Repeal of Unskilled Minimum Wage Ordinance 1969
The International Labour Organisation (ILO) has urged Pakistan to repeal the Unskilled Minimum Wage Ordinance 1969 in order to avoid inconsistencies in wage-setting mechanisms for unskilled workers.
In its recent report on the ‘minimum wage setting, implementation and working conditions in the formal and informal sectors of the garment industry in Pakistan’, the ILO asked the federal government to ratify the Minimum Wage Fixing Convention of 1970, and suggested the provincial governments to implement a minimum wage system that is consistent with the 1970 Convention.
The provincial governments should abolish the express exclusions contained in the minimum wage legislation, including those excluding agricultural workers, public sector workers, and workers in charitable enterprises.
Minimum wage legislation does not expressly exclude workers in informal sector enterprises or those holding informal jobs. Provincial governments should, therefore, interpret the legislation in a manner consistent with Convention No. 131 (1970). Interpretations that expand the minimum wage coverage would be preferable.
The report also asked the ILO to commission research on the role of the judiciary, labour tribunals, and prosecutors in the enforcement of labour standards; mapping of indirect sourcing and sub-contracting in the textile and garment sector, particularly in hotspots such as Faisalabad, Sialkot, Lahore and Karachi.
Under the current legislation, provinces require the Minimum Wage Boards to review minimum wage levels periodically, if there are changes in “economic conditions and cost of living and other relevant factors”.
However, the legislation is silent on the elements to be taken into consideration, and there are no agreed data sets or data sources to be used to determine economic conditions, costs of living, and other economic conditions.
Since the 18th Amendment to the Constitution, minimum wage setting has come within the sphere of provinces, while the federal government retains its role in the Islamabad Capital Territory. The provinces and Islamabad Capital Territory governments exercise their powers in respect of wage setting under the 1961 Minimum Wage Ordinance for West Pakistan or newly enacted provincial legislation.
The continuing applicability of the West Pakistan Minimum Wage for Unskilled Workers Ordinance 1969 has been debated. The legislation has not been expressly repealed, altered or amended. However, the federal government has no residual power in relation to this area, as it would be unconstitutional for it to legislate in a devolved area.
Minimum wage legislation covers all workers in industry and commercial establishments but expressly excludes public sector employees, agricultural workers, coal miners, workers in charitable enterprises, and small enterprises that employ up to nine (9) people in Khyber Pakhtunkhwa.
Minimum Wage Boards have been established in each province and in the Islamabad Capital Territory under the 1961 Minimum Wage Ordinance or equivalent provincial legislation. These boards have the role of recommending minimum wage rates for unskilled workers and skilled workers in scheduled industries, as well as for unskilled and juvenile workers. They also recommend adjustments after a minimum of one (1) year but at least once every three (3) years.
Although Pakistan has ratified the Equal Remuneration Convention of 1951, it has not yet taken any significant steps in implementing the Convention. There is no law currently in force that prohibits discrimination based on sex or gender in relation to wages. The legislation is silent as to the purpose of a statutory minimum wage and there is no conceptual agreement among stakeholders as to the purpose of minimum wages in Pakistan.
Despite efforts to implement technical criteria in minimum wage settings, it is a political process in which Minimum Wage Boards are sidelined. Even in provinces where detailed work is undertaken by Minimum Wage Boards, figures are replaced by those announced in the federal budget.
The report also went on to analyse the legal and policy frameworks and the implementation of minimum wages in Pakistan, with a particular focus on the textile and garment sectors.