Inflation and Dwindling Buying Power of Urban Lower Middle Class

Professor Dr. Qais Aslam ([email protected])

The Interim Governments of The Punjab, KPK and Baluchistan have increased the minimum wage from Rs. 25,000 to Rs. 32,000 a month this September (2023) that comes to Rs. 1,067 a day.? While the Government of Sindh had proposed a minimum wage of Rs. 35,500 a month or Rs. 1,1 83 a day. It should be noted that the permissible taxable income in Pakistan is more than Rs. 400,000 a year or on an earning of Rs. 1096 a day.? Therefore, all people above the age of 18 years that earn more than or equal to Rs. 1,100 a day in Pakistan have to be taxed and should file their income tax returns.

For a daily wager’s or a laborer’s or a person working as office boy, guard and other such low paid employee’s urban? family? where the woman of the household usually does not work as paid worker and is confined as unpaid homeworker, and their children who should be in school, where according to UNICEF in 2023 almost 23 million children between age of 5 to 16 (44% in this age group) are “not attending school”, and therefore increased child labore where according to ILO more than 3.3 million children in the country are trapped in child labor working mostly in brick kilns, industry, mining, road side eateries and mechanic workshops etc. These children do not get even minimum wage and are subjected to harsh working conditions and lengthy work hours. In July 2022, a qualitative study by the International Labor Organization (ILO) determined that one in every four households in Pakistan employs a child in domestic work, predominantly girls, aged 10 to 14 years. “More than 140 cases of abuse, rape and murder of child domestic workers were reported in the media during the past 10 years,” (Source:? https://tribune.com.pk/story/2430576/child-domestic-labour-the-worst-form-of-slavery) ILO called it “worst kind of Slavery”. Many cases are not reported and those that have been reported go unpunished by our legal system, because the parents of a poor child, the police, the witnesses to the crime, and even in a few cases, the lower judiciary are known to be ‘bought’ by the rich and powerful elite.

Let us break up the Rs. 1,100 a day when the inflation has reached 30% this September, that means that the buying power of Rs. 1,100 has been reduced to Rs. 770 a day. The price of petrol has increased to Rs. 331.4 a liter, the per unit increase in electricity this month is for use of 200 units a month is Rs. 32 per unit plus taxes and fuel adjustment charges that raise the electricity costs for the poor to almost Rs. 60 a unit, or an average bill of Rs. 12,000 a month which would be electricity cost of Rs. 400 a day. On top of this LNG cost to a poor household is Rs. 220 per kilograms. The daily or monthly energy cost to a poor household has surpassed the minimum wage that the lower middle class person, or labor would be receiving. Mayb the policy makers have assumed that the ‘poor’ would not be commuting or using electricity or LNG in their daily life and would be living their life in the dark ages.

Fares in the country have also been increased due to the recent petrol hike. “The prices of bus tickets vary depending on various factors such as the distance, type of bus, and the services provided”. Bus Fares from Karachi to Islamabad start from Rs. 6,200 per passenger and are fluctuate between Rs. 1,100 (Lahore-Faisalabad) and Rs. 5,500 (Lahore-Karachi). (Source: https://pkbuses.com/bus-fares/) Rail fairs in the country have also been increased.

So, let us calculate what does this Rs. 1,100 buy them as food. For a family of 6 as an average household (usually there are more than 8 or 10 people living in a household among the poor). The cost of 100 grams (about 3.53 oz) Roti (bread) from the market in Pakistan is Rs. 16- and 150-gram nan is Rs. 30. Per piece. "15 kg flour bag of (Flour) is available at Rs 1,800 to Rs 1,850 and fine (Maida) 80 kg bag is available at Rs 11,000. (Source: https://www.brecorder.com/news/40221645) and one Kg of refined sugar is available at Rs. 140 in the market and at Rs. 155 online. The price of 100 Kg bag of sugar is Rs. 13,800. (Source: https://whatisprice.pk/sugar-rate-in-pakistan-today/#:~:text=The%20market%20price%20of%20sugar%20per%20kg%3A%20140%20PKR ).

Vegetables are sold at (1 Kg) - carrots Rs. 50; Ginger Rs. 240; Green Chili Rs. 40; Kohlrabi Rs. 25; Tomatoes Rs. 45; Ladyfinger (bhindi) Rs. 35; Mint Rs. 10 a bunch; fresh Beans Rs. 80; Beetroot Rs. 45; Karalla Rs. 60; Lokee Rs. 20; Egg Plant (bangain) Rs. 40; Cabbage Rs. 25; Cauliflower Rs. 45; Chayote (chaayot) Rs. 35; Colocasia (aalukee) Rs. 50; Cucumber Rs. 50; Onion Rs. 25; Pumpkin (kaddoo) Rs. 20; Radish (moolee) Rs. 30; Yam (jimikand) Rs. 75 etc. Chicken Prices per 1 Kg vary from Rs. 600 to Rs. 1,000. (Source: https://liveratetoday.com/vegetable-price/vegetable-price-today-in-pakistan/). Cooking oil priced depending upon the brand fluctuate between Rs. 690 per 1 litter to Rs. 840 per 1 liter.

Winter is just a few months away and the poor would be subjected to buying used clothes, discarded by the ‘rich’ or bought at the secondhand market.

I have not calculated the house rent for the urban lower- and middle-income population.,

With this price hike in almost all marketable goods and services the life of the almost 90 million urban population of Pakistan (80% of which earn and live at or below minimum wage) has become unbearable to live. More and more households have stopped sending their kids to school and many have started sending them to madrassas or have ‘enrolled 'their children as child labor in services, industry, or as domestic servants. Due to lack of opportunities of earning a decent wage when the manufacturing sector in Pakistan is growing at a rate of minus 3.9%; agriculture sector at only 1.6%; commodity producing sector at minus 0.5% and services sector growing at only 0.9%. Overall GDP growth rate in 2022-2023 was 0.3% according to data of Economic Survey of Pakistan 2022-2023. When China has reached as second largest economy and India the fifth largest economy and Brazil as eighth and South Korea as 10th largest economy with ever increasing middle and effluent classes, because prudent economic policies have created new and substantial job creation and income earning opportunities in these rising economies even in the era of global economic crisis and price rise. At the same time Pakistan is squeezing its poor and the middle classes, most of whom are devoid of skills to cope with economic challenges of the 21st century. Pakistan has become a nation where almost all politicians (elected or otherwise) are facing corruption and embezzlement cases, where real democracy is a myth, and where the rich and powerful are using the government institutions to illegally pile up wealth at the cost of the hardworking people of the country, where most of the skilled and educated are trying to ‘flee’ a nation that has become ungovernable. A nation where so called ‘mafias 'and ‘muscle men’ are usurping the market structures from ‘free’ to consortiums through collusion with the government functionaries at all levels of the economic ladder, therefore depriving our present and future generation of reviving these ‘economic, political, environmental and institutional’ shocks. The rich and powerful blame the IMF for their own misdeeds and misadventures.

The time has come that the government should give back to the working people their political and economic dignity by bringing in earnest reforms that create opportunities and help generate income through the manufacturing and service sector. Give the youth their future, otherwise the so called ‘powerful’ circles might also be deprived of opportunities, if the economy of the country sinks further into depression and ciaos. Make policies that are economic friendly, rather than revenue friendly and avoid ‘favoring’ the élite and spend on the hard-working people of the country.