Published in Dawn, March 21st, 2021
No aspect of labour economy is as divisive and as controversial as minimum wage. On one side are economists and employers who think minimum wage creates distortion in the labour market, leads to unemployment and lowers productivity. Add to this the anti-poor section who thinks the poor are lazy, illiterate and deserve low wages! On the other side are sociologists, political economists, pro-poor policymakers who think all human beings have a right to a decent living and thus need a wage floor to put their feet on the ground so as not to fall into the abyss of poverty.
Debate on minimum wage has intensified in the 21st century since the American economists challenged the classical view and presented empirical evidence that minimum wage increases do not have adverse effect on employment in Myth and Measurement: The New Economics of the Minimum Wage in 1995. Factors which impact productivity are workers’ education and skills and technology. However, these topics, worthy of greater debate in Pakistan, do not receive as much attention or ignite sentiments as does minimum wage.Continue reading