Islamabad
The Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has opposed the proposed minimum wage of Rs.37,000 per month, stressing the need for ease of doing business and urging the policymakers to adopt a more comprehensive approach to address high economic growth agenda instead of focusing solely on raising wages, as it would be additional burden on the industry.
PRGMEA Central Chairman Mubashar Naseer Butt and Regional Chairman Ahmad Hanif, in a joint statement said that the government should work on skills development and infrastructure, investing more in education as well as creating an enabling environment for business growth and job creation to enhance the living standard of the working class.
Mubashar Naseer Butt raised the question over escalation of minimum wages rate despite the government claim that the year-to-year rate of inflation, as measured by the Consumer Price Index, has come down to only 11.8% in May 2024. This is close to a single-digit rate, and is the lowest since Nov 2021. So, why do the authorities need to make a hike in wages of workers, he argued.
The PRGMEA Central Chairman also criticized the budget makers for raising wages because they did not run the businesses and never made the payments to their employees. So, they didn’t understand as to how the soaring cost of production hit the industry hard, he added. He said that there is need to analyze the factors that have contributed to this sharp decline of inflation.
This will enable an assessment as to whether this low rate of inflation will be sustained in coming months. The fact is that the year-to-year rate of inflation has been falling steadily since Dec 2023, when it was 29.7%. The rate of decline has averaged over 3.5 percentage points monthly. However, the decline was exceptionally large at 5.5 percentage points in May 2024, as compared to April 2024.
Showing unhappiness with the budget, Regional Chairman Ahmad Hanif said that the budget has been focused solely on tax and revenue collection while the whole textile and garment industry has not been taken into consideration, as not a single of industry’s proposal was incorporated in the budget.
The PRGMEA regional chief said that the government of the Punjab, in September last year, has issued a Minimum Wage notification adjusting the minimum wage to Rs32,000 per month.
And now within few months, another huge raise in minimum wage is unfair and unacceptable as it would increase the cost of production further amidst high markup rate, rupee depreciation and escalating energy tariffs, he argued.
Factories in the region promptly complied, raising wages effective from that month. Payments based on this new minimum wage were initiated, incorporating adjustments to various compensation elements such as overtime premiums, paid holidays, leaves, and bonuses.
Ahmad Hanif added that there is no clear incentive to the industry in the current budget, as the whole budget has concentrated on revenue collection activities. The people in the value-added garment industry were expecting a lot because there was a lot of commitment by the government.
Huge amount of exports have been lost due to lack of funds. The government is under pressure from the IMF because it is forcing to promote revenue collection activities, he added.
Ahmad Hanif called for lowering cost of production, solution of liquidity crunch through early refunds payment, low energy tariff and relaxed import policy for industrial raw material so that industrialization can be promoted and exports can be enhanced.
He added that various provincial departments including Employees’ Old-Age Benefits Institution (EOBI), Social Security, Women Welfare, Environment Department should have to facilitate the manufacturers and exporters in a better way.
He said that Pakistan’s core issue was high cost of doing business which rendered its industrial production uncompetitive, suggesting the government to work on bringing around significant improvements in ease and cost of doing business for the export industry.
