The Pakistan Institute of Development Economics has recommended a national minimum wage of Rs. 45,000 per month for FY2026-27 — a 12.5 percent increase over the current notified wage of Rs. 40,000 — as part of a broader push to reform how minimum wages are set and enforced across the country.
The recommendation comes in PIDE’s Policy Viewpoint No. 62, which proposes a hybrid wage-setting framework aligned with International Labour Organization principles. The model is designed to balance worker purchasing power, household adequacy, labour market affordability, productivity sharing and the practical realities of provincial implementation.
PIDE Vice Chancellor Dr. Nadeem Javaid emphasized the urgency of the reform, saying: “Pakistan needs a credible wage governance system that balances worker protection, productivity, business sustainability, and macroeconomic stability within a transparent institutional framework.”
He added that a country aspiring for export-led growth and social stability cannot afford working poverty, wage uncertainty and fragmented labour market governance. Sustainable economic reform, he stressed, must translate into dignity, predictability and economic security for workers.
Four Key Pillars of the Proposed Framework:
The proposed system rests on four foundations — transparent evidence-based wage setting, bounded provincial adjustment, effective enforcement mechanisms and annual reporting on outcomes.
Province-Wise Recommended Wages:
Under the proposed model, provinces would retain the constitutional authority to set wages at or above the national floor based on local economic conditions. Indicative benchmarks suggest Rs. 45,000 for Punjab and Khyber Pakhtunkhwa, Rs. 46,000 for Sindh due to higher urban living costs, and Rs. 45,500 for Balochistan, reflecting geographic and market access challenges.
Why This Reform Is Urgently Needed:
Co-author Dr. S. M. Naeem Nawaz pointed out that with nearly 80 percent of Pakistan’s workforce remaining in the informal sector, a credible wage floor must be both realistic for workers to receive and practical for provinces to enforce. The proposed framework prioritises phased enforcement — starting with public procurement, government contracts and large registered firms before gradually extending to SMEs, agriculture and domestic work.
The study also highlights alarming economic indicators that make this reform increasingly urgent. Average inflation stood at 6.19 percent during July to April FY2026, April 2026 year-on-year inflation reached 10.9 percent, and household food insecurity rose to 24.35 percent in 2024-25 — up from 15.92 percent in 2018-19.
PIDE has submitted the proposed framework to the Planning Commission of Pakistan for consideration, with the goal of developing a coordinated, transparent and sustainable minimum wage governance system for the country.
