ISLAMABAD: Pakistan Institute of Development Economics (PIDE), a state-owned think tank, has asked the government to increase the minimum wage by at least 12.5 per cent to Rs45,000 and ensure its rule-based enforcement, rather than a notional announcement, given the country’s economic conditions and inflationary pressures.

“In a period marked by persistent inflationary pressures, food and energy shocks, labour 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,” PIDE said in its policy note to the government ahead of FY27 budget.

This policy brief called for a shift from discretionary and symbolic annual wage announcements towards a transparent, rules-based framework grounded in official evidence and aligned with International Labour Organisation principles.

“Rather than relying on a single indicator or arbitrary adjustment, the proposed approach combines purchasing-power protection, worker-family adequacy checks, labour-market affordability, partial productivity sharing, and provincial implementation realities,” it said, adding that 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.

Govt think tank urges rule-based enforcement, not symbolic announcements

Last year, the Centre made a departure from even a symbolic minimum wage announcement, and Finance Minister Muhammad Aurangzeb then said businesses were unwilling to pay even the previous year’s minimum wage.

The institute said that the application of the minimum wage framework to official data from the Pakistan Bureau of Statistics (PBS) and the Ministry of Planning, Development and Special Initiatives, suggested “a national minimum wage reference benchmark of Rs45,000 per month for 2026-27, representing a 12.5pc increase over the current notified wage of Rs40,000.

“Minimum wage policy cannot remain a ceremonial annual exercise disconnected from economic realities and labour welfare. Pakistan now requires a credible wage governance system that balances worker protection, productivity, business sustainability, and macroeconomic stability within a transparent institutional framework,” said PIDE Vice Chancellor Dr Nadeem Javaid.

He emphasised that a country aspiring for export-led growth and social stability could not afford working poverty, wage uncertainty, and fragmented labour market governance. Sustainable economic reform must also translate into dignity, predictability, and economic security for workers, he added.

Under the proposed “national reference benchmark with provincial calibration” model, provinces would retain constitutional authority to notify wages at or above the national floor in accordance with local economic conditions.

Indicative provincial calibrations suggest Rs45,000 minimum wage for Punjab and Rs46,000 for Khyber Pakhtunkhwa and Sindh due to relatively higher urban living costs and formal-sector concentration, and Rs45,500 for Balochistan reflecting geographic and market access vulnerabilities.

Dr S. M. Naeem Nawaz, Professor of Economics at PIDE and co-author of the study, said: “A credible wage floor must be one that workers can realistically receive and provinces can realistically enforce. That requires moving beyond CPI-only or poverty-line-only approaches toward a hybrid methodology that respects affordability, compliance capacity, and the reality that nearly 80pc of Pakistan’s employment remains informal.”

Published in Dawn, June 3rd, 2026