ISLAMABAD: The Pakistan Institute of Development Economics (PIDE) has formally recommended to the government to fix the minimum wage at Rs45,000 per month from the existing level of Rs37,000. This current minimum wage has not yet been fully implemented across many federal and private jurisdictions.
Applying this framework to official data from the Pakistan Bureau of Statistics (PBS), the Ministry of Planning, Development, and other government sources support a recommended national minimum wage reference benchmark of Rs45,000 per month for FY2026–27. This benchmark represents the administratively rounded policy application of the hybrid methodology and reflects purchasing-power protection, worker and household adequacy, partial productivity sharing, labour-market affordability, and implementation feasibility.
The framework further recommends a “national reference benchmark with provincial calibration” model. Under this approach, the federal government would publish a transparent methodology and national reference benchmark. At the same time, provinces would retain constitutional authority to notify wage rates at or above that benchmark, based on local labour-market evidence, affordability conditions, and enforcement capacity. Indicative provincial calibrations suggest Rs45,000 for Punjab and KP, Rs46,000 for Sindh, and Rs45,500 for Balochistan, subject to provincial affordability, sectoral, and compliance reviews.
The central contribution of this policy brief is therefore institutional rather than merely numerical. It proposes a minimum wage governance system under which the national benchmark is derived transparently, provincial adjustment is evidence-based and bounded, compliance is progressively strengthened through phased enforcement, and annual reporting holds institutions accountable for whether workers actually receive the notified wage.
Speaking on the significance of the initiative, Dr. Nadeem Javaid, Vice Chancellor of PIDE and Member of the Planning Commission of Pakistan, stated: “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.”
The proposed architecture rests on four interconnected pillars: transparent evidence-based wage setting, bounded provincial calibration, credible enforcement mechanisms, and annual reporting on implementation outcomes. 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 for Punjab and Khyber Pakhtunkhwa, Rs46,000 for Sindh due to relatively higher urban living costs and formal-sector concentration, and Rs45,500 for Balochistan reflecting geographic and market access vulnerabilities.
Dr. SM Naeem Nawaz, Professor of Economics at PIDE and co-author of the study, stated: “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 80 percent of Pakistan’s employment remains informal.”
He added: “Our framework prioritises phased and realistic enforcement — beginning with public procurement, outsourced government contracts, and large registered establishments before gradually extending compliance coverage to SMEs, agriculture, and domestic work.”
The study argues that minimum wage policy today carries implications far beyond labour departments, directly influencing household purchasing power, poverty vulnerability, labour informality, domestic demand, productivity incentives, and broader social stability.
With period-average inflation recorded at 6.19 percent (July-April FY2026), April 2026 year-on-year inflation reaching 10.9 percent, and household food insecurity increasing to 24.35 percent in 2024–25 compared to 15.92 percent in 2018–19, the study notes that the urgency for credible wage governance has significantly intensified.
PIDE has forwarded the proposed framework to the Planning Commission of Pakistan for consideration and further necessary action toward developing a coordinated, transparent and sustainable minimum wage governance architecture for Pakistan.
Key recommendations of the policy framework include:
Adopting the Rs45,000 national reference benchmark for FY2026–27 as the current-year application of the proposed annual governance framework.
Introducing enforceable minimum wage compliance clauses in public procurement and outsourced service contracts.
Implementing phased enforcement beginning with formal sectors before extending coverage to SMEs, agriculture, and domestic work.
Requiring provinces to publish annual Minimum Wage Implementation Reports to improve transparency, accountability, and policy monitoring.
