Sindh industrialists slam raise in minimum wage to Rs25,000

KARACHI: Industrialists have criticised the Sindh government over the rise in the minimum wage to Rs25,000 and termed it unconstitutional, a statement said on Wednesday.

“The industries of Sindh, particularly of Karachi, are highly aggrieved and perturbed by the controversial move of the Sindh government to increase [the] minimum wage from Rs17,500 to Rs25,000 without following [the] due process of law and in contrary to the provisions of [the] Sindh Minimum Wage Act 2015 and [the] ILO’s Minimum Wages Fixation Convention 1970, which has deprived the industries of Sindh from [a] level-playing field not locally but also globally,” a joint statement issued by various chambers and associations said.

“This is making them uncompetitive and unviable to operate due to exorbitant upshot in the cost of manufacturing, as wage is the major component in the cost,” it added.

The Sindh government’s move appears to be unconstitutional, which has compelled the industrialists to plan and shift their industries to other provinces or abroad. Resultantly, it will severely impair the national economy, as the 54 per cent share of industries of Karachi in national exports will face a downfall and the 67 per cent revenue generated mainly from Karachi for the national exchequer and 95 per cent revenue for the Sindh Revenue Board will also decline.

“The gravity of the situation shall lead to massive layoffs, unemployment and law and order situation,” it warned.

The joint statement has been issued by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Karachi Chamber of Commerce and Industry (KCCI), Pakistan Hosiery Manufacturers and Exporters Association, SITE Association of Trade and Industry, Landhi Association of Trade and Industry, North Karachi Association of Trade and Industry, Pakistan Readymade Garments Manufacturers and Exporters Association, All Pakistan Textile Processing Mills Association, Pakistan Cloth Merchants Association, Pakistan Knitwear and Sweaters Exporters Association, Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association, Pakistan Bedwear Exporters Association and other FPCCI-affiliated chambers and associations of the province.

The trade organisations see the Sindh government’s decision dated July 9, 2021, to fix the minimum wage of Rs25,000 as unjustified and executed in non-compliance of the due process of law, contrary to the Sindh Minimum Wage Act 2015 and sidelining the jurisdiction of the Minimum Wage Board and without consulting the stakeholders.

The fixation of the minimum wage of Rs25,000 will proportionately increase and multiply the variable cost on account of the employers’ contribution in the Employees Old-Age Benefits Institution (EOBI) and the Sindh Employees Social Security Institution.

The trade organisations articulated that the Sindh government has created huge division and wide disparity by fixing the minimum wage of Rs25,000, whereas the minimum wage in the federal and Punjab province is Rs20,000 and in Khyber-Pakhtunkhwa and Balochistan is Rs21,000.

The minimum wages fixed by Sindh is not a justice to the employers. The manpower resource is a fundamental requirement and the cost for the manufacturing sector and the same cannot be subject to increase 43 per cent in one go. The prices of other commodities such as gas, electricity, petrol and diesel, etc, are uniform across Pakistan. How can the industry survive with different minimum wages in the provinces?

Exports are the backbone of the economy and 54 per cent of exports of Pakistan are from Karachi alone, the minimum wage in competing countries was already lower, compared with the current rate of minimum wage in Pakistan.

In Bangladesh, the minimum wage is $94 (Rs15,000), 14.28 per cent lower than Pakistan. The enhanced minimum wage will not only hamper the cost of manufacturing of export industries and make them uncompetitive in the international market but will also miss the target of creating import substitute industry in Pakistan.

The Covid-19 also dealt a fatal blow to the industries of Sindh due to the closure of businesses for 75 days in the beginning and 10 days during the Eid-ul-Fitr holidays.

In this scenario, the industries are struggling hard to overcome the hardships for complete revival. The one-sided imposition of minimum wage of Rs25,000 over the Sindh industries will push the industries towards complete closure.

The trade organisations also appealed to the Sindh government to review and reconsider the matter of minimum wage as per the relevant laws, rules and procedures in the best interest of the province, people of and industries of Sindh, otherwise industries will be forced to shift to other provinces.

They also fear that if the provincial government does not review its decision, no new industries will be established in the province, which will lead to mass unemployment and huge decline in the revenue collection

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