The Pakistan Institute of Development Economics (PIDE) has proposed increasing the national minimum wage to Rs45,000 per month for the fiscal year 2026-27, representing a 12.5 percent rise from the current Rs40,000. This recommendation is part of a broader move towards an evidence-driven wage governance framework.
In its Policy Viewpoint No. 62, titled “Reforming Minimum Wage Determination in Pakistan: From Wage Announcements to Wage Governance,” PIDE presents a hybrid model that integrates factors such as purchasing power protection, family living expenses, labor market conditions, and productivity, while aligning with the principles of the International Labour Organization (ILO). The proposal aims to replace the existing practice of annual wage announcements with a transparent, rule-based mechanism.
Using data from the Pakistan Bureau of Statistics and the Ministry of Planning, the study establishes Rs45,000 as a national reference benchmark. PIDE Vice Chancellor Dr. Nadeem Javaid emphasized the necessity of reform, stating that minimum wage policy should no longer be a ceremonial yearly exercise detached from economic realities and labor welfare. Dr. Javaid, who also serves on the Planning Commission, highlighted the need for a credible system that balances worker protection, business sustainability, and macroeconomic stability. He added that a country pursuing export-led growth cannot tolerate working poverty or wage uncertainty.
In a significant development, the framework proposes a “national reference benchmark with provincial calibration” approach. This allows provinces to set minimum wages at or above the national floor based on local economic conditions. Indicative provincial figures include Rs45,000 for Punjab and Khyber Pakhtunkhwa, Rs46,000 for Sindh, and Rs45,500 for Balochistan.
Professor Dr. S.M. Naeem Nawaz, co-author of the study, underscored the importance of realism in wage setting. He pointed out that nearly 80 percent of Pakistan’s workforce is employed informally, making it essential that the wage floor be both achievable for workers and enforceable by provinces. The report recommends a phased enforcement strategy, beginning with public procurement, government contracts, and large formal enterprises, before gradually extending to small and medium-sized businesses, agriculture, and domestic work.
Moreover, the proposal calls for provinces to publish annual implementation reports to enhance transparency and accountability. PIDE has submitted this proposal to the Planning Commission, urging the adoption of the Rs45,000 benchmark alongside the comprehensive governance framework. This move aims to address inflationary pressures, rising food insecurity, and the need for improved social stability across the country.
