ESTIMATING THE LIVING WAGE IN SIALKOT, PAKISTANDr. Asad SayeedDirector, Collective for Social Science Research, Karachi

Global Living Wage Coalition: Who Are We?

With additional support from :

A coalition of six sustainability standards and the ISEAL Alliance, covering multiple sectors and products

Working together to measure, promote, and implement a living wage in the sectors in which we are active

Working together to establish benchmarks using a shared definition of Living Wage and the Anker Methodology for developing Living Wage Benchmarks

Defining Living Wage• Living wage is recognized as a need by the international

community. It is included in the United Nation’s Universal Declaration on Human Rights and the ILO’s constitution.

• There is a consensus on a definition of the living wage, and all definitions have the following in common: a living wage should support a worker and his or her family with a basic living standard that is decent and appropriate to the society and times.

Living Wage Estimation in Pakistan• We estimated the Living Wage for areas where workers in

the football manufacturing sector of Sialkot are concentrated.

• Includes Urban and Rural Areas. • This work is only representative of small urban and rural

north-east Pakistan.

Methodology• A number of methodologies have been used to determine the

living wage in the past, with varying degrees of rigour and appreciation of the local context.

• This study uses a new methodology developed by Richard and Martha Anker. This has been used to estimate the living wage in approximately 20 countries so far.

• The methodology uses a mix of secondary and primary data. • There are four components of a living wage in the Anker

methodology:1. Food costs, i.e. Nutritious low cost diet2. Housing costs3. Non-food non-housing costs (education, health, transport,

recreation and culture etc.)4. A 5% buffer for emergencies and sustainablity

Secondary Data Use• Using data from the Household Integrated Economic Survey,

the Labour Force Survey and the Demographic and Health Survey, we determined the following: • Using average household size data, fertility rates and mortality rates,

we arrived at the typical family size:• Urban = 5• Rural = 5.5

• Using labour force participation rates, unemployment rates and part-time employment rates we arrived at the number of full-time workers per family:• Urban = 1.53• Rural = 1.65

• Local housing conditions and norms• Proportions of household expenditure by category

Food Costs• Model diet based on secondary data of food consumption

• Purchased grams vs. Edible grams• Edible grams into calories based on USDA nutritional data• WHO/FAO minimum standards of carbohydrates, proteins and fats

to be met• Primary data from local food market surveys used to

calculate cost for the model diet• Model diet adjusted based on two principles

• 1. Distribution of cost in our model diet compared to expenditure distribution in secondary data, as well as cost per kilo of items

• 2. As per international standards, intake of carbohydrates, proteins and fats was balanced in appropriate proportions

Final diet and costs for Urban

Food Group  FOOD EDIBLE GRAMS

PURCHASED GRAMS

COST PER KILO COST

1.A Cereals and grains Wheat 343 343 39.5 13.55Rice 25 25 76.25 1.91

1.B Prepared cereals Bread 0 0 0 0.002.A Roots and tubers Potato 58 77 28 2.163. Pulses, legumes, beans Black channey 15 15 121.25 1.82

Lentils (daal channa) 30 30 126.25 3.79

4. Dairy Milk (cow) 162 162 86.67 14.04Yogurt 20 20 103.333 2.07

5. Eggs Eggs 15 17 101.4 1.766. Meats & Fish Chicken 24 35 218.333 7.717.A Green leafy vegetables Spinach 46 64 14 0.897.B Other vegetables Tomato 31 35 41.25 1.44  Onion 41 46 38 1.73

 Pumpkin (kaddu) 46 66 29.5 1.94

  Eggplant 46 57 19.5 1.118. Fruits Banana 30 47 60.24 2.82  Watermelon 40 77 19.04 1.469. Oils & fats Oil 34 34 153.33 5.2110. Sugar Sugar 36 36 60.85 2.1911. Nonalcoholic beverages Tea 3.6 3.6 750 2.70Total cost of model diet excluding additional costs indicated below 70.30

Total cost of model diet including additional costs indicated below 82.95Percentage added for salt, spices, sauces, and

condiments Based on household expenditure survey data.

3%

Percentage added for spoilage and waste The living wage model diet typically adds 3% to 5% for wastage and spoilage for developing countries.. This

assumption is very conservative.

5%

Percentage added for variety Typically between 10% and 15% additional cost for developing countries.

10%

Final diet and costs for Rural

Food Group  FOOD EDIBLE GRAMS

PURCHASED GRAMS

COST PER KILO COST

1.A Cereals and grains Wheat 337 337 35.75 12.04Rice 25 25 75 1.88

1.B Prepared cereals Bread 0 0 0 0.002.A Roots and tubers Potato 52 69 23.667 1.633. Pulses, legumes, beans Black channey 15 15 125 1.88

Lentils (daal channa + masoor) 30 30 125 3.75

4. Dairy Milk (cow) 170 170 86.667 14.73Yogurt 20 20 100 2.00

5. Eggs Eggs 15 17 126.54 2.206. Meats & Fish Chicken 24 36 260 9.297.A Green leafy vegetables Spinach 46 64 20 1.287.B Other vegetables Tomato 31 35 43.333 1.51  Onion 41 46 35 1.59  Pumpkin (kaddu) 46 66 19 1.25  Eggplant 46 57 24.667 1.408. Fruits Banana 30 47 85.34 4.00  Watermelon 40 77 20.52 1.589. Oils & fats Oil 34 34 136 4.6210. Sugar Sugar 35 34 60.667 2.1011. Nonalcoholic beverages Tea 3.5 3.5 825 2.85Total cost of model diet excluding additional costs indicated below 71.57

Total cost of model diet including additional costs indicated below 84.45Percentage added for salt, spices, sauces, and

condiments Based on household expenditure survey data.3%

Percentage added for spoilage and waste The living wage model diet typically adds 3% to 5% for wastage and spoilage for developing countries.. This

assumption is very conservative.

5%

Percentage added for variety Typically between 10% and 15% additional cost for developing countries.

10%

Housing Costs• Housing characteristics from secondary data• Setting a housing standard • Rental values for house that meets minimum standard• Construction and maintenance cost to be determined if no

rental market• Utilities included in housing costs – based on field work

Rental Value

User Cost Value

Utilities Total

Urban 6000 0 2475 8475

Rural 0 2424 2186 4610

Non-food Non-Housing Costs• NFNH Includes following categories:

• Communication• Education• Health• Transport• Recreation and Culture• Clothing and footwear• Furniture and housing equipment• Miscellaneous

• Determined using the NFNH/Food ratio, which is calculated from secondary data

NFNH Food Ratio

Urban 27.68 44.44 0.623

Rural 29.61 50.82 0.583

Post-check adjustments• Within NFNH, costs of health, education and transport are

calculated using their shares of NFNH• Rapid post-checks are done – i.e. we do an estimate of

these costs based on our field research• If post-check costs are higher than that in secondary data,

NFNH is increased by commensurate amount• In our case only costs for education were higher

Summary - UrbanPART I. FAMILY EXPENSES Pakistan

Rupees US $

Food cost per month for reference family (1) 12615 121 Food cost per person per day 82.95  Housing costs per month (2) 8475 81 Rent per month for acceptable housing a 6000   Utilities and minor repairs per month 2475  Non-food non-housing costs per month taking into consideration post checks (3) 8514 82

Preliminary estimate of non-food non-housing costs 7858   Health care included in NFNH (including post-check) 864   Education included in NFNH (including post-check) 1583   Transport included in NFNH (including post-check) 1092  

Additional 5% for sustainability and emergencies (4) 1480 14Total household costs per month for basic but decent living standard for reference family (5) [5=1+2+3+4]

31085 298

PART II. LIVING WAGE PER MONTH

Living wage per month, net take home pay (6) [6=5/#workers] 20264 194

Mandatory deductions from pay (7) (list these in notes to table, e.g. taxes) 80b  

Gross wage required per month for Living Wage (8) [8=6+7] 20344 195

Summary - RuralPART I. FAMILY EXPENSES Pakistani

Rupees US$

Food cost per month for reference family (1) 14128 135

Food cost per person per day 84.45  Housing costs per month (2) 4610 44

Rent per month for acceptable housing (user cost value indicated) a 2424  

Utilities and minor repairs per month 2186  Non-food non-housing costs per month taking into consideration post checks (3)

8805 84

Preliminary estimate of non-food non-housing costs 8231   Health care included in NFNH (including post-check) 1177   Education included in NFNH (including post-check) 1167   Transport included in NFNH (including post-check) 1062  Additional 5% for sustainability and emergencies (4) 1377 13Total household costs per month for basic but decent living standard for reference family (5) [5=1+2+3+4] 28920 277

PART II. LIVING WAGE PER MONTH

Living wage per month, net take home pay (6) [6=5/#workers] 17559 168

Mandatory deductions from pay (7) (list these in notes to table, e.g. taxes) 0  

Gross wage required per month for Living Wage (8) [8=6+7] 17559 168

THANK YOU