Challenges in minimum wage compliance and wage deductions for garment and textile workers in Pakistan

Pakistan’s minimum wage structures for workers of different skill levels vary by region, and workers in key garment and textile hubs—Punjab and Sindh—are at risk of losing wages due to improper implementation of those structures by suppliers. Additionally, some suppliers are unfairly deducting workers’ incomes for factory-provided services, resulting in a significant loss of wages for workers.

Minimum wage implementation in Punjab and Sindh has long faced persistent challenges, such as employers implementing wage increases retrospectively, uncertainty around classifying workers by skill level, and ongoing confusion over deductions for factory-provided services such as meals and transportation.

Like in many South Asian countries, Pakistan’s wage structure sets different minimums by skill category—unskilled, semi-skilled, skilled, and highly skilled—based on criteria and job categories defined in provincial wage announcements.

In 2018, the Sindh government decided not to set minimum wage levels for semi-skilled, skilled, and highly skilled workers in the garment and textile sector. In response, FLA, together with two prominent local workers’ rights organizations, sent a joint letter urging the government to reconsider. The Sindh government has since reversed this policy and resumed announcing higher wage levels for skilled categories. However, the wage gap between highly skilled and unskilled workers in Sindh currently stands at 30%.

The Punjab government has recently discontinued the practice of declaring distinct minimum wages for semi-skilled, skilled, and highly skilled garment and textile workers. Although Punjab does recommend higher wages for skilled workers, the absence of clearly defined minimum wage levels has created a loophole—similar to what happened in Sindh before its policy was reversed. There is a risk that employers will either apply the unskilled worker minimum wage to all employees or offer only minimal increases to semi-skilled and skilled workers. If Punjab’s policy remains unchanged, it is possible that workers in these categories will be denied comparable raises to workers in Sindh. Workers without union representation and genuine bargaining power are at a greater risk of wage losses.

Pakistan has faced an average consumer price inflation of around 22% over the past three years.  The recent 8% minimum wage increase in Sindh has raised unskilled workers’ minimum wage to PKR 40,000 per month—still only about half of what many local civil society organizations, such as the Human Rights Commission of Pakistan (HRCP) consider a living wage. In the absence of union representation, genuine bargaining power, and a performance- and skills-based transparent wage system, garment and textile workers are often forced to rely on excessive overtime to meet their basic needs.

Additionally, workers are facing income losses due to deductions from wages for factory-provided services such as transportation, accommodation, and meals, which directly reduce their take-home pay. Workers may opt out of these services. However, they may be unaware they can opt out, or they may be charged regardless of if they use the services.

The two provinces have taken different approaches to regulating deductions for factory-provided services: in Sindh, such deductions are prohibited under Articles 11 and 12 of the most recent minimum wage update, whereas in Punjab, the latest announcement specifies maximum thresholds. Most notably, Punjab has now introduced permitted deductions for meals—a new cost not included in previous announcements. Under the current rules, nearly 11% of an unskilled worker’s monthly minimum wage can be deducted for meals and transportation, the two most commonly used services. The deductions may not reflect actual costs per worker, as employers may simply apply the maximum thresholds, when allowed. The cost of transportation deductions alone has surged dramatically, from 98 PKR to 1,800 PKR per month—a nearly 1,740% increase compared to last year.

To effectively address these risks, companies sourcing from Punjab and Sindh should review how minimum wage structures are being implemented by suppliers for semi-skilled, skilled, and highly skilled workers, as well as what deduction schemes are applied for factory-provided services. In this issue brief, FLA offers recommendations for points that should be considered when reviewing minimum wage structures and deduction schemes.

We are actively monitoring the situation and are committed to keeping our members regularly updated on this issue, which has a direct impact on the income, financial security, and overall well-being of garment and textile workers in Pakistan