THE corporate sector of Pakistan has largely preferred to ignore Prime Minister Imran Khan’s appeal to increase workers’ wages. Good pay-masters ignored as they believe the big ask is not directed towards them, while the rest consider it to be a political statement, not meant to be actionable advice.

The heads of private-sector bodies, such as the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and the Karachi and Lahore chambers, chose not to respond to Dawn query on the matter, while celebrity businessmen responded diplomatically.

On their part, industry-watchers consider the prime minister’s request rather rhetorical and do not expect even the most pliant of businesses to pay heed.

Businesses leaders from Faisalabad claimed that the wage situation had already improved. The multinationals operating under human resource guidelines of their principals implement periodical pay raise and offer a decent workplace environment to their staff. However, generally speaking, workers are made to share the burden in stressful times but are often excluded from the benefits of success in the national labour market that has always been employer-dominated. When businesses suffered last year in the wake of the Covid pandemic, workers took the beating, but indicators suggest they have been ignored in the current recovery phase.

The private sector has generally turned a deaf ear to the prime minister’s recent appeal to increase wages, arguing that it was an infringement on their freedom

Without directly commenting on the recent Imran Khan speech (Nov 2) or the merit of his plea to the private sector, the elite opposed the very idea which they feel infringe on their freedom. None of the corporate heads approached showed any inkling to respond to the prime minister’s call regarding pay-raise.

Fearing further action by the government, some started playing victims when quizzed. As always, they amplified the scale of their own challenges. Besides routine complaints, like uncertainty, inconsistency, administrative lethargy, expensive utilities, weak infrastructure and tax harassment, the bosses hammered low labour productivity as a justification of the current wage rates. They argued that underperforming workers compel the employers to induct extra people that burden companies’ financials and blunt their competitive edge.

Quite a few businessmen deflected questions on the weightage of wage bill in the overall cost of production and its ratio to annual revenue excluding pay and perks of the executive cadre. The absence of relevant data and criterion to judge the sector-wise merit of pay structures weaken the argument of unfair wages.

Iftikhar Ahmed, a labour expert based in Islamabad, and labour economist Dr Lubna Shahnaz Umer confirmed that the relevant work in this regard has yet to start. Senior sources in the relevant federal ministries and provincial departments could not even mumble a word on the matter.

“No, as far as I know, the government has never made an effort to gather structured information on salaries in different occupations or develop an evidence-based strategy to ensure fair pay scales,” said a senior ministry official privately.

Iftikhar Ahmed mentioned the findings of the Wageindicator Foundation that projected Rs28,700 as the minimum pay for a standard family. He recommended scaling up the minimum wage to that level and to ensure its implementation as “I don’t think the employers are going to follow up on the prime minister’s appeal”.

The government’s role in regulating the private sector in this regard is currently limited to the minimum wage announcement.

“It is naïve to expect private companies to offer pay raises on a verbal plea. Unless labour market dynamics change, and the government or trade partners exert pressure or the unionised workers learn to mount pressure effectively, I foresee no change in wages”, commented an analyst.

Musadiq Zulqarnain, Chairman and CEO of Interloop Ltd, did not see the need for the prime minister’s nudging to care for workers. “I can’t speak for others. To me, the employees are the responsibility of the employers. It is unfortunate that many employers don’t even pay the legally binding minimum wages and guaranteed safeguards of overtime and pension etc. The trend might be more rampant in Pakistan, but the workers are not given their due in other Asian and some Western countries as well.

“Sadly in Pakistan, the attitude of most businesses is to make money by any means. This includes depriving workers of their legal rights, tax evasion etc. I personally think that being ethical is not only the right approach but also beneficial in the long run. The reason for low productivity in Pakistan is lack of training and low wages,” he said while supporting a uniform minimum wage rate across Pakistan determined by an independent body.

Saquib H. Shirazi, CEO, Atlas Honda, said forward-looking establishments share fruits of success with their employees without the government’s intervention. “Labour-intensive small firms tend to be stingy, but larger players, with 30-40,000 employees, opt for variable pay incentives to ensure retention,” he said.

“With rising exports and the emergence of the ‘new economy’, job options have increased for some. If not satisfied, skilled workers are more mobile, often opting for self-employment or switching jobs. A combination of legislation and allowing the interplay of market forces is perhaps where the global best practices lie,” he opined.

Ehsan Malik, CEO of the Pakistan Business Council, also believed that the wage situation was improving. “As the impact of Covid subsides and employment choices increase, the employers are paying competitive rewards to attract and retain quality talent. Inflation is one of the factors taken into account in shaping employment packages. I am aware of employers offering mid-year increases to cover the rising cost of living.

“However, businesses also need to cut costs and focus on productivity to remain competitive. This is all the more important for exporters who need to benchmark against regional labour, energy and other costs. Some of the upturn in Pakistan’s exports is opportunistic as foreign buyers switched out of Covid-impacted alternatives. Exporters will only sustain the trend by remaining competitive. Pakistan’s export basket is primarily in low value-added items in which price plays the dominant role. Any unrealistic wage expectations will result in killing the goose that lays the golden egg,” he warned.

“Hopefully, global commodity costs will subside and bumper local harvests will offer some relief from inflation. The focus must be on addressing the cause rather than the effect of the fundamental flaws.

“Businesses also need to brace for higher energy costs and the rumoured increase in taxes. Their domestic sales and margins will also suffer from depressed demand due to reduced disposable incomes and the possible increase in borrowing costs. Already the cash margin requirements on import of industrial inputs are affecting cash flow and costs,” he concluded.

Khurram Mukhtar, CEO of Sadaqat Ltd, contested the perception of falling wages. He told Dawn that lower-cadre salaries had increased by 15 per cent in the current fiscal year, whereas the middle and higher tiers had seen performance-based increases.

Published in Dawn, The Business and Finance Weekly, November 15th, 2021