Pakistan Institute of Development Economics



What Has Been Happening to Real Wages in Pakistan?

It seems unnecessary to prepare an elaborate case emphasizing the need for some knowledge about the movement of real wages. Such knowledge would help confirm our ideas about the supply of labour and its abundance or scarcity, shed light on the mechanism of transfer of labour from the traditional sector to the modern sector by highlighting the incentive differential between wages in these two sectors and its change over time, and provide insight into the question of the distribution of incremental income. In view of the obvious importance of the subject, it seems unfortunate that practically no enthusiasm has been shown by researchers in estimating the course of this variable in Pakistan. Certainly part of the explanation lies in the inadequacy of statistical information. Over the vast agricultural sector, wage labour is not the dominant mode of production. Whatever wage-labour relations exist there and in the services sectors are not systematically reported by the data collecting machinery in the country. Inevitably one is, therefore, limited to the examination of the wage movement in the manufacturing industries only.

Azizur Rahman Khan

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