What Does Minimum Wage Get You in Lahore, Pakistan? Something Far Away from the Pakistani Middle Class
I’ve been inspired by the recent willingness of t-shirt corporation Econscious to share some information about one of its factories in Lahore, Pakistan. By inspired, I don’t mean elated. When I look at the income reports for 20 workers in that factory in Lahore for the fall of 2007 to winter of 2008, I’m inspired to dig deeper and find out what the numbers in them actually mean for the people who receive that pay.
The minimum wage in Pakistan during the time of the audit was 4600 PKR (Pakistan Rupees). 4600 Pakistan Rupees converts to US $76.67 in the report’s exchange rate of 60 PKR to the US dollar (this exchange rate overrates the value of the Pakistan Rupee during the period covered the report, but we’ll go with it because it’s a nice round number). Beyond that, overtime was legally required during the period to be paid at the rate of 44.23 PKR/hour for work greater than 48 hours a week. Speaking of rates, I should mention the overall unit of time for the minimum wage in Pakistan. It wasn’t the hour, or the day, or the week. The minimum wage in Pakistan during the time of the audit was 4600 PKR per month.
What did the 20 workers in that Pakistan factory making shirts for Econscious actually earn during that time? Well, I can’t really tell you what they actually earned, because the the text of the audit of that factory in Pakistan is headed with the caveats that “auditors have accepted as true what they have been told by management and employees of the facility,” and that “auditors have accepted as valid documentation provided to them by facility officials, and have made no independent investigation to determine the accuracy or completeness of the documentation.” All I can tell you is what the factory itself reported to the auditors, without confirmation, that the workers earned.
Each worker was reported (remember that word) to have earned the minimum wage for the factory: 4600 RPK per month (equivalent to 37 US cents an hour for a 48-hour workweek) plus the required 44.23 rupees/hr overtime for more than the standard 48-hour workweek in Pakistan (equivalent to 74 US cents an hour). With every worker doing some overtime and the average worker doing an extra 3 hours of overtime a week, the average worker was reported (but remember, not verified) to do about 51 hours of work per week. With an average number of 222 hours worked per month, the average reported monthly pay for the workers in the Lahore factory supplying t-shirts to Econscious was PKR. 5344.75, or $89.08.
What does PKR. 5344.75 a month buy for that factory worker logging in 51 hours a week? I’ll be answering that question in a number of ways over the next few days; let me start by demonstrating just how far away that monthly salary is from a middle-class lifestyle in Lahore, Pakistan. The Human Resource Department of the Lahore University of Management Sciences maintains a cost of living in Lahore page in which it estimates monthly living expenses for people considering coming to work at LUMS and live in Lahore. Its 2006 estimates for monthly expenses in PKR are:
House Rent: 18,000
Utility Bills: 11,000
Car Maintenance: 8,800
Grocery, Food: 13,200
Education Expenses, 2 children: 11,000
Servants and Entertainment: 7,700
Clearly, the people who make shirts for Econscious at that factory in Lahore, Pakistan are not going to be making anything close to the money required for the middle-class cost of living estimate by university staff. What workers at this factory in Lahore can afford is a question I’ll start looking at tomorrow.