IN Pakistan, the dual challenges of rising poverty rates and inflationary pressures have become increasingly alarming. According to estimates from the Multidimensional Poverty Index (MPI) in 2023, a staggering 38.3% of the country’s population is living below the poverty line. Shockingly, 21.5% of these individuals are experiencing severe multidimensional poverty, which encompasses various aspects such as health, education, and living standards.
Compounding this issue is the persistent inflationary environment in Pakistan, where the inflation rate hovers around 20 to 30%. This surge in prices has rendered essential food items increasingly unaffordable for the average citizen, exacerbating the already precarious conditions faced by many.
Given the gravity of these challenges, it is imperative that the government prioritizes the implementation of living wages as part of its strategy to address poverty and inflation. Unlike minimum wages, which may fall short of meeting basic needs, living wages encompass all three dimensions of the MPI, namely health, education, and living standards.
A living wage encompasses remuneration that enables workers to maintain a decent standard of living for themselves and their families. This includes covering essential expenses such as food, water, housing, education, transportation, clothing, healthcare, and savings for unexpected events. Article 23(3) of the Universal Declaration of Human Rights underscores this principle, advocating for just and favourable remuneration to ensure a dignified existence for workers and their families.
Moreover, a living wage is pivotal for SDGs, directly impacting poverty reduction and economic growth (Goals 1 and 8), while also promoting gender equality and reducing inequalities (Goals 5 and 10). Nonetheless, in countries like Pakistan, minimum wages often fall short of providing a living wage due to factors such as limited awareness of labour rights, inadequate labour inspection services, job insecurity, and widespread informal employment with daily wage payments.
Addressing the crucial need for living wages, the Wage Indicator Foundation and GIZ have introduced the Living Tariff Tool in Pakistan. This tool offers a comprehensive solution for gig workers, including those working in location-based or online platforms. It takes into account various factors such as health costs, social security, taxes, and hidden expenses to calculate daily, weekly, monthly, and yearly wage sums.
The Living Tariff Tool stands out for its real-time relevance, with quarterly data updates reflecting economic changes. This dynamic approach empowers workers to make informed decisions, especially during periods of high inflation. Moreover, implementing living wages necessitates a collaborative approach involving government, academia, and industry. The government’s role is central, establishing and enforcing living wage standards through regulatory frameworks, labour laws, incentives for businesses, and fostering dialogue among stakeholders.
Academic institutions contribute to the implementation of living wages through research, education, and advocacy. They can conduct studies to assess the impact of living wages on various sectors of the economy, analyze best practices for implementation, and develop training programs to educate businesses and workers. Furthermore, academic researchers can serve as independent evaluators, providing evidence-based recommendations to policymakers and industry leaders.
Industry, on the other hand, plays a crucial role in implementing living wages within the private sector. Businesses are responsible for adhering to wage regulations, ensuring that their employees receive fair compensation, and fostering a culture of ethical labour practices. Industry associations and chambers of commerce can also promote living wage standards among their members, providing guidance and resources to support compliance.
In conclusion, enforcing living wages is essential for addressing the twin challenges of poverty and inflation in Pakistan. By adopting a collaborative approach and leveraging innovative tools like the Living Tariff Tool, policymakers, academia, and industry can work together to ensure fair compensation for workers and promote sustainable economic development.
—The writer is a contributing columnist.
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