Minimum Wages in the Time of Globalization

Early June is the time the workers in Pakistan hope for some respite in managing their meager household budgets and look forward to a raise in minimum wage announced with the annual budget of the country. The minimum wage for unskilled workers currently in Punjab, Sindh and Khyber Pakhtunkhwa is Rs10,000 per month, while in Balochistan it is Rs9,000.

With the current family size of 6.8 and 1.5 earning members per family in Pakistan, a monthly income of Rs10,000 translates into Rs73.52 (less than one dollar) per person per day in the household. The picture gets gloomier when we look at the national average monthly wages reported in Pakistan Labour Force Survey 2012-2013 — 20pc workers earn up to Rs5,000 and 41.73pc make an income between Rs5,000 to Rs10,000. With a 9pc inflation rate, minimum wages in real terms amount to even less.

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GSP-Plus and Labour Compliance

Previously a beneficiary of the tariff cuts under the Generalised System of Preference, Pakistan is one of the 10 countries which have been granted the Generalised System of Preference Plus (GSP-Plus) status by the European Union from January 2014. The GSP-Plus allows developing countries tariff-free export of their products to European markets. Under this special incentive trade arrangement, presumably for ‘sustainable development and good governance’, Pakistan fulfils the criteria for vulnerability. As defined by the EU, vulnerable (in terms of trade) are the countries which lack diversification and insufficient integration within the international trading system.

The GSP-Plus is conditional to ratification of, and compliance to, 27 international standards and covenants on labour, human and women’s rights, environment, narcotics and corruption. These 27 standards comprise eight ILO core labour conventions, six UN conventions/covenants on human rights, and gender and racial discrimination, nine UN conventions/protocols on environment and four UN conventions on narcotics and corruption.

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