The term “wage rate” is heard, yet many individuals lack a comprehensive understanding of its significance. Additionally, there’s often limited awareness that employers are legally obligated to pay their workers above a specified threshold for their services. If you’re seeking clarity on these concepts, you’re in the right spot.
In this guide, Graana.com will illuminate the concept of minimum wage and its determination across various provinces of Pakistan.
What is Minimum Wage?
Minimum wage refers to the legally established lowest amount of compensation that employers must pay their employees for the work performed within a specified jurisdiction and time. It serves as a fundamental labour law in Pakistan aimed at ensuring that workers receive fair remuneration for their efforts.
This, thereby, safeguards their basic economic well-being. Minimum wage laws are enacted by governments at the national, state, or provincial levels. Many factors such as prevailing economic conditions, cost of living, and social welfare considerations influence it.
The implementation of minimum wage laws addresses issues of income inequality, poverty alleviation, and social justice by establishing a floor for wages that all employers must adhere to. By setting a minimum standard for compensation, these laws aim to prevent the exploitation of vulnerable workers, promote economic stability, and stimulate consumer spending. Additionally, minimum wage policies are integral to fostering a more equitable and inclusive society, where individuals can earn a decent living and contribute to overall societal progress.
Prohibition Against Paying Below Minimum Wage
Employers must adhere to the government-declared minimum wage rate, irrespective of whether the employee falls under the category of unskilled labour. In Pakistan, many labourers are unaware of their minimum wage rights and may agree to work for wages lower than the established minimum rate. However, it is unlawful for any employer to demand or authorise payment below the minimum wage rate for any employee.
Even if there is a contractual agreement in place, employees have the right to receive at least the set minimum wage rate. They should also receive compensation and benefits exceeding those standards. Employers who fail to comply with the law and are found to be in violation may face penalties such as fines, imprisonment, or both. Additionally, they may be required to compensate employees for any shortfall in wages for the duration of their employment.
Minimum Wage in Punjab
In exercise of the powers conferred under section 6 of the Punjab Wages Act, 2019, the Governor of Punjab, on the recommendation of the Minimum Wages Board, specified the following minimum wages in Punjab, for unskilled adults and adolescent workers employed in all industrial and commercial establishments:
- Rs. 1230.77/- per day (for eight working hours);
- Rs. 32,000/- per month (for 26 working days)
Moreover, the following deductions shall be allowed to the employers for providing housing accommodation and transport facilities to the workers employed by them subject to agreement between the employer and the worker:
- Rs. 397/- per month (for providing housing accommodation)
- Rs. 85/- per month (for providing transport facility)
Furthermore, according to Rule 15 of the West Pakistan Minimum Wages Rules, 1962, female workers in a particular category must receive equal minimum wages for work of equivalent value as their male counterparts in the same category.
Additionally, the daily/weekly working hours, regulations concerning overtime work, work on weekly rest days, and entitlement to paid holidays for unskilled adult and adolescent workers within the specified category shall be governed by the Factories Act, 1934 (Act XXVI of 1934), Payment of Wages Act, 1936 (No. IV of 1936), and other pertinent labour legislations.
Lastly, the minimum wage rates for highly skilled, skilled, and semi-skilled workers employed across industries must not fall below the currently established minimum wage rates for unskilled adult and adolescent workers in the Province of Punjab.
Minimum Wage in Khyber Pakhtunkhwa
The minimum wage in the province of Khyber Pakhtunkhwa is as follows:
| Category of Workers | Minimum Rates of Wages | |
| Per day for eight hours of work | Per month [twenty-six (26) working days] | |
| Adult, unskilled, juvenile, and adolescent workers employed in industrial establishments and commercial establishments, whether registered or unregistered located in the province of Khyber Pakhtunkhwa | Rs. 1230.77/- (rupees one thousand two hundred thirty and seven only) seventy- -paisas | Rs. 32,000/- (rupees thirty-two thousand only) |
The minimum wage regulations stipulate the following conditions:
(a) Employers in industrial and commercial establishments must pay their workers wages at a rate no lower than the specified minimum wages outlined in the table above.
(b) Minimum wages should not be regarded as maximum rates, and existing wages exceeding the minimum shall not be decreased. Employers, however, have the discretion to pay higher wages, either independently or through collective agreements, considering factors such as higher grade, skill, experience, cost of living in specific areas, or other relevant considerations.
(c) Minimum wages for different worker categories must never fall below the minimum wages established in this regulation.
(d) Employers must adjust remuneration rates for piece-rate workers as necessary to ensure they receive wages not below the minimum wages specified in the table while working eight hours a day and twenty-six days per month.
Minimum Wage in Balochistan
The minimum wage standards are mandated for all unskilled adult and juvenile/adolescent workers across industrial and commercial establishments in Balochistan, irrespective of registration status.
Gender equality is underscored, with female workers entitled to the same minimum wages as their male counterparts for equivalent work categories. Working hours, overtime, rest days, and holiday conditions for these workers are governed by various labour laws. This includes the Balochistan Factories Act and the Balochistan Minimum Wages Act.
Furthermore, minimum wage rates for skilled and semi-skilled workers must not fall below those set for unskilled adult and juvenile workers. Employers, whether registered or unregistered, must pay these workers no less than the rates specified in the accompanying schedule.
Employers must review remuneration rates for piece-rated workers to ensure they earn at least Rs. 154/- per hour on any working day. These minimum rates serve as a baseline, with employers encouraged to pay higher wages based on various factors, including experience and local cost of living.
Temporary piece-rated workers and other time-based employees are also covered by these regulations, effective from the date specified by the Government of Balochistan under section 6 of the Balochistan Minimum Wages Act.
Benefits of Minimum Wage
Establishing a minimum wage rate holds paramount importance in shielding both skilled and unskilled labourers from exploitation. Violations of this standard can result in legal consequences for employers found paying below the designated minimum wage.
Increasing the minimum wage has the potential to stimulate economic growth as it puts more purchasing power into the hands of consumers, thereby fostering increased circulation of cash within the market and contributing to national prosperity.
By setting a baseline income level, the minimum wage provides a safety net for individuals amidst rising unemployment rates, ensuring they can meet their financial obligations. This measure also plays a crucial role in poverty reduction by ensuring that even those employed in low-skilled positions earn a livable income.
While some employers may prioritise profit maximisation by minimising expenses, minimum wage legislation acts as a safeguard against such practices. Conversely, offering wages slightly above the minimum not only cultivates goodwill among employees but also enhances their morale, leading to improved job satisfaction and performance, ultimately resulting in higher retention rates as evidenced by various studies.
Frequently Asked Questions (FAQs)
Following are the most common questions and their answers for minimum wage in Pakistan
What is the minimum wage in Pakistan?
The minimum wage in Pakistan varies depending on the province and industry but the federal government has announced Rs. 32000 as the minimum wage rate. The government periodically revise this rate.
Who determines the minimum wage in Pakistan?
Typically, provincial governments determine the minimum wage in consultation with relevant stakeholders, such as labour unions and employers’ associations.
How often is the minimum wage reviewed and updated in Pakistan?
The minimum wage is reviewed and updated periodically by provincial governments. This reflects changes in economic conditions and cost of living.
Do all workers in Pakistan receive the same minimum wage?
No, the minimum wage may vary based on factors such as the industry, geographic location, and type of employment.
Are there different minimum wage rates for different provinces in Pakistan?
Yes, each province in Pakistan may have its minimum wage rates, which provincial authorities determine independently.
Do employers have a legal requirement to pay the minimum wage in Pakistan?
Yes, employers must pay their workers at least the minimum wage set by the provincial government.
What happens if an employer pays below the minimum wage in Pakistan?
Employers who pay below the minimum wage may face penalties, fines, or legal action as per relevant labour laws in Pakistan.
Can employers waive or negotiate the minimum wage in Pakistan?
No, the minimum wage is a legal requirement and employers cannot waive or negotiate below the prescribed rate.
Do part-time workers in Pakistan qualify for the minimum wage?
Yes, part-time workers have an entitlement to receive the minimum wage for the hours they work, as long as they meet the eligibility criteria set by labour laws.
How does the minimum wage contribute to poverty alleviation in Pakistan?
The minimum wage helps uplift the living standards of low-income workers by ensuring they earn a decent income to meet their basic needs and support their families.
To read about the employees’ old age benefits, visit Graana Blog.
