The Pakistan Institute of Development Economics (PIDE) has urged the federal government to increase the minimum wage to Rs. 45,000/month and work to ensure its rule-based enforcement rather than merely announce it, citing prevailing economic conditions and inflationary pressures.
“In a period marked by persistent inflationary pressures, food and energy shocks, labor market informality, and rising household vulnerability, minimum wage policy must evolve into a credible macro-social policy instrument capable of protecting workers while remaining economically sustainable and administratively enforceable,” the state-run think-tank said in a policy note issued ahead of the upcoming budget.
The policy brief also called for a shift from discretionary and symbolic annual wage announcements to a transparent, rules-based framework grounded in official evidence and aligned with International Labor Organization principles. “Rather than relying on a single indicator or arbitrary adjustment, the proposed approach combines purchasing-power protection, worker-family adequacy checks, labor-market affordability, partial productivity sharing, and provincial implementation realities,” it said.
PIDE further said the proposed reform architecture was based on four linked elements: transparent evidence-based wage setting, bounded provincial calibration, credible enforcement and compliance mechanisms, and annual reporting on wage-setting evidence and implementation outcomes.
The organization’s advice follows the federal government maintaining the minimum wage last year, with Finance Minister Muhammad Aurangzeb arguing businesses were unwilling to pay even the previous year’s minimum wage. At the same time, the minister defended a nearly 300% increase to the salaries of MNAs and senators, which was implemented with retrospective effect. The current notified minimum wage is Rs. 40,000/month.
“Minimum wage policy cannot remain a ceremonial annual exercise disconnected from economic realities and labor welfare,” emphasized PIDE Vice Chancellor Nadeem Javaid. “Pakistan now requires a credible wage governance system that balances worker protection, productivity, business sustainability, and macroeconomic stability within a transparent institutional framework,” he added.
According to Javaid, any country aspiring for export-led growth and social stability cannot afford working poverty, wage uncertainty, and fragmented labor market governance. Sustainable economic reform must also translate into dignity, predictability, and economic security for workers, he added.