In explaining the most important economic challenge for the government, Gohar Ejaz, country’s prominent textile manufacturer and exporter and currently Patron in Chief of APTMA, proposed to Imran Khan’s government, that the biggest challenge it currently had was to help improve people’s lives. He argued that the best way to serve the poor and disadvantaged working classes is to raise the minimum wage by at least 20% in the coming budget.
Gohar Ejaz made this proposal to the government while participating in TV Anchor, Moeed Pirzada’s program, Hard Talk at 92 News, on Thursday night. Ejaz is himself a leading textile manufacturer and has previously been Chairman of All Pakistan Textile Mills Association (APTMA), country’s leading association of exporters – sometimes described as the most powerful private organisation. He admitted that if this proposal is implemented, by the government, in the coming budget, he too will suffer financial implications due to raised labor costs but he argued raising minimum wages will be a better option than expanding the scope of Ehsas program as is currently being done by the government.
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Raise Minimum Wage
Current minimum labour wage in Pakistan is around Rs. 17,500 per month. Which the current government has increased from Rs16,000 – so an increase around 10%. But Gohar Ejaz pointed out that over the last two years Pakistani Rupee has lost around 35% against the US dollar. He admitted that in recent weeks the rupee has strengthened back to around Rs. 156 against US $ from Rs. 168 against a US dollar which has never been seen before in the country’s history but even with this correction Pakistani rupee is still 35% less valuable than it was in 2018 when parity was around Rs. 125 to a US $.
Gohar argued that raise of minimum wage by Rs. 3,000-4,000, in both private and public sector will give more liquidity to poor house holds enabling them to spend more on food and daily articles of life. This empowerment with self respect is much better than the direct cash payments by the Ehsas program which Imran Khan government is practicing. In March, PM Imran Khan announced that from June 2021, government will be making direct payments to around 30 million poor families enabling them to spend more on food items. Gohar was speaking in that context and made what he called his “humble submission”. He explained that private sector companies have seen an improvement in profits in the past one year, however, the benefit of this will only go to the workers when the government increases minimum salaries. Over 10 million families are working or related to the private sector – an increase in minimum salaries will directly impact them and the economy.
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Gohar applauded the government’s Naya Pakistan Housing Program (low income housing) as a good initiative, given housing market’s linkages to 40 other related industries, the economy is already seeing the positive impact, as cement plants have started operating at 100%, glass furnaces that were closed during Covid have opened again, steel industry started booming. But he argued that the scope and size of mortgages given should be much bigger. Housing is an urban problem and not of rural Pakistan and offering housing mortgage products of Rs. 25 lacs in this market is not a solution, such low amounts are not feasible amounts for construction in the cities. He argued that mortgage of up to Rs. 10 million, on 5% rate of interest, should be available to all Pakistani citizens irrespective of whether they are part of Naya Pakistan program or not, to expand the construction industries.
Gohar Ejaz is considered among those business leaders PM Khan listens to. it remains to be seen how PM Imran Khan reacts to his proposals – or the “humble submissions” as he calls them.