In a significant development, the Sindh Government’s decision to unilaterally increase the minimum wage from Rs17,500 to Rs25,000 has stirred discontent and alarm within the industrial sector, particularly in Karachi.
Industry leaders assert that this decision, made without due process and seemingly in violation of existing laws, is poised to have severe repercussions on the economic landscape, potentially leading to job losses, unemployment, and a decline in revenue.
The move, deemed controversial by industry stakeholders, is seen as unconstitutional and not in alignment with the provisions of the Sindh Minimum Wage Act 2015 and the International Labour Organization’s (ILO) minimum wages fixation convention of 1970. Industry representatives argue that the abrupt hike in the minimum wage will render Sindh industries uncompetitive and economically unviable, both domestically and globally.
The Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Karachi Chamber of Commerce & Industry (KCCI), Pakistan Hosiery Manufacturers & Exporters Association, and various other trade organizations issued a joint statement expressing their concern. They highlighted that the industries in Sindh, particularly in Karachi, will face increased manufacturing costs due to the substantial rise in wages, a critical component of overall production expenses.
One of the key concerns raised by industry leaders is the potential exodus of businesses from Sindh to other provinces or even abroad as a result of the increased operational costs. This migration could have severe implications for the national economy, as Karachi currently contributes 54% to national exports, 67% to national revenue, and 95% to the Sindh Revenue Board.
The trade organizations argue that the decision lacks justification, as it was executed without following due legal processes, ignoring the Sindh Minimum Wage Act 2015 and sidelining the jurisdiction of the minimum wage board. Moreover, the employers’ representatives were allegedly not consulted in the decision-making process.
Critics of the decision point out that fixing the minimum wage at Rs25,000 creates a significant disparity when compared to other provinces. While the minimum wage in the federal and Punjab provinces is Rs20,000, in KPK and Baluchistan, it is Rs21,000. This inconsistency in wage rates, coupled with the already challenging economic environment due to the COVID-19 pandemic, is viewed as a potentially disastrous blow to industries in Sindh.
Industry leaders emphasize that the enhanced minimum wage will adversely impact export-oriented industries, making them less competitive internationally. They argue that the minimum wage rates in competing countries, such as Bangladesh, are considerably lower, posing a significant threat to the competitiveness of Pakistani industries in the global market.
The trade organizations collectively appealed to the Sindh Government to reconsider the decision and review the minimum wage in accordance with existing laws and procedures. They underscored the potential dire consequences, including mass unemployment and a decline in revenue generation, if the decision is not revisited in the best interest of the people of Sindh and the industries operating in the province.
