Minimum Wage in Pakistan – Frequently Asked Questions

Is there separate minimum wage legislation in Pakistan?

Pakistan used to have two laws in the realm of minimum wages before 2010. With the 18th Constitutional Amendment in 2010 and with devolution of the subject of "Labour" fully to provinces, now federal government has no mandate in declaring the minimum wages for unskilled workers. Minimum Wages for Unskilled Workers Ordinance, 1969 was used by the Federal Government to declare minimum wages prior to the devolution. Now only provincial governments can declare minimum wages and they do so by using the Minimum Wages Ordinance, 1961 Minimum Wages Rules, 1962 have also been promulgated in accordance with the Ordinance 1961. The Minimum Wages Ordinance, 1961 is still applicable in Islamabad Capital Territory and the Province of Balchistan. The Punjab Province has adapted 1961 Ordinance in 2012 while the Khyber Pakhtunkhwa province has promulgated its new legislation, i.e., The Khyber Pakhtunkhwa Minimum Wages Act in 2013. Sindh Province also has enacted its own Minimum Wage Act in 2016.

Do one or more minimum wage/s, exists in Pakistan?

There used to be a single national minimum wage for unskilled workers in Pakistan prior to the devolution in 2010. With the devolution of the subject of labour to the Provinces, different minimum wage rates prevailed. This year, however, all provinces have set the same minimum wage rate for unskilled work, i.e., PKR 14,000 per month. Minimum wages for semi-skilled and skilled workers are determined by the Minimum Wage Boards constituted under the Minimum Wages Ordinance, 1961. The Detailed Minimum Wage notifications for different industries based in the provinces are issued later by the provincial labour departments.

At what level are minimum wages determined?

Minimum Wages are determined at the provincial level. Section 4 of Minimum Wage Ordinance, 1961 allows Minimum Wage Boards, for each province, to recommend minimum wage rates for adult unskilled workers and juvenile workers employed in industrial undertakings. Section 5 of MW Ordinance gives the power to each province's MW Board to fix MW rate even for workers in industries where there is no effective regulation of wages. The list of industries covered also varies from province to province. The Government can fix the wage rate for skilled workers because Section 2(9) defines worker as "skilled or unskilled, intellectual, technical, clerical, manual, or other work including domestic work for hire or reward". So, it has the authorisation to do that.

On what basis is/are minimum wage/s declared?

According to section 5 (3) of minimum wages Ordinance, 1961, minimum wages Board can fix minimum wages for time work, piece work, overtime work and work on weekly rest day and paid holidays. The time rates recommended by the Board may be on hourly, daily, weekly or monthly basis.

In case of daily/weekly/monthly minimum wage, are number of working hours considered while fixing Minimum Wage?

Nothing relating to number of hours is mentioned in the MW Ordinance, 1961. However, as per Factories Act, 1934 (Section 34 and 36), no adult worker shall be allowed or required to work in a factory for more than 48 hours a week or 9 hours a day.

Who all are involved in setting minimum wage?

Section 3 of the MW Ordinance, 1961 requires the provincial governments to establish a minimum wages board that will recommend minimum wage rates. The Minimum Wages Board comprises of a Chairman, an independent member and one member as employer's representative and one as workers representative. All the members are appointed by the provincial government. Provincial government also have to appoint one member as representative of employers and workers each at the industry level for all the industries for which minimum wages have to be notified.

How are upratings (adjustments) of minimum wage/s decided upon?

As per section 7 of the MW Ordinance, 1961, MW Board can review its minimum wage recommendations if there are any changes in economic conditions or the cost of living and further recommend it to Provincial Government. However, in norm, it is a political decision and in the recent past, provinces have tried to increase minimum wages just to outdo the other provinces or the federal government.

Which are the components of minimum wage in Pakistan?

In accordance with section 2(g) of the Minimum Wages for Unskilled Workers Ordinance 1969, wages have both the fixed and variable components. These include dearness allowance, house rent, conveyance allowance, cost of living allowance and special allowance. All of these are variable components. Above these variable allowances, MW includes also the fixed allowances.

How frequently is the fixed component of minimum wage updated?

As per the section 7 of minimum wages Ordinance, 1961, no recommendation regarding review of minimum wages will be considered before 1 year and after 3 years. Only under very special circumstances revision of before a year can be considered. However, it is important to note that this is only for a recommendation that Board sends on its own to the Government. Government can send the reference to the Board anytime for revision of wages.

What are the yardsticks on which minimum wage revisions are based?

According to section 7 of the minimum wages Ordinance, 1961 minimum wage rates are reviewed if there is any change in the economic conditions or cost of living or other relevant factors. Cost of living here can be interpreted as consumer prices because whenever there was a change in level of consumer prices, minimum wage rates were revised (raised). Economic conditions can be interpreted as decent living standards.

What is National Poverty line?

National Poverty line in Pakistan is PKR 3,030.32. Click here to know the national poverty line in context with Minimum Wage, living wages and actual wages. Select the currency (Euro or national currency) to know national poverty line.

When was poverty line last updated?

Poverty line was updated in 2016.

What is the incidence of MW(s) in the national labour force (wage earners only)?

10% of the wage earners are earning below the poverty line.

Who regulates minimum wage compliance?

As per section 21 and 22 of West Pakistan minimum wage Rules, 1962 government may appoint labour inspectors to regulate and inspect the compliance of minimum wages by making as many visits to industries. Governmental Body/Authority - As per section 9-A of MW Ordinance, 1961 the provincial government may appoint any person as the Authority for the area to hear and decide on all the claims (complaints) regarding non-payments or delay in the payment of wages. Provincial Industrial Relations laws require every industry to have a collective bargaining agent who deals with matters relating to employment, work conditions or enforcement of any right.

Which legal sanctions can be applied if compliance is lacking?

According to section 9(3) of minimum wages Ordinance, 1961, the following penalties are specified - either upto 6 months imprisonment or a fine or even both along with the payment of arrears made to the employee.

Are employer and/or trade union representatives involved in compliance procedures?

According to the National & Provincial Industrial Relations Acts, Collective Bargaining Agent (registered trade unions) is responsible for dealing with matters relating to workers rights guaranteed by law.

To whom/where can individuals complain, if they think they are earning less than minimum wage?

As per section 9-A(2) of MW ordinance 1961, if no action has been taken by the employer (in case of delay of payment) within 6 months of the complaint, the worker can appeal to the Authority appointed by the provincial government. As per the section 23 of the West Pakistan Minimum Wage Rules 1962, a worker can send his complaint regarding non compliance of minimum wages to the government through Inspectors or any authorized official. As provided under the National & Provincial Industrial relations Acts, a worker can bring his complaint relating to any right guaranteed to him by law, to the Collective bargaining agent. Collective Bargaining Agent is a registered trade union and is elected representative of the workers in an enterprise. Similar provisions are found are Khyber Pakhtunkhwa 2013 Act, Punjab 2012 Minimum Wages Act and Sindh Minimum Wage Act 2015, enacted in 2016.