No Increase in Minimum Wage as Budget 2025–26 Prioritizes Stability
Finance Minister Muhammad Aurangzeb confirmed on Wednesday that the minimum monthly wage will remain unchanged at Rs37,000 for the fiscal year 2025–26. The announcement came a day after the presentation of the Rs17.6 trillion federal budget, which focuses on stabilizing the economy and achieving 4.2% GDP growth in the upcoming fiscal year.
The decision not to increase the minimum wage has sparked criticism from labour advocates and political allies, especially amid persistently high living costs and rising demands for income support.
Background: Wage Policy vs Economic Constraints
In the 2024–25 budget, the government had increased the minimum wage from Rs32,000 to Rs37,000, citing inflation and cost-of-living pressures. However, this year, no such revision was made.
Interestingly, Finance Minister Aurangzeb made no reference to the minimum wage during his budget speech, only addressing the matter after widespread queries on social media and among the press.
The Pakistan People’s Party (PPP) — a key coalition ally — had strongly advocated for raising the minimum wage to Rs50,000, aligning it with urban cost-of-living metrics. The PML-N-led federal government, however, opted to freeze the rate, citing fiscal limitations and the broader need for macroeconomic discipline.
Key Budget Figures:
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Total budget outlay: Rs17.6 trillion (↓7% from FY25)
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GDP growth target: 4.2% (↑ from 2.7% in FY25)
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Inflation target: 7.5%
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Primary surplus: 2.4%
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Budget deficit: 3.9% of GDP
What This Means for Workers
For low-income and informal sector workers, the wage freeze is a setback. With urban inflation still biting into real incomes, stagnant wages mean reduced purchasing power — especially in major cities like Karachi, Lahore, and Islamabad.
Labour unions and social activists argue that Rs37,000 is insufficient for a household’s monthly expenses, especially given rising costs in transport, utilities, and food.
Political Implications and Labour Backlash
The decision may create tensions within the ruling coalition, as PPP leaders have voiced disapproval of the government’s refusal to raise wages. This comes at a time when the government is under pressure to maintain political unity while also delivering on promises of economic stabilization under potential IMF oversight.
Looking Ahead
While the budget aims to lay the groundwork for long-term fiscal sustainability, the lack of income support for low-income groups may deepen inequality and public dissatisfaction. Whether provinces follow the federal lead or implement higher regional minimum wages remains to be seen.
