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Negative Effects of the Minimum Wage and Its Increase on Pakistan
Have you ever wondered why our business world has made such a limited progress since independence? Have you ever thought why our nation still is in the list of N11 from last 17 years and still could not be a progressively developing nation? It is because of the limits we set in every sphere of our life. It is because of the fact that we have stopped thinking big. It is because we find our satisfaction in making both ends meet. Getting more specific, it is because we have set a limit of earning in our market, no matter if it’s a minimum or a maximum limit, which by the way is PRs. 17,500. Moreover, it clearly is not a suitable law for a developing country such as Pakistan as, because of this people make limited effort in their work and get lazy and careless, although there is no doubt about the fact that a higher minimum wage would lower the government spending on welfare still Increasing the minimum wage would force businesses to reduce their employees and unemployment would rise.
If we have a minimum wage in Pakistan, then a bunch of our workers would stop striving hard and become a dawdler. If someone is guaranteed a minimum income then he/she would lose motivation in their work. Imagine if you pay a worker as much as he works, without any limit. It would definitely motivate the worker to work more and more. This will definitely polish his/her capabilities and hence our nation would start getting skilled. Moreover, if workers have a minimum wage, they would only do what is necessary to maintain their jobs and that too half-heartedly. This will end up killing their creativity and making them a dawdler. This is due to a natural human psyche that when a worker knows that what so ever innovative he/she does they will still get the same salary at the end of the month, they will actually do nothing more than they actually have to for maintaining their jobs. This will also lower the work efficiency. Lastly when some innovative and motivated worker gets a minimum wage due to lack of experience, they at times get into crisis and their attention gets diverted from work. Eventually they also end up getting lazy towards their work. This is because crisis at times can kill creativity and motivation too.
Still a higher minimum wage can lower the government spending on welfare. When we have a healthy minimum wage, people would get less depressed due to economic crisis. It will be easy for people to manage their basic health expense. Also, that motivation and innovation of the work force will not fall prey to crisis. This will reduce the government spending on the welfare of the state such as making health cards and giving education scholarships to such a wide range of public. They would just then offer it to the few who left in the dusk.
However, in Pakistan increasing the minimum wage would force businesses to reduce their employees and unemployment would rise. Pakistan Institute of Labor Education and Research (PILER) Executive Director Karamat Ali says in an interview that “The increase in the minimum wage is insufficient…especially after the recent massive rupee depreciation and acceleration in inflation”. Furthermore, when a low skilled worker cannot make his both ends meet with this minimum wage, he simply thinks of getting migrated to some other country with a higher minimum wage to support his family. This is also reducing our work force. Even a small family of five members cannot conveniently run its kitchen and bear day-to-day expenditure with the revised minimum wage of Rs 17,500. Moreover, if there is a high minimum wage then many companies would prefer free lancers rather than permanent employees. This will again increase the unemployment will a larger rate. Especially our low skilled workers would suffer a lot to make their both ends meet. If the minimum wage is increased, companies may use more robots and automated processes to replace service employees. According to a psyche of a common businessman reduction of cost and increased revenue is the utmost ambition, no one cares if the rate of unemployment or inflation increases or decreases. This is why this doctrine of setting a minimum wage is completely destructive and against the flow.
Finally, to sum up, we as a developing nation need to re think on our practices. We need a motivation to work and an innovative work environment. This is impossible with setting a minimum wage as then no one will give their best. This will end up killing their creativity and making them a dawdler in their life. Still a higher minimum wage can lower the government spending on welfare. It will be easy for people to manage their basic health expense. Also, that motivation and innovation of the work force will not fall prey to crisis. However, increasing the minimum wage would force businesses to reduce their employees and unemployment would rise. Especially our low skilled workers would suffer a lot to make their both ends meet. If the minimum wage is increased, companies may use more robots and automated processes to replace service employees. Due to all these major reasons, we should take the risk of going against all the odds and get better day by day.
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