage boards are contained in the Minimum Wages Ordinance, 1961. Section 7(1) states “The board shall review its recommendations if any change in the economic conditions and cost of living and other relevant factors so demand…”

Article 3 of the ILO convention describes what all must be considered in determining the minimum wages ie the needs of workers and their families, the level of wages in the country generally, cost of living, social security benefits and the living standards of other social groups.

In Pakistan political expediency prevails over objective criteria in wage fixation. Presently, the provincial wage boards simply endorse the minimum wages fixed by the centre while announcing the annual budget. Even after devolution, this practice continues.

In July 2014, KP had fixed a higher minimum wage of Rs15,000 per month when it was fixed at Rs12,000 by the other three provinces. On a petition by employers, this notification was suspended by the Peshawar High Court in March 2015. Ultimately, the KP government succumbed to employers’ pressure and decreased the amount to Rs12,000 retrospectively from July 2014, causing a loss in arrears to the workers. Seven years after the devolution, the rate of existing minimum wage is Rs15,000 per month across Pakistan.

Both Pakistan and India inherited from the British one wage law called the Payment of Wages Act, 1936, which provided for the timely payment of wages to workers and prevented arbitrary deductions by employers. It was silent on the fixation of minimum wages. Soon after independence, the first labour legislation promulgated by India was the Minimum Wages Act, 1948. It applied to workers employed in different employments including agriculture. All types of industries related to agriculture were comprehensively covered and nothing was left out.

After independence, India did not allow big landholdings by individuals, which continued in Pakistan. Its large presence in our legislatures has helped the landed elite guard its position. I strongly endorse the ILO’s recommendation to bring the workers employed in agriculture and garments industry within the scope of minimum wages act.

Till Convention No 131 is ratified by Pakistan, the fixation of just and fair wages should be based upon the elements mentioned here. When these factors are objectively taken into consideration in determining the level of minimum wages, the existing figure of Rs15,000 per month may have to be doubled as advocated by the Pakistan Institute of Labour Education and Research in order to make it a living wage.

The writer is an industrial relations professional.

Published in Dawn, September 19th, 2017