living wage report - collective · added task of estimating two living wages for sialkot - a rural...
TRANSCRIPT
08Fall
Series1,Report9
March2017
Preparedfor:TheGlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwiththeISEALAllianceandRichardAnkerandMarthaAnker
LivingWageReportUrbanandRuralPakistanSialkot,NorthEasternPunjabWithContextProvidedintheSportsBallManufacturingIndustryDecember2015AsadSayeedandKabeerDawaniCollectiveforSocialScienceResearch,Karachi
PhotoCourtesyofAndrewJenkin,SupportersDirectScotland
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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ACKNOWLEDGEMENTS
Thisreportwouldnothavebeenpossiblewithouthelpfromseveralpeople.WethankWilbertFlinterman(FaitradeInternational)forinvaluablesupportthroughoutthisexercise.WearegratefultoShakirHussain(FairtradeAsiaPacific,Pakistan)whohelpedarrangemeetingswithfirmsinSialkot.ImranSaleemwasourlocalliaisonpersoninSialkotandourfieldresearchanddatacollectionwouldnothavebeenpossiblewithouthishelp.MichelleBhattacharyyafromtheGlobalLivingWageCoalitionwashelpfulateachstageofthisproject.WeareextremelygratefultoRichardandMarthaAnkerforhelpingusunderstandvariousfacetsofthemethodologyandtakingtimetometiculouslygothroughourfindings.Finally,wethanktheworkersandfirmsinSialkotfortheirtimeandcooperationduringourfieldwork.
Asad Sayeed and Kabeer Dawani, CollectiveforSocialScienceResearch,Karachi
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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FOREWORD
ThisreportonlivingwagesforruralandurbanSialkotPakistanbyAsadSayeedandKabeerDawaniprovidesvaluableinformationforanimportantPakistanimanufacturingcenter.Italsoprovidesinsightsonhowtoestimatelivingwages.Itisespeciallyrelevantforthesoccerball(football)industryandsportsballindustryingeneral,becauseSialkotandfootballsarealmostsynonymousas70%ofallhandstitchedfootballsintheworldaremadeinSialkot.WhilethesportsballindustryinSialkothasbeensubjectinthepasttoconsiderableattention,studyandactionregardingtheuseofchildlabor-andtheindustryhasrespondedtothischallenge-muchlessattentionhasbeenpaidtohowwellworkersinthesportsballindustryarepaidandwhethertheyreceiveadecent–akalivingwage.
AsadSayeedandKabeerDawaniinvestigatelivingcosts,livingwages,andprevailingwagesintheSialkotareaandinthesportsballindustryinaholisticway.ThisledthemtotakeontheaddedtaskofestimatingtwolivingwagesforSialkot-arurallivingwageaswellasanurbanlivingwage.TheyfeltthattwolivingwageswerenecessaryforSialkotbecauseofthestructureoftheindustryinSialkot-withhandstitchedsportsballsmadeinruralareasonapieceratebasisininformalsettingsandmachinemadesportsballsmadeinurbanfactories.Estimatingseparateruralandurbanlivingwagesforthesamegeneralareaisanimportantstepforwardforourlivingwagemethodology.
WhilethelivingwageforruralareasnearSialkotislowerthanthelivingwageforurbanSialkotasexpected,therelativelysmallsizeofthisdifference(14%)wassurprising.Understandingthesourcesofthisdifferenceandwhyitwasnotgreaterisquiteinformative.AlmostallofthisdifferencewasduetolowerhousingcostsinruralSialkot(thatwerearoundone-halfofthoseinurbanSialkot).Incontrast,foodcostsandnon-foodnon-housing(NFNH)costsaswellasdemographicfactorsoftypicalfamilysizeandnumberofworkersperfamilywerereasonablysimilarforruralandurbanSialkot.Foodcostsweresimilar,becausetheauthorsusedalmostidenticalmodeldietsforruralandurbanareastoassuresimilarnutritionforbothareasasamatteroffairness,andtheslightlylowerruralfoodpricestheyfoundintheirfieldworkwerecounterbalancedbyabiggerfamilysizeinruralareas.ThefactthatruralfoodpriceswereonlyslightlylowerthanurbanfoodpricesistraceabletothefactthatSialkotisnotthatlargeacity(slightlymorethan1million)andthattheruralareaswheresportsballsarestitchedarerelativelyclosetothecity.Non-foodandnon-housingcostsweresimilarinruralandurbanSialkot,becauseSialkotCityhasalowNFNHtoFoodcostratioforacityaccordingtoavailablehouseholdsurveydata,asSialkotisamanageablesizecitywithforexamplerelativelylowtransportcostsforhouseholds.Finally,thesomewhatlargerfamilysizetypicalofruralareas
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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comparedtourbanareasiscounterbalancedbythesomewhathigherlaborforceparticipationrateforruralwomencomparedtourbanwomen.
AsadSayeedandKabeerDawaniprovidecompellingevidencethatthesportsballindustryhasalongwaytogobeforeworkersarepaidalivingwage.Urbanprevailingwageswouldneedtobeincreasedbyaround50%.Ruralprevailingwageswouldneedtobeincreasedbymorethan100%.Itisimportanttonotethattheselargedifferencesarenotduetoanexaggeratedlivingwage,becausetheauthorsusedconservativeassumptionstoestimatetheirlivingwages.Itisdisconcertingthattheurbanlivingwagewasfoundtobemorethantwicethegovernment’snewpovertylinewhenconvertedintoawageandmorethan50%greaterthantheminimumwage.Thesituationisevenworseinruralareaswhereitispossibleforhandstitchersofsportsballstoearnlessthantheminimumwage,becausetheyworkininformalsettingsandarepaidbypiece.
Itisclear–aspointedoutbyAsadSayeedandKabeerDawani–thattheentirevaluechainneedstogetinvolvedinfindingwaysforwardtowardsignificantlyimprovingwagesinthesportsballindustryinPakistan,becausemanufacturingofsportsballsinSialkotisacompetitiveindustry.Itishopedthatthisreportwillhelpthesportsballindustry,whichhasrespondedinthepasttocriticismoftheuseofchildlabor,tobringtogetherkeyindustrystakeholdersandcertifyingorganizationssuchasFairtradetonowtacklelowwagesespeciallyforhandstitchedballsthatareoftenusedbyprofessionalsportsteamsandathletes.
RichardAnkerandMarthaAnker
January2017
08Fall
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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Acknowledgements................................................................................................................2
Foreword................................................................................................................................3
Introduction...........................................................................................................................7
1. Background.....................................................................................................................7
2. LivingWageEstimate.......................................................................................................8
3. Context............................................................................................................................9
4. Introductiontolivingwage............................................................................................10
5. Howthelivingwagewasestimated...............................................................................11
CostofaBasicbutDecentLifeforaWorkerandTheirFamily...............................................13
6. Foodcosts.....................................................................................................................136.1GeneralPrinciplesUsedtoDevelopModelDiet..........................................................................136.2ModelDietUsedtoEstimateFoodCostsforLivingWage...........................................................136.3FoodPrices...................................................................................................................................21
7. HousingCosts................................................................................................................227.1MinimumHousingStandard.......................................................................................................227.2RentforBasicAcceptableHousing..............................................................................................277.3UtilityCostsandtheirEstimation................................................................................................287.4SummaryofHousingCosts..........................................................................................................28
8. Non-foodandNon-housingCosts..................................................................................29
9. Post-checksofNon-foodandNon-housingCosts...........................................................319.1HealthCarePost-check................................................................................................................329.2EducationPost-check...................................................................................................................339.3TransportPost-check...................................................................................................................34
10. ProvisionforUnexpectedEventstoEnsureSustainability............................................35
LivingWageforWorkers......................................................................................................36
11. FamilySizeNeedingtobeSupportedbyLivingWage..................................................36
12. NumberofFull-timeEquivalentWorkersinFamilyProvidingSupport.........................37
13. GrossPayandTakeHomePayRequired......................................................................38
EstimatingGapsbetweenLivingWageandPrevailingWages...............................................39
14. PrevailingWagesinIndustryofFocus..........................................................................3914.1In-kindBenefitsasPartialPaymentofLivingWage...................................................................40
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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15. LivingWageinContext:WageLadderandRecentWageTrends..................................42
16. Conclusion...................................................................................................................45
Bibliography.........................................................................................................................50
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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LivingWageEstimatesSialkot,NorthEasternPunjab,PakistanRuralandUrbanContextProvidedintheSportsballSectorINTRODUCTION
1. BACKGROUND
ThisreportestimatesalivingwagefortheSialkotregioninPunjab,PakistanforDecember2015withafocusonworkersinthesportsballproductionindustry.SialkotisoneofthebiggestcentersofmanufacturinginPakistan,andinparticularisdominatedbythesportsballmanufacturingindustry.ThereportusesthemethodologydevelopedbyRichardandMarthaAnkertoestimatethelivingwage(AnkerandAnker,2017).
Inordertoestimatethelivingwage,fieldworkwasconductedinurbanSialkotaswellasitsadjoiningruralareas.ThisisbecausetheprocessofproducingsportsballsinvolveslargefactorieswhicharesituatedinurbanSialkot,aswellassportsballstitchingcenterswhichareprimarilylocatedinruralSialkot.Toincludeworkersinbothaspectsofsportsballproduction,weestimatedseparatelivingwagesforurbanandruralareas.Theprimarydatacollectedfromourfieldwork,complementedbysecondarydatafromnationaldatasets,formsthebasisofthelivingwageestimateinthisreport.
ThisstudywasinitiatedandfundedbyFairtradeInternational,andconductedbytheGlobalLivingWageCoalition(GLWC)1.TheoverallworkoftheGlobalLivingWageCoalition,includingactivitiesleadingtothisbenchmark,isfurthersupportedbytheMinistryofForeignAffairsoftheNetherlands,Directorate-GeneralforInternationalCooperation(DGIS).
TheGlobalLivingWageCoalitioncomestogetherwiththesharedmissiontoseecontinuousimprovementsinworkers'wages,inthefarms,factoriesandsupplychainsparticipatingintheirrespectivecertificationsystemsandbeyond,andwiththelong-termgoalforworkerstobepaid
1TheGlobalLivingWageCoalitionbringstogetherFairtradeInternational,ForestStewardshipCouncil(FSC),Goodweave,RainforestAlliance(RA),SocialAccountabilityInternational(SAI),SustainableAgricultureNetwork(SAN),andUTZinpartnershipwiththeISEALAllianceandRichardAnkerandMarthaAnker
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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alivingwage.EachlivingwagebenchmarkcommissionedbytheCoalitionismadepublictofurtherthisaimandtoincreasetheopportunityforcollaborationtowardpaymentofalivingwage.
TheGlobalLivingWageCoalitionaimstodeveloplivingwagebenchmarksinmanycountriesbasedonasingledefinitionandmethodologyofcalculationoflivingwageandasacriticalsteptoenableindustriesandcompaniestomovetowardspayingalivingwage.TheCoalitionisworkingtogetherwithRichardAnkerandMarthaAnker,internationalspecialistsonlivingwages,tobenchmarklivingwagelevelsusinganewmethodologytheyhavedevelopedtomeasurelivingwages.
Inordertoworktogetheronlivingwage,itisimportanttoshareanunderstandingofwhatalivingwageis.ArecentILOreviewrevealedthatthereisageneralconsensusonthedefinitionoflivingwage(Anker,2011).Drawingonthisreportandinconsultationwithexperts,theGlobalLivingWageCoalitionhasadoptedacommondefinitionforlivingwage(seesection4).TheGlobalLivingWageCoalitionseesthecalculationandreleaseofLivingWagebenchmarksasthefirststepinalong-termprocess.TheCoalitiondoesnotbelievethebenchmarkswillorshouldsupplantcollectivebargainingrights,butwillserveasareplicabletooltosupportsocialdialoguebetweenworkersandemployers.Formanydevelopingcountryproducers,wagesformanimportantpartofthecostsofproduction.Assuch,itisimportanttointroducewagerequirementsinthestandardssystemsofCoalitionmembersonlyincombinationwithdialogueandinvolvementofactorsatalllevelsofthesupplychain.
2. LIVINGWAGEESTIMATE
OurnetlivingwageestimateforurbanSialkotisRs.20,144($193) 2permonthandthegrosslivingwageestimateisRs.20,224($194).3Thisisbeforeaccountingforanyin-kindbenefitsthatreducetheneedforcashincome.Whenworkersreceivetransportasanin-kindbenefit,ourestimateofthecashgrosslivingwagerequiredisRs.19,960($191).
Ourlivingwageestimates,netandgross,forruralSialkotarethesameatRs.16,993($163)permonth.Theworkersintheseareasdonothaveanypayrolldeductionsorincometaxestopay,nordotheyreceiveanycommonin-kindbenefits,andsothereisnoconsiderationforthatinourcalculations.
2 TheexchangerateforPakistanRupeestoUSDollarwasRs.104.3onMay20th,2016.Thisistherateusedthroughoutthisreport. 3Thedifferencebetweenthenetandgrosslivingwagesismandatorydeductionsmadebyfirms,suchasforsocialsecurityorincometax.Fordetailsseesection13.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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IncomparisontotheprevailingwageinurbanSialkot’ssportsballindustry,thegrosslivingwageis45%higherthanthewagecurrentlyprevalentthere.ThedifferenceisgreaterinruralSialkot,wherethegrosslivingwageweestimateis110%higherthantheprevailingwageinsportsballstitchingcenters.Thus,bothourlivingwageestimatesaresignificantlyhigherthanthewagesworkerscurrentlyearninthisregion(seeSection14fordetails).
TheprocessofestimatinglivingwagesincludedvisitstosportsballproducingfactoriesinurbanSialkot,andtosportsballstitchingcentersinruralSialkot;visitstoworkershousesinbothareas;discussionswithrealestateagents;visitstomarketsandshopswhereworkersshopinbothareas;discussionswithworkersinfactoriesandstitchingcenters;andusingdatafromnationalsurveysconductedinPakistan.
3. CONTEXT
SialkotDistrictisinthenortheastofthePunjabprovinceinPakistan.Itcomprisesoffourtehsils(oradministrativesubdivisions):Daska,Pasrur,SambrialandSialkotcity.Sialkotcityisthemainurbancenterandtheadministrativecapitalofthedistrict.Accordingtothe1998census–whichisthemostrecentcensusinPakistan–SialkotDistricthasapopulationofmorethan2.7millionpeople.Ofthese,1.25millionresideinSialkotcity.
SialkotisoneofPakistan’sprimaryhubsofmanufacturingexportqualitygoods.Intheyear2014-15,Sialkot’sexportswerevaluedat$2billion(Malik,2015).Inparticular,thecityproduceshighqualitysportsgoods,leathergoods,surgicalinstruments,cutlery,andtextilegoods.
However,itismostrenownedforproducingsportsballsthatareusedthroughouttheworld,includingforthelargestglobalbrands.Morethana100firmsproducethesesportsballs,whichaccountfor40percentoftheglobalmarketshare(Pinsker,2014).Infact,withinsportsballs,Sialkotcompletelydominatestheworldmarketforhand-stitchedsportsballswithashareof70%(CREB,2015).Famously,theballsusedatthemostrecentFIFAWorldCupheldinBrazilin2014wereproducedhereaswell.
Therearetwotypesofballsproduced.Onecategoryisballsthatarestitchedonmachinesandtheotherishandstitchedballs.Machinestitchedballsareallmadeinfactoriesthatarelocatedinurbanareas.Handstitchedballs,ontheotherhand,aresourcedouttoworkersinruralareas.Becausenocapitalequipmentisrequiredforhandstitchedballs,employerstendtoreducetheiroverheadcostsbyfarmingoutproductiontoworkersinruralareas.Themechanismistoidentifymiddlemen,whoareprovidedwithmaterialsandtaughtspecificationsonwhichhandstitchingistobedone.Thesemiddlementhenseekoutworkersinnearby
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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villagesandprovidethemwithworkthatisundertakenonapieceratebasis.Thereisthuslittlecontactbetweentheworkerandtheemployer.Theentireprocessisalsoinformal,asinthereisnoformalemploymentcontractorcompliancewithlabourlaws.4
4. INTRODUCTIONTOLIVINGWAGE
Theideaofalivingwageisthatworkersandtheirfamiliesshouldnotliveinpoverty.Importantly,however,theideagoesbeyondthatandincludesparticipationinsocialandculturallifeforthefamily.Thus,“wagesshouldbesufficienttoensurethatworkersandtheirfamiliesareabletoaffordabasiclifestyleconsidereddecentbysocietyatitscurrentlevelofdevelopment.”(AnkerandAnker,2014)
Theconceptforalivingwageisnotneworradical,andhasbeenespousedbyvariouseminentpersonalitiesaswellaswell-respectedinstitutionsandorganizationsforhundredsofyears.Forexample,AdamSmithwrotein17765:
“Nosocietycansurelybeflourishingandhappy,ofwhichthefargreaterpartofthemembers are poor andmiserable. It is but equity, besides, that theywhofeed,clotheandlodgethewholebodyofthepeopleshouldhavesuchashareoftheproduceoftheirownlabourastobethemselvestolerablywellfed,clothedand lodged.… These necessaries and conveniences are: not only commoditieswhich are indispensably necessary for the support of life, but whatever thecustom of the country renders it indecent for creditable people, even of thelowestorder,tobewithout.”
Infact,livingwageisrecognizedasaneedbytheinternationalcommunity,andisincludedintheUnitedNation’sUniversalDeclarationonHumanRightsaswellasintheInternationalLaborOrganization’sConstitution.
ThedefinitionforalivingwageagreeduponbytheGlobalLivingWageCoalitionmembersandusedinthisreport,isasfollows:
4 It is worth noting that for sports balls manufactured in rural areas, even when subcontracted, to become Fairtrade certified that there needs to be child care facilities for workers’ children (http://www.fairtrade.net/fileadmin/user_upload/content/2009/standards/documents/Sports balls_HL_EN.pdf). To help accomplish this, factory owners who subcontract hand stitching work in rural areas often concentrate production in stitching centers. In this way, factory owners are better able to monitor production, improve working conditions, and provide child care for workers’ children.
5QuotetakenfromAnkerandAnker(2017).
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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“Remunerationreceivedforastandardworkweekbyaworkerinaparticularplacesufficienttoaffordadecentstandardoflivingfortheworkerandhisorherfamily.Elementsofadecentstandardoflivingincludefood,water,housing,education,healthcare,transport,clothing,andotheressentialneeds,includingprovisionforunexpectedevents.”
5. HOWTHELIVINGWAGEWASESTIMATED
Thechartbelow(Figure1)indicateshowthelivingwagewasestimatedforurbanandruralSialkot.WestartedbyestimatingthecostofabasiclivingstandardforanaveragepersonthatwouldbeconsidereddecentforSialkotandmeetsminimuminternationalstandards.Thiswasdonebyaggregatingthecostsforalow-costnutritiousdiet,basicbutacceptablehousing,andallotherneedsatadecentlevel(firstthreeboxes).TheseweredoneseparatelyforurbanandruralSialkot.The‘otheressentialexpenses’arereferredtoasNon-FoodandNon-housing(NFNH)costsintherestofthisreport.Asmallmarginabovethistotalcostforabasicbutdecentqualityoflifefortheaveragepersonwasaddedforemergenciesandsustainability.Thisisincludedincaseofanyshocksandsoworkerscanavoidgettingintoadownwarddebtcycle.
Sincelivingwageisafamilyconcept,theunitofanalysischosenwasanuclearfamily.Therefore,thetypicalfamilysizewasdetermined.Theindividualcostforbasicbutdecentlivingstandardwasthenscaledupforthisfamilysize,andthendividedoverthetypicalnumberoffull-timeworkerspercouple(asmoreoftenthannot,morethanonepersoncontributestothefamily’sincome)toarriveatthelivingwageforaworkerforurbanandruralSialkot.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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Figure1:Calculationofalivingwage
Costofabasicbutdecentlifeforafamily
Fromcostofabasicbutdecentlifeforafamilytocalculationofanetlivingwage
Fromnetlivingwagetogrosslivingwage
Source:Anker&Anker(2017).
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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SECTION1
COSTOFABASICBUTDECENTLIFEFORAWORKERANDTHEIRFAMILY
6. FOODCOSTS
Thissectiondescribeshowfoodcostswereestimatedforatypicalfamilyinboth,urbanandruralSialkot.Wewillfirstidentifythegeneralprinciplesusedtodevelopthemodeldiet,thenestimatethemodeldietandthenestimatethepricesforfoodincludedinourdiettogiveusfoodcosts.
6.1GeneralPrinciplesUsedtoDevelopModelDiet
Wefollowedsomegeneralprincipleswhendevelopingamodeldiet,whichareasfollows:
i. Nutritious–themodeldietshouldbenutritious,i.e.havesufficientcaloriesaswellasmeetinternationalstandardsofproportionsofmacronutrients(proteins,carbohydratesandfats)andsufficientquantitiesoffruitsandvegetables.
ii. Relativelylowcost–theitemschosentoincludeinthemodeldietwerekeptaslowcostaspossiblewithintheparametersofbeingnutritiousandbeingofacceptablequalityandpalatability.Theideaisthatthedietshouldbehealthyyetaffordablegivenprevailingprices.
iii. Consistentwithlocalpreferences–Ourmodeldietreflectslocalfoodpreferences,whichwereascertainedthroughinterviewsandfocusgroupdiscussionswithworkers.Thus,forexample,inacontextwherewheatisthemainstaplefood,ourmodeldietincludeswheatasthemainstaplefoodandonlyincludesriceonceaweekasthatwasconsistentwithlocalpreferences.
6.2ModelDietUsedtoEstimateFoodCostsforLivingWage
Todevelopourmodeldiet,wefirstdeterminedthenumberofcaloriesrequiredforanaverageruralandurbanfamilymemberinourreferencefamilysizes.TheserequiredcaloriesperpersonweredeterminedusingtheSchofieldequations(WHO/FAO,2003)thatarewidelyusedtoestimatecalorieneedsbasedonage,sex,averageheight,andactivitylevel.Wesettheactivitylevelforadults,includingworkers,andchildrenasmoderate.6Theequationswerethenusedto6Thisisappropriateforbothurbanandruralbecausethenatureofworkforadultsandthelifethatchildrenleadisneithervigorousnorsedentary.SourceusedforaverageheightisAverageHeight(2015).
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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calculatecaloriesforadultmalesandfemalesaswellaschildren.Theaveragenumberofcalorieswasthendeterminedforourreferencefamilyof5inurbanand5.5inrural(seeSection11forhowwearrivedatthefamilysize).Thus,thenumberofcaloriesperpersoninourmodeldietforurbanSialkotis2187andforruralSialkotis2161.7
Tostartdevelopmentofourmodeldiets,wechosespecifictypesoffoodstorepresenteachfoodgroup.Theseweredeterminedthroughinterviewswiththeworkers.ThespecificquantitiesofeachfoodincludedinourmodeldiettostartwithwerethoseindicatedbydatafromtheHouseholdIntegratedEconomicSurvey2011-12(HIES).Thesequantitieswerethenadjustedsothatthenumberofcaloriesrequiredforatypicalfamilymemberasindicatedabovewasmet(e.g.if2187calorieswererequiredandtheoriginaldietbasedlargelyonHIESdatacontained2000calories,eachfooditeminthemodeldietwasmultipliedby2187/2000).Anumberofotheradjustmentsandcheckstothesequantitiesfollowedtoensure:nutritionalbalance;distributionoffoodcostswasreasonablysimilarcomparedtotheexpendituredistributionaccordingtoHIES;ourmodeldietwasconsistentwithlocalfoodpreferences;andourmodeldietwaslowincostforanutritiousdietbytakingintoconsiderationrelativefoodpricesineachlocation.
OurmodeldietsforruralandurbanSialkotareshowninTables1aand1bbelow.Theproportionsofcaloriescomingfromproteins,fatsandcarbohydratesmeettheminimumWHO/FAO(2003)standardsforanutritiousdiet(seeFigures1aand1b).Itisimportanttonotethatthequantitiesrefertoediblegramsperdayforeachpersoninthefamily.Thismeansthatshells,skin,bonesandseedswereexcluded(buttheywereincludedinpurchasedgramssothatfoodcostscouldbeestimated).Thedatafortheediblepercentageofeachfood,aswellastheirnutritionalcontentintermsofproteins,fatsandcarbohydratesweretakenfromtheextensiveUnitedStatesDepartmentofAgriculturedatabase(USDA,2015).
7Thereasonwhytherequirednumberofcaloriesperpersonforourmodeldietsislowerforruralareasthanforurbanareasisbecauseourruralreferencesizefamilyincludesmorechildrenthanoururbanreferencesizefamilyandchildrenrequirefewercaloriesthanadultsonaverage.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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Table1a:Urbanmodeldiet
Fooditems Ediblegrams
Purchasedgrams
Costperkg
ediblegramsXcostperkilo/1,000
Comments(Dietisforaveragepersoninfamilyof5)
Wheat 342 342 39.8 13.6 Staplefoodacrosstheregion,andcheaperthanrice.
Rice 25 25 71.9 1.8 Riceonceaweekassomemealsareconsumedwithrice.
Potato 58 77 29.8 2.3 Potato.Leastexpensiverootandtuberandconsumedwidely.
Legumes1 15 15 120.0 1.8 Beansareconsumedasacheapsourceofproteins.
Legumes2 30 30 128.8 3.9
Lentils(daalchanna)areextremelypopularinthelocaldietasacheapsourceofproteins.
Milk 162 162 88.8 14.4
Freshunpackagedmilk.Pasteurizedprepackagedmilkmoreexpensive.1cupforchildren;and10mlpercupofteaforadults.
Yoghurt 20 20 105.0 2.1 Oftenconsumedwithmealsinsmallquantities.
Egg 15 17 119.3 2.1 2eggsperweek
Meat/poultry/fish 24 35 207.5 7.3 Broilerchicken
Vegetable1 46 64 14.4 0.9 Spinachisacheapandnutritiousgreenleafyvegetable.
Vegetable2 31 35 40.1 1.4 Tomatoisusedasabase
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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Fooditems Ediblegrams
Purchasedgrams
Costperkg
ediblegramsXcostperkilo/1,000
Comments(Dietisforaveragepersoninfamilyof5)
vegetableinmostmeals.
Vegetable3 41 46 38.6 1.8 Onionisusedasabasevegetableinmostmeals.
Vegetable4 46 54 17.2 0.9RadishinthewinterandCabbageinthesummer.Botharelowcostvegetables.
Vegetable5 46 54 22.0 1.2Carrotinthewinterandeggplantinthesummer.Botharelowcostvegetables.
Fruits 70 121 32.3 3.9Bananasinthewinterandwatermeloninthesummer.Theyarenutritiousandcheapfruits.
Cookingoil 34 34 155.1 5.3 Packagedoilavailablefromageneralstore.
Tea 3.6 3.6 796.0 2.9 Packagedtea(Tapal)
Sugar 36 36 60.5 2.2 Sugarissoldperkilo,usuallyingeneralstores.
Total 69.7
Totalwith18%miscellaneouscosts 82.2
10%forvariety5%forminimalspoilageandwaste3%forcondimentsandspices
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Table1b:Ruralmodeldiet
Food items Edible grams
Purchased grams
Cost per kg
ediblegramsXcostperkilo/1,000
Comments (Diet is for average person in family of 5.5)
Wheat 336 336 36.7 12.3 Staple food across the region, and cheaper than rice.
Rice 25 25 60.8 1.5 Rice once a week as some meals are consumed with rice.
Potato 52 69 27.8 1.9 Potato. Least expensive root and tuber and consumed widely.
Legumes 1 15 15 112.5 1.7 Beans are consumed as a cheap source of proteins.
Legumes 2 30 30 122.5 3.7 Lentils (daal channa) are extremely popular in the local diet as a cheap source of proteins.
Milk 170 170 85.6 14.6
Fresh unpackaged milk. Pasteurized prepackaged milk more expensive. 1 cup for children; and 10 ml per cup of tea for adults.
Yoghurt 20 20 100.0 2.0 Often consumed with meals in small quantities.
Egg 15 17 132.3 2.3 2 eggs per week
Meat/ poultry/fish
24 36 224.8 8.0 Broiler Chicken
Vegetable 1
46 64 20.0 1.3 Spinach is a cheap and nutritious green leafy vegetable
Vegetable 2
31 35 52.4 1.8 Tomato is used as a base vegetable in most meals.
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Food items Edible grams
Purchased grams
Cost per kg
ediblegramsXcostperkilo/1,000
Comments (Diet is for average person in family of 5.5)
Vegetable 3
41 46 42.5 1.9 Onion is used as a base vegetable in most meals.
Vegetable 4
46 54 14.0 0.8 Radish in the winter and cabbage in the summer. Both are low cost vegetables.
Vegetable 5
46 54 26.0 1.4 Carrot in the winter and eggplant in the summer. Both are low cost vegetables.
Fruit 1 70 121 33.9 4.1 Bananas in the winter and watermelon in the summer. They are nutritious and cheap fruits.
Cooking oil
34 34 134.5 4.6 Packaged oil available from a general store.
Tea 3.5 3.5 769.6 2.7 Packaged tea (Tapal)
Sugar 34.5 34.5 60.5 2.1 Sugar is sold per kilo, usually in general stores.
Total 68.6
Total with 18% miscellaneous costs 81.0
10% for variety 5% for minimal spoilage and waste 3% for condiments and spices
Somefeaturesofourmodeldietworthnotingare:
§ Wheat is central to our diets and to local consumption. It is cheaper than rice and accounts for almost 18% of the cost in the rural diet and 20% in the urban diet.
§ A considerable part of the animal protein in our diets comes from chicken. Workers overwhelmingly preferred this to other animal-based proteins. It is also less expensive than other foods such as beef and lamb. However, the consumption of chicken was infrequent due to its relatively higher cost. Our diet includes two chicken meals a week, which we think is decent and necessary to meet protein requirements.
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§ A considerable amount of pulses and beans (45g) are included in our diets because they are a relatively inexpensive protein and they were frequently consumed.
§ For vegetables we include radish and carrots in the winter and cabbage and eggplant in the summer. Spinach is included as a green leafy vegetable. These are relatively cheaper and popularly consumed, while also being nutritious.
§ In addition to these vegetables, we also include onions and tomatoes because these form the base for almost all meals cooked in Pakistan.
§ Banana (winter) and watermelon (summer) are included to represent fruits as these are inexpensive and widely consumed fruits.
§ Quantity of milk is 1 cup per day for children and 10 ml per cup of tea for adults and children.
§ Tea is widely consumed in Pakistan; therefore, we include 3 cups of tea for adults per day and 1 cup of tea for children per day8.
§ Our urban and rural model diets are almost the same. We felt that for decency and fairness that urban and rural people should have similar nutrition. The only difference in our urban and rural model diets is that there are slightly different quantities of wheat, potatoes, dairy, and tea in our rural model diet because our rural reference family size is slightly larger with more children than our urban reference size family.
Tothetotalcostofourmodeldiet,weaddedanadditional18%asmiscellaneouscosts.Thisincludes10%forvarietytoaccountforoccasionallyeatingmoreexpensivefruitsandvegetables,and5%toaccountforwastageandspoilage.Boththeseareconservativeestimates.Wealsoadd3%forsalt,spicesandcondiments,whichcorrespondstothepercentageforthesethatisfoundinthehouseholdexpendituredatafromtheHIES2011-12.
ThefinaldietmeetstherequirementssetoutbyWHO/FAOforthedistributionofmacronutrients.Thestandardsspecifiedarethatproteins,fatsandcarbohydratesconstitute,respectively,greaterthan10%,between15and30%,andlessthan75%ofthediet.AsFigure1aand1bbelowshow,themacronutrientsinourdietfallwithintheserequirements.
8ChildrenstartconsumingteafromaveryyoungageinPakistan;thiscanbeasearlyaswhentheyare4-5yearsold.Therefore,weinclude1cupperchildaswethinkthatisappropriateforchildren.
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Figure1a:DistributionofMacronutrientsinUrbanModelDiet
Figure1b:DistributionofMacronutrientsinRuralModelDiet
Proteins12%
Fats22%
Carbohydrates66%
PercentageofMacronutrients(Urban)
Proteins12%
Fats22%
Carbohydrates66%
PercentageofMacronutrients(Rural)
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6.3FoodPrices
Toestimatethecostofourmodeldiet,wecollecteddataonpricesofdifferentitemsfromthoseareaswheretheworkersshop.Theseareasweredeterminedafterinterviewingtheworkers.Typically,theworkersdidtheirshoppingfromstallsandshopswithintheirneighborhood.Byvisitingthemarketsintheseneighborhoods,wewereabletoestimatethecostofourmodeldietusingpricesthatworkersactuallypay.
Ineachneighborhood,multipleshopsandstallsweresurveyedtodeterminethelowestpriceavailableforanitemwithacceptablequality.Thelowestpricewasthenusedinourcalculation.Thiswasdonesoastomimicthewaycostconsciousworkerswouldshop.
Wecollectedpricesfrom4neighborhoodsinurbanSialkotand3marketsinruralSialkot.WecollectedfoodpricesinDecember(winter)andApril(summer).Foreachseasonwecalculatedtheaveragepriceacrosstheneighborhoodsbyusingthelowestpriceforeachitemfromeachmarket.Wethenaveragedthepricesfromthetwoseasonsandthiswasthepricetakenforeachfoodincludedinourfinaldiet.Also,sincesomevegetablesandfruitsareseasonal,weaveragedthepricesinthetwoseasonsofthosefruitsandvegetablesthatwerelowestinpriceperkilointhatparticularseason.Thus,forexample,weusedradishinthewinterandcabbageinthesummerasoneofthevegetablesinthemodeldiet,anditscostwasdeterminedbyaveragingtheirrespectiveprices.Additionally,thismethodusesdifferentfoodpricesforurbanandruralareasofSialkot.
Pricesofmostfoodswerecollectedperkilogramasthatwasthestandardmeasure.However,someitemsweresoldinotherquantities,andpricesforthosewerecollectedforthequantitythattheitemwastypicallysold.Thepricesfortheseitemswerethenconvertedtokilogramsandincludedinourdiet.Forexample,thiswasthecaseforeggsandbananas,whichweresoldbythedozen.
Withineachfoodgroup,asmentionedinSection6.2aswell,thelowestcostitemwaschosenthatmetlocalpreferencesandmetnutritionstandardsandminimumacceptabilityintermsofquality.Thus,forexample,pumpkinwasoneofthevegetablesselectedasithadalowcostperediblegramratherthancabbage,whichhadahighcostperediblegram.
Ourdietaccountsforseasonalvariationaswellasthefoodpricesurveyswereconductedattwodifferentpointsintime;firstinDecember2015(winter)andthesecondtimeinApril2016(summer).Therewasnosignificantdifferenceinthepricesofamajorityoftheitems.
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7. HOUSINGCOSTS
Housingcostswereestimatedbysummingthecostof:(1)therentforanacceptabledwelling(ortherentalequivalentvaluewhenthereisnorentalmarketandowneroccupieddwellingsarecommonlyused,aswasthecaseinruralSialkot),and(2)utilitycosts(gas,water,electricity).TheAnkermethodologyyieldsbetterestimatesforhousingcostsforestimatingalivingwagethanothermethodologies,particularlyincountrieswherehousingconditionsforworkersisespeciallypooratpresent,becauseitestablishesaminimumhousingstandardandtakesintoaccountthecostforthat,asopposedtousinghousingcostsfromsecondarydataforexistinghousing.
ForurbanSialkot,weestimatedrentpermonthforacceptablehousingtobeRs.6000($57.5),andexpensesonutilitieswereestimatedtobeRs.2475($23.7).Therefore,totalhousingcostsinareasnearfactoriesinurbanSialkotareRs.8475($81.3)permonth.
InareasnearstitchingcenterslocatedinruralSialkot,therewasnorentalmarket.WeestimatedtherentalequivalentvalueforowneroccupiedhousingtobeRs.2424($23.2)andexpensesonutilitieswereestimatedtobeRs.2186($21)permonth.Hence,totalhousingcostsinruralSialkotareRs.4610($44.2)–whicharelowerthanforurbanSialkotasexpected.
Thediscussionbelowdetailstheminimumhousingstandardthatwasestablishedaswellashowthehousingcostsweredetermined.
7.1MinimumHousingStandard
Inordertoestimatethecostforbasicbutacceptablehousing,wefirstsetminimumstandardsforhousingforourtypicalfamilysize(5inurban,5.5inrural),basedoninternationalstandards9ofhealthyhousing,whichwerethenadaptedtothelocalcontextbyusingstatisticsonhousinginPakistan(fromtheDemographicandHealthSurvey2012-13)andinterviewswithworkers.
Thehousingstandardweset,forbothurbanandruralSialkot,includesthefollowing:
§ Atleast50sq.meters(2marlainlocallexicon)totalarea
§ Walls,roofandfloormadeofpermanentmaterialssuchthattheyaredurable
§ Wallsofacceptablequalitycanbeofcement,concreteorbricks,butnotmud
9See,forexample,UnitedNations(1976),FairtradeInternational(2014),andWHO(1989).
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§ Roofofacceptablequalitycanbemadeofreinforcedcementconcrete(RCC)ortier-girder.Withoutsteelandcementisnotacceptable.
§ Floorofacceptablequalitycanbeofcementorbricks,butnotmud
§ Atleast3rooms(2bedroomsandseparatekitchenforourtypicalfamily)
§ Kitchenshouldhaveadequateventilationandfoodstoragearea
§ Atleast1windowperroom(preferably2)forventilationandlight
§ Electricity
§ Potablewater(boringisacceptableifgroundwaterisnotcontaminated)
§ Pitorflushtoiletconnectedtosewageorseptictank
§ Buildingshouldbeinreasonablecondition
Datafromthe2012-13PakistanDemographicandHealthSurvey(PDHS)showsthatthehousingstandardaboveisbetterthancurrentlivingconditions.Forexample,inruralPakistan,almost60%ofhouseshavemud/sandfloors,andmorethan40%ofhouseshaveonly1bedroom.WhilehousingconditionsarebetterinurbanPakistan,eventhere33%ofhouseshaveonly1bedroom.
Duringourvisitstoworkers’houses,wefoundthemtobelivingincrampedspaces.Inmorethanoneinstance,therewere4-5peoplesharingaroom.Often,housesalsodidnothaveproperventilationoraseparatekitchen.Somehouseswevisitedwerealsonotconstructedfrompermanentmaterials–thiscanbedangerousashouses(ortheirroofs)cancollapseinprecariousweather.However,almostallthehousesweresuppliedwithelectricity.Waterwasalsousuallyavailablethrougheitherapipedsupply,orawaterpumpwithinthepremisesorashortdistanceaway.Insomeareasgaswassuppliedthroughpipes,butinothersworkershadtoperiodicallybuyacylinderfilledfromnearby.
Despitebeingbetterthancurrentlivingconditionsthough,ourhousingstandardisverybasic.Acceptablehousesaresmallandprovideonlynecessities.Forexample,runningwaterisnotrequiredaswatermaybebroughtfromanearbysource(communitypumpetc.).Intheirconstructionrequirementsaswell,housesarebasicbyanymeasure.ThepicturesinFigure2abelowillustratethis.Thus,evenonalivingwagehouseswouldbebasicandnotextravagant.Asacontrast,Figure2bshowsahouseinruralSialkotthatdidnotmeetourstandard.
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Figure2a:ExamplesofAcceptableHousing
ThisisanexampleofanacceptablekitcheninurbanSialkotasithasgoodventilation.Thematerialsusedintheconstructionarealsopermanent.
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ThisisanexampleofaroominruralSialkot,whichismadeofpermanentmaterialsandhasadequateventilation(windowcoveredbywhitecloth).
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Figure2b:ExampleofanUnacceptableHouse
Thepictureshowsabathroomunderthestairswithnoroof.Thebathroomwasrightnexttothemake-shiftkitchen,asseeninthenextpicture.This,alongwithitspoorcondition,makesitunacceptable.
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Thekitchenwasoutintheopenwithnoproperexhaust.Sinceitwasveryclosetothebathroom,itwasnotsanitary.Inaddition,asthetoprightofthepictureshows,thewallsofthehousewerenotpermanent,makingthishouseinruralSialkotunacceptable.
7.2RentforBasicAcceptableHousing
TherentalmarketinurbanSialkotwaswellestablished.Inneighourhoodswhereworkerslived,weenquiredabouttherentforacceptablehousingfromlocalresidentsaswellasrealestatebrokers;wedeterminedrenttobeRs.6000($57.5)permonth.TherangeofrentalvalueswecameacrossforacceptablehousingwasfromRs.6000toRs.9000dependingonvariousfactors(suchasbuildingcondition,exactlocationinneighborhood,etc.).However,weincludedthelowerboundinourlivingwageestimate.
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InruralSialkot,however,therewasno(oraminimal)rentalmarket.Mosthouseswereowneroccupied.Thus,toestimatehousingcostsweusedthecostofconstructingabasicacceptablehouseandmadeassumptionsonthelifeexpectancyandmaintenancecostofthehouse10.Thisconstructioncostwasdeterminedbyspeakingtoseveralconstructioncontractorsandbuildersintwodifferentruralareasandenquiringindetailaboutthecostofconstructingahousebasedonthespecificationsofourminimumhousingstandard.
Thecostwasalmostthesameinbothareas;Rs.747,200andRs.707,200.Assumingalifeexpectancyof50yearsforanewhouse(whichistypicalfordevelopingcountries)andincluding2%forannualmaintenance(whichistypicalforhousingaroundtheworld),wedeterminedthemonthly‘usercost’ofhousingforeacharea.Thevaluesweresimilar,soinourlivingwageestimationwetooktheaveragevalueofRs.2424($23.2)permonth.
7.3UtilityCostsandtheirEstimation
Utilitiesconstituteanimportantpartofhousingexpenditureandneedtobeestimatedseparately.Theseincludeelectricity,waterandgas(usedasacookingfuel).Wheninterviewingworkers,weaskedindetailhowmuchtheyspendonutilitiesandtheiravailability.Thiswasalsoaskedwhenvisitingworkershouses(asmentionedearlier,almostallhouseshadeasyaccesstoallthreeutilities).Wethenestimatedtheutilitycostsbyaveragingtheresponseswegot(thecostwasnotdissimilarifwetookcostsperpersoninthehouseholdandthenmultipliedbyourtypicalfamilysizeof5or5.5).
ForurbanSialkottheutilitycostweestimateisRs.2475($23.7),andforruralSialkotweestimateRs.2186($21).Asapercentageofourestimatedlivingcostsforalivingwage,thisissimilartothepercentageaccordingtohouseholdexpendituredatafromHIES2011-12.
7.4SummaryofHousingCosts
OurestimateforhousingcostsinurbanSialkotisRs.8475($81.3)andinruralSialkotisRs.4610($44.2).Table2belowsummarizesthesecosts.Housingcostsinourlivingwageconstitute27.3%oftotalhouseholdexpenditurefortheurbanestimateand15.9%ofthetotalhouseholdexpenditureoftheruralestimate.Thisisinthesamerangeastheshareofhousehold
10TheAnkermethodologyreferstothisastheuser-costapproach.Theirmanual(AnkerandAnker,2017)alsonotesthatthisapproachhasbeenusedpreviouslybytheWorldBankandsuggestedbytheILO.
AnnualCost=(𝐶𝑜𝑠𝑡 𝑜𝑓 𝑐𝑜𝑛𝑠𝑡𝑟𝑢𝑐𝑡𝑖𝑜𝑛 / 50 𝑦𝑒𝑎𝑟 𝑙𝑖𝑓𝑒 𝑒𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦) + (𝐶𝑜𝑠𝑡 𝑜𝑓 𝑐𝑜𝑛𝑠𝑡𝑟𝑢𝑐𝑡𝑖𝑜𝑛 ∗ 2% 𝑓𝑜𝑟 𝑚𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒)
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expenditureofhousingcostsfromHIES2011-12dataforthe30thpercentofincomedistribution;forurbanPakistanthisis26.8%andforruralPakistanthisis18.4%.
Table2:AsummaryofthehousingcostsforSialkot
RentalCost UserCostValue
UtilityCosts Total
Urban 6,000 0 2,475 8,475($81.3)
Rural 0 2,424 2,186 4,610($44.2)
8. NON-FOODANDNON-HOUSINGCOSTS
Typically,povertylinesandlivingwagesonlyestimatefoodcostsandclumptogetherallnon-foodcosts.11TheAnkermethodologyismoreprecisethanothermethodsbecauseitseparatesnon-foodcostsintotwo:housingcosts(section7)andnon-foodnon-housingcosts(henceforthNFNH).
AllNFNHcostsinourlivingwagewereestimatedasRs.8453($81)permonthforafamilyof5inurbanSialkotandRs.8501($82)permonthforafamilyof5.5inruralSialkot.TheNFNHcomponentcoversthefollowing:clothingandfootwear,householdfurniture,contentsandappliances,healthcare,education,transport,communication,recreationandculture,andmiscellaneousexpendituressuchasbankservicesandpersonalcare.
Thesecostswereestimatedinthreesteps.
Step1
First,weusedatafromtheHouseholdIntegratedEconomicSurvey(HIES)2011-12todetermineexpenditureonfoodandNFNHasapercentageoftotalhouseholdexpenditureforthethirdincomedecile,whichisafairestimationforourlivingwage.ThisisdoneforbothurbanandruralPakistan.ThisisastraightforwardapproachandprovidesusaballparkfigureasastartingpointtoestimateNFNHcostsinourlivingwage.
11ThisincludeshowPakistanestimatesitspovertyline.UntilrecentlypovertyinPakistanwasmeasuredbasedonfoodenergyintake,settingaminimumnumberofcaloriesrequired.InApril2016,however,arevisedmethodologywasintroduced,whichwasmoremulti-dimensionalinitsapproach.Inadditiontofoodenergyintake,thismethodincludescostsofbasicneedstocapturenon-foodexpenditures(PlanningCommission,2016).Whilethisismorerepresentativeofpovertythanthepreviousmethod,thenewapproachalsoclumpsnon-foodcoststogether.
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ForurbanPakistan,theshareofexpenditureonfoodandNFNHwere45.38%and28.04%respectively.ThecorrespondingfiguresforruralPakistanwere51.82%and29.93%.
Step2
WeremoveunnecessaryexpendituresfromfoodandNFNH,suchasexpensesontobacco(0.94%inurbanand1%inrural)andadditionalcostsassociatedwithowningandoperatingprivatevehiclecomparedtousingpublictransport(0.36%inurbanand0.32%inrural)astheseexpendituresareconsideredasnotessentialforabasicbutdecentlife.ThedecreasedexpendituresharesonfoodandNFNHarepresentedintable3below.
Table3:Theshareofnon-foodnon-housing(NFNH)andfoodexpendituresasapercentageoftotalhouseholdexpenditureusingHIES2011-12data.
NFNH(%) Food(%) NFNH/FoodRatio
Urban 27.68 44.44 0.623
Rural 29.61 50.82 0.583
TheseexpendituresharesarethenusedtodeterminetheratioofexpendituresonNFNHtofood.ForurbanPakistanthisratiois0.623andforruralPakistanitis0.583.
Theratiosarethenmultipliedbythefoodcostswehaveestimatedinsection6togiveusapreliminaryestimateforNFNH.Inurbanareas,thepreliminaryestimateforcostsofNFNHinourlivingwageareRs.7788($74.7),andinruralareasthepreliminaryestimateofNFNHcostsisRs.7896($75.7).
Step3
Finally,welookcarefullyathealth,educationandtransportexpendituresbydoingrapidpost-checkcalculationsbasedonprimarydatafromourfieldresearch.Thisisimportantbecausesimplyextrapolatingfromsecondarydataforthesevitalexpendituregroupshasthepossibilityofreplicatingorreinforcingtheexistingpovertylevels.Therefore,thisstepinvolvesdeterminingwhethersufficientfundsareavailableforthedecentprovisionofthesecrucialexpenses.Assuch,theseexpendituresmayrequireadditionalfundstoensureabasiclivingstandard.Thenextsectionexplainshowthepost-checkswereconductedandwhat
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adjustmentsweremadetothepreliminaryestimateofNFNHcostsderivedfromsecondarydata.
9. POST-CHECKSOFNON-FOODANDNON-HOUSINGCOSTS
Weneedtoensurethatourmethodofestimatingnon-foodnon-housing(NFNH)costsbyextrapolatingsecondarydatadoesn’tunderestimatetheactualcostsinvolvedforthesecategories.Thiscouldhappenfortworeasons.First,becausesomeofthesecostsvarygreatlybyregionandoursecondarydatamayunderestimatetheseforSialkot.Second,wehaveuseddataonhouseholdexpenditure,anditispossiblethatfamiliescurrentlyunderspendonhealthandeducation–whicharebasichumanrights–becausetheycannotaffordthem.Inourestimateforthelivingwage,however,wewanttoensurethatabasicanddecentstandardismet.Therefore,weconductrapidpost-checksusingdatafromourfieldwork,particularlyforhealth,educationandtransport,becausetheyarenecessaryfordecency.
Itshouldbenoted,however,thatotherconsumptionitems,suchasclothing,communications,furniture,recreation,arealsoincludedinNFNHcosts.Thesearenotsubmittedtopost-checkadjustmentsbecausetheyarenotthoughttobecriticalforadecentlivelihood.Therefore,weassumethatthevaluesforthesecapturedthroughextrapolatingsecondarydataarecorrect,orclosetoactualexpendituresontheseitems.
Todeterminetheamountincludedforhealth,educationandtransportinthepreliminaryestimateofNFNHcosts,wefirstcalculatedtheratioofthepercentageexpenditureoneachcategoryasashareoftheadjustedNFNHpercentagefromHIES2011-12data.Thisratiowasthenmultipliedbyourpreliminaryestimateofthecostofourmodeldietforourreferencesizefamilytogiveustheamountforeachconsumptionitem.Theseexpenditures,accordingtosecondarydata,areshownbelowinTable4.
Table4:Amount(inPakistaniRupees)implicitlyincludedinourpreliminaryestimatefornon-foodnon-housingcosts
Urban Rural
Healthcare 857 1129Education 919 569Transport 1083 1019
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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9.1HealthCarePost-check
Pakistanhasanelaboratepublichealthinfrastructurethatextendstothesub-districtlevel.However,thesehospitalscanoftenbeatlargedistances,havelongwaitinglinesandqualityofserviceprovisionmayvary.Hence,giventhesignificantcostsoftransportandtime,fornon-criticalillnessespeopleoftengotoaprivateclinicorhospital.
Intheabsenceofsecondarydataonhospitalvisits,wetakethenumberofvisitstohealthcarefacilitiesperyearas3.5(AnkerandAnker,2017)forbothurbanandruralareas.
UrbanSialkot
Employeeswhoworkinthesportsballmanufacturingfactories(urbanworkers)aswellastheirspouseandchildrenareprovidedwithSocialSecurity,whichincludeshealthcoverageatthedesignatedSocialSecurityHospital.Accordingtoourinterviewswiththeworkers,theyortheirfamilymembersvisitthishospital,apublicprovider,forcriticalillnessesorforemergencies.Therefore,wekeep1.5ofthe3.5visitsforthispublicprovider.
Forillnessesthatarenotserious,theworkersandotherfamilymembersusuallygototheprivateclinicintheirneighborhood.Thereasonforthisisthattheysaveontravelcosts,whichoftenexceedthecostofpayingprivateproviders.Hence,2outofthe3.5visitsweassumearetoprivateproviders.
Inourfieldwork,weinterviewedworkersaboutthenumberofvisits(forthefamily)toprivateandpublichealthcareproviderinthelastyearandlastmonthandthetypicalcostsforthesevisits.Usingdatafromourinterviews,weassumevaluesforthecostpervisitperperson.Foraprivateprovider,theOPD(outpatientdepartment)costisRs.300andforapublicproviderthiscostisRs.75012.ThesecostsarethenmultipliedforthetypicalfamilysizeandnumberofvisitsperpersontogiveusthetotalcostperreferencefamilypermonthasRs.719.Thisislowerthantheestimatefromsecondarydata,ofRs.857.Thus,wedonotadjusttheamountforhealthcare.13
RuralSialkot
Accordingtoourinterviewswiththeworkers,theyvisitgovernmenthospitals(publicprovider),forseriousillnesses,forillnessesthatpersistforquitesometime,orforemergencies.12Giventhemoreseriousnatureofvisitstopublicproviders,therewillbeincreasedcostsforlaboratorytestingandmedicines.13Itshouldbenotedthatpost-checksareintendedtopickupsituationswhereamountincludedfortheminNFNHistoolow.TheyarenotintendedtopickupandadjustforsituationswheretoomuchisincludedfortheminNFNHbecausepost-checksarerapidassessmentsandthereforeproviderapidandcrudeestimationsforcosts.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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Therefore,wekeep1ofthe3.5visitsforpublicprovider,asgovernmenthospitalsareusuallyquitefarfromruralareas.
Forillnessesthatarenotserious,theworkersusuallygototheprivateclinicintheirneighborhoodwhichisthemostconvenientforthem.Hence,2.5outofthe3.5visitsaretoprivateproviders.
SimilartourbanSialkot,wefoundthatthecostpervisitperpersontoaprivateproviderisRs.300andtoapublicproviderisRs.750.Thetotalcostforourtypicalfamilypermonthaccordingtothispost-checkcalculationisRs.688.ThisissignificantlylowerthanourpreliminaryestimateofruralhealthcarecostsofRs.1129.Thus,wedonotadjusttheamountforhealthcareinNFNHforruralSialkot.
9.2EducationPost-check
Pakistan’spubliceducationsystemhas5yearsofprimaryschooling(class1to5),5yearsoflowersecondaryschooling(class6to10),and2yearsofuppersecondaryschooling(classes11and12).Thereisasmallfeeforprimaryandlowersecondaryschools(Rs.20permonth),whilethefeeforuppersecondaryschoolsisalittlemore(Rs.375permonth).
Tocalculatetheaveragecostofeducationforatypicalchild,costofeducationateachstandard–asdeterminedthroughinterviewswithkeyinformantsandschools–ismultipliedbythenumberofyearsofschoolateachlevel,andthensummedupanddividedby18yearsofchildhood.Inthisway,weestimatedaveragecostperchildperyearofchildhood.Tocalculatetheaveragecostforafamily,wemultiplytheestimatedaveragecostperchildbythenumberofchildreninthetypicalfamily.
Weconsiderthepublicschoolsystemasadequateandusethatasourstandard.Wealsoconsiderfordecencythatchildrenshouldbeabletoaffordtogotoschoolthroughsecondaryschool.Theaveragecostfortheeducationofatypicalchildisestimatedusingdatafromourfieldwork.Inlinewiththeexpensesincludedinthe2011-12HIES,weaccountforexpensesontuitionfees,books,stationary,bags,andtransport.
ThetotalcostforourtypicalfamilyinurbanSialkotpermonthaccordingtoourpost-checkcalculationisRs.1583.Thisisabout70%morethantheestimatefromthesecondarydatashownintable4(Rs.919).Therefore,weincreasetheestimateforNFNHcostsbythedifference(Rs.664).
InruralSialkot,thetotalcostpermonthforthetypicalfamilyaccordingtoourrapidpost-checkcalculationscomesouttoRs.1167.Thisisalmostdoubletheestimatefromthesecondarydata
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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shownintable4(Rs.569).Therefore,weincreasetheNFNHamountbythedifferencebetweenourrapidassessmentestimateofcostandamountforeducationinthepreliminaryNFNHestimate.
Insummary,itisevidentthatsincenationaleducationenrollmentislowerthanitshouldbe,thisresultsinlowerexpenditureonaverageforeducationinsurveydatathanwouldbethecaseifallchildrenwenttoschoolthroughsecondaryschool.Thus,weavoidthetrapofreplicatingthecurrentsituationbyincludingasufficientamountforeducationinourlivingwagethroughapost-checkadjustment.
9.3TransportPost-check
Transportisanimportantexpenditureforhouseholds.InurbanSialkot,publictransportconsistedmostlyofvanswhichserveddifferentroutes.However,motorcyclerickshaws(referredtoasChingchi’slocally)alsooperateonapatternsimilartothatofvansonvariousroutes.Infact,inruralareasthesemotorcyclerickshawsarethedominantformoftransport.
Thepublictransportnetworkisdecentandubiquitousenoughtonotposecommutingproblems.Moreover,privatetransportintheformofprivatelyownedmotorcycles,althoughpresent,isexpensiveandnotusedbythemajority.Therefore,wetakepublictransportasourstandard.
Costofpassengertransportpermonthforaworkerandhis/herfamilywasestimatedbysummingthecostofdifferenttypesoftravel–thisincludescommutetowork,visitstothecity,recreationalvisitsandvisitstohealthfacilities–withthecostforeachtypeoftravelcalculatedbymultiplyingthenumberoftripspermonthneededbythecostofaroundtrip.Thecostsforroundtripsfordifferentdestinationswasdeterminedthroughinterviewswithworkersaswellasotherskeyinformantsduringourfieldresearch.
UrbanSialkot
Sincethesoccerballfactoriesprovidetransportforworkers(andmanyotherworkersinSialkotwalktowork),commutingcostsarenotincludedhereandareinsteadconsideredasanin-kindbenefitforsoccerballfactories.Hence,weestimateinthissectionthecostfortypicaltransportbesidescommuting.ItisworthnotinginthisregardthathouseholdsinurbanPakistanspendverylittleontransportcomparedtourbanhouseholdsinothercountriesastheyspendonly2-3%ofalloftheirexpendituresfortransport.
Mostofourrespondentsdidtheirfoodandgroceryshoppingintheirneighborhoodasthatwasmostconvenient.Therefore,onlyonetripperadultpermonthisincludedforshoppingand
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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errandsforwhichtheymayhavetogointotown.Transportforhealthfacilitiesiscalculatedusingthe1.5visitsperpersonperyeartopublicproviders.Giventhatthesevisitsmaybeanemergency,orthepersonmaybetoosicktotravelinpublictransport,thecostsforthisareestimatedfortransportforhire(suchasarickshawortaxi).Wekeeprecreationalvisitstoanearbytownasamonthlyvisitasweconsiderthatdecent.
ThecostoftransportforthehouseholdpermonthusingtheaboveassumptionsworksouttoRs.810.Thisislowerthantheamountimplicitlyincludedinourpreliminaryestimate(Rs.1082),andsowedonotadjustthecostsforNFNHfortransport.
RuralSialkot
Sincetheworkplaceistypicallywithinwalkingdistanceinruralareas,thereisgenerallynocosttocommutingtowork.Hence,weestimatecostsforothertransportexpensesforruralSialkot.
Similartourbanareas,mostoftheworkerswespoketodidtheirfoodandgroceryshoppingintheirneighborhoodasthatwasmostconvenient.Therefore,onlyonetripperadultpermonthisincludedforshoppinganderrands,forwhichtheymayhavetogointotownfor.Transportforhealthfacilitiesiscalculatedusingthe1visitperpersonperyeartopublicproviders.Giventhatthesevisitsmaybebecausethepersonmaybetoosicktousepublictransport,thecostsforthisareestimatedforpublictransportforhire(suchasarickshawortaxi).Wekeeprecreationalvisitstoanearbytownasamonthlyvisitasweconsiderthatdecent.
Ourpost-checkcalculationgivesthetotalcostpermonthperhouseholdasRs.1025.Thisisalmostthesameasourpreliminaryestimate(Rs.1019),sowedidnotmakeatransportpostadjustmentforruralSialkot.
10. PROVISIONFORUNEXPECTEDEVENTSTOENSURESUSTAINABILITY
Workerslivingabasiclifecaneasilybethrownintopovertyanddebtthroughshocksthatleadtolargeunforeseenexpenses.Forinstance,thiscanhappenbecauseofaccidents,majorillnesses,deathinthefamily,etc.Forthatreason,itisrecommendedthatasmallmarginisincludedinthelivingwagetoensuresustainabilityduringunexpectedevents.
Weadda5percentmargintothefood,housingandnon-foodnon-housingcostsestimatedearlier(AnkerandAnker,2017).ThisworksouttoRs.1471($14)permonthforurbanareasandRs.1333($13)permonthforruralareas.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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SECTIONII–LIVINGWAGEFORWORKERS
LIVINGWAGEFORWORKERS
11. FAMILYSIZENEEDINGTOBESUPPORTEDBYLIVINGWAGE
Livingwageisafamilyconcept,asshownbythecomprehensivereviewoflivingwagesbyAnker(2011)fortheILO.Theneedforalivingwagetosupportafamilyisalsoapartofthedefinitionoflivingwageusedinthisreport(Section4).
Weuseafamilysizeof5persons(2adultsand3children)forurbanSialkotandafamilysizeof5.5persons(2adultsand3.5children)forruralSialkottoestimatethelivingwage.
Thesenumbersweredeterminedusingdataon(1)averagehouseholdsize,and(2)totalfertilityrateandtheunder-fivemortalityratefromthePakistanDemographicandHealthSurvey2012-13.Todeterminetherepresentativefamilyusingsecondarydataonaveragehouseholdsize,weexcluded1-personhouseholdsandhouseholdswith9peopleorgreater14.Inotherwords,inourcalculationofaveragehouseholdsizeonlyhouseholdswith2-8memberswereincluded,asthisismorerepresentativeofnuclearhouseholdswithchildrenandavoidsthecalculationbeingdistortedbyextremevalues.Thiswas5.4forruralPakistanand5.3forurbanPakistan.
Toestimateatypicalfamilysizebasedonfertilityrates,thetotalfertilityrateinruralandurbanareaswasadjustedforunder-fivemortalityrateusingthefollowingformula:
𝐴𝑑𝑗𝑢𝑠𝑡𝑒𝑑 𝑇𝐹𝑅 = 𝑇𝐹𝑅×(1− 𝑈5𝑀𝑅/1000)
Wethenusetheadjustedtotalfertilityrate15todeterminethetypicalfamilysizeforruralandurbanhouseholds,asthiscouldbeconsideredastheexpectednumberofchildrenperhousehold(Table5).Forurbanareas,thisnumberis4.9,whichweroundedupwardsto5,becauseaveragehouseholdsizeforurbanhouseholdswith2-8memberswas5.3.Forruralareas,thisformulayieldsafamilysizeof5.7.However,weroundedthisdownwardsto5.5as
14Singlepersonhouseholdsareexcludedsincetheyarenotrelevantfordetermininganappropriatefamilysizeforalivingwagesincesinglepersonhouseholdsbydefinitiondonotincludechildren.Householdswith9membersormoreareexcludedbecausetheyarelargehouseholdsthatmostlikelyareextendedfamilyhouseholdswithmorethan2potentialearners,whichisnotrelevanttoourcalculationwhenestimatingthenuclearfamilysize.15Totalfertilityrateis“abasicindicatoroftheleveloffertility,calculatedbysummingage-specificbirthratesoverallreproductiveages.Itmaybeinterpretedastheexpectednumberofchildrenawomanwhosurvivestotheendofthereproductiveagespanwillhaveduringherlifetimeifsheexperiencesthegivenage-specificrates.”(UNdataGlossary,2016)Adjustingthisforunder-fivemortalitygivesusamorerealisticpictureofthenumberofchildrenawomanwillhave.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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thisismoreconsistentwithsecondarydata,whichshowsaveragehouseholdsizeforhouseholdswith2-8peopletobe5.4.
Table5:Typicalfamilysizecalculations(dataforTFRandU5MRfromthePakistanDemographicandHealthSurvey2012-13) TotalFertility
Rate(TFR)Under-fivemortalityRate(U5MR)
AdjustedTotalFertilityRate
FamilySize(2adults+AdjustedTFR)
Urban 3.2 74 2.9 4.9
Rural 4.2 106 3.7 5.7
12. NUMBEROFFULL-TIMEEQUIVALENTWORKERSINFAMILYPROVIDINGSUPPORT
Livingwageisafamilyconceptand,therefore,itisreasonabletoexpectmorethanonepersoninthefamilyearns.Previousmethodologieshaveassumedthateither1workerperfamily(basedonthemalebreadwinnermodelofthehousehold),or2workersperfamily(whereitisassumedbothspousesworkfull-timeallyeararound).
Inthismethodology,wetakemorethanoneworker,butlessthantwofull-timeadultworkersbecauseofvoluntaryinactivity,unemployment,andpart-timework.
Dataonlabourforceparticipationrates(LFPR),unemploymentratesandpart-timeemploymentratesisgatheredfromtheLabourForceSurvey2014-15(Table6).Wethenusethefollowingformulatodeterminetheprobabilitythatapersonintheworkingageisafull-timeworker.
𝑃𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑝𝑒𝑟𝑠𝑜𝑛 𝑎𝑔𝑒 25− 59 𝑖𝑠 𝑎 𝑓𝑢𝑙𝑙 − 𝑡𝑖𝑚𝑒 𝑤𝑜𝑟𝑘𝑒𝑟 = 𝐿𝐹𝑃𝑅 (𝑎𝑔𝑒𝑠 25− 59) × (1− 𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 (𝑎𝑔𝑒𝑠 25− 59)) × (1.0− (𝑃𝑎𝑟𝑡 − 𝑡𝑖𝑚𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑒/2))
Theideabehindthisformulationisthatthegreatertheparticipationrate,thelowertheunemploymentrate;andthelowerthepart-timework,themorelikelyitisthatanadultfamilyworkerisworkingfull-time.Thisprobabilityisthenaddedto1todeterminethenumberoffull-timeequivalentworkersinthereferencefamilytorepresentthatonefamilymemberisworkingfull-timeinthesportsballindustry.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑢𝑙𝑙 𝑡𝑖𝑚𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑤𝑜𝑟𝑘𝑒𝑟𝑠= 1+ 𝑃𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑝𝑒𝑟𝑠𝑜𝑛 𝑖𝑠 𝑎 𝑓𝑢𝑙𝑙 − 𝑡𝑖𝑚𝑒 𝑤𝑜𝑟𝑘𝑒𝑟
AsTable6shows,thenumberoffull-timeequivalentworkersweuseforurbanSialkotis1.53workersandforruralSialkotweuse1.65workers.
Table6:DatafromtheLabourForceSurvey2014-15usedtoestimatenumberofworkersinourreferencefamily LabourForce
ParticipationRateages25-59
UnemploymentRateages25-59
Part-timeEmploymentRate16
Probabilitypersonisafull-timeworker
Numberoffull-timeequivalentworkersforreferencefamily
Urban 55.95 4.21 0.7 0.534 1.53
Rural 67.23 3.18 1.3 0.647 1.65
Thetotalhouseholdcostforabasicbutdecentlivingstandardisthendividedbythenumberoffull-timeequivalentworkersforurbanandruralareasrespectivelytoarriveatthelivingwagerequiredperworkerforeacharea.Thus,forurbanSialkotwedividedRs.31,085($298)by1.53toarriveatanetlivingwageofRs.20,264($194).ForruralSialkotwedividedRs.28,920($277)by1.65toarriveatanetlivingwageofRs.17,559($168).
13. GROSSPAYANDTAKEHOMEPAYREQUIRED
Thenetlivingwagedeterminedabovewasestimatedusingthetotalcostsofatypicalfamily.Thus,thisshouldbetakenastheneededtake-homepayforworkers.However,thegrosslivingwage(theamountactuallypaidtotheworkers)shouldtakeintoaccounttaxesandmandatorydeductions.
Forworkersinfactories(urban)thereisadeductionofRs.80permonthforsocialsecurity,whichgivesthemandtheirfamilyaccesstohealthfacilities.Thisisthusaddedtothenetlivingwagetoarriveatthegrosslivingwage,whichisRs.20,344($195).Theincomefortheworkersisbelowtheincometaxthresholdandtherearenootherapplicabletaxestofactorintothis.
Forworkersinstitchingcentersintheruralareas,therearenomandatorydeductionsandnoapplicabletaxes,therefore,thenetlivingwageisequaltothegrosslivingwage.
16Part-timeemploymentratecomprisesallemployedpersonswhoduringthereferenceperiodsatisfiedthefollowingtwocriteriasimultaneously:i)workedlessthan35hoursperweek,andii)soughtorwereavailableforalternativeoradditionalwork.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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SECTIONIII
ESTIMATINGGAPSBETWEENLIVINGWAGEANDPREVAILINGWAGES
14. PREVAILINGWAGESININDUSTRYOFFOCUS
ItisnecessarytogaugetheprevailingwagesinthesportsballindustryinSialkotsoastocomparethistoourlivingwageestimate.
TherearetwotypesofworkersinthesportsballindustryinSialkot,asexplainedinSection3:(1)workersinfactoriesinurbanSialkot;and(2)workersinruralSialkotwhoworkinstitchingcenters.
Urbanworker
Thefirsttypeofworker,inurbanSialkot,typicallyworksontheshopfloorandhis/herworkinvolvesoperatingmachineryorcleaningand/orinspectingthesportsballsmade.InthetwoFairTradecertifiedfactorieswevisited,allworkerswereatleastpaidgovernmentminimumwage(Rs.13000or$125)17asamonthlysalary.Infact,amajoritywerepaidminimumwageorafewhundredrupeesmorethanminimumwage.Onlyafewworkerswerepaidmuchmore,andthesewereusuallyballinspectors,whowereresponsibleforensuringthesportsballsproducedarebeingmadeaccordingtotheirstandards.Oneofthefactoriesprovidedusdataontheaveragewageoftheirworkers;accordingtothemthiswasRs.13628($131)permonth.Thisseemsanaccuratefigureandissimilartowhatwefoundduringinterviewswithworkers.
Itshouldbenotedthattheseworkersarefull-timepermanentworkers.Thereisnoseasonalvariationandtheyhaveemploymentthroughouttheyear.Hence,itisnotnecessarytotakeintoaccounttheshortageofworkdaysduringtheyear.Besidestheirbasicwage,theydonotworkovertimeanddon’tgetanycashallowances.Theyreceiveonlyonein-kindbenefit(oftransport),whichwevalueatRs.184permonthasdiscussedinSection15.
Thus,weincreasedtheprevailingwageinurbanSialkot’ssportsballindustry(Rs.13,628)byourestimatedvalueofin-kindbenefits(Rs.184)togetagrossprevailingwage(Rs.13,812)tocomparetoourgrosslivingwageestimateofRs.19,960which,incomparisontothis,isaround45%higher.
Ruralworker
17ThiswasinDecember2015,whenwedidourfieldwork.InJune2016,thegovernmentincreasedtheminimumwagetoRs.14000.However,throughoutthisreportweuseRs.13000astheminimumwageasthatwasinplaceforourreferenceperiod.
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Thesecondtypeofworker,inruralSialkot,isusuallyasportsballstitcher.Theyoperateoutofsmallstitchingcenters(oftenthisisjustaroom)thathavebeensetupinvillagesoutsideSialkotcityandareprovidedwithrawmaterial(Rexene),whichtheystitchintosportsballs.Wevisited4stitchingcentersindifferentruralareas.
Sportsballstitchersarepaidbypiecerate,sotheirwagevariessignificantlybyhowproductivetheyare.Typically,therearethreedifferentratesperballstitcheddependingonthesizeofthesportsball.Atonestitchingcenter,wherealltheworkersweremale,thethreerateswereRs.60,Rs.70andRs.85.Butatanothercenterwherealltheworkerswerefemale,therateswereRs.58,Rs.63andRs.67–indicatingpossiblegenderinequalityofpayintheindustry–althoughoneneedstobecautiousondrawingconclusionsbasedonsofewexamples.Allworkersworked6daysaweek,butmaleworkersindicatedthattheystitchedmoresportsballsthanfemales.Femaleworkersonaveragesaidtheystitch3sportsballsaday,astheyleaveearlytotendtohouseholdtasks.Ontheotherhand,maleworkerssaidthattheystitched5ballsperdayonaverage.
Thus,themonthlywagevariedconsiderablyforworkersweinterviewed,withthelowestbeingaroundRs.4500andthehighestbeingaroundRs.10,000.Themedianwage,whichwetookastheprevailingwage,wasRs.8000amongstourrespondents.Althoughoursamplewasnotlargeorrepresentative,thisvalueofRs.8,000isindicativeofthewageanaverageworkeratastitchingcenterwouldmakeinruralSialkot.Incomparison,ourgrosslivingwageestimateforruralSialkotofRs.16,993isaround110%greaterthantheprevalentwageshere.
Ruralworkersalsoreportedhavingworkthroughouttheyear.Besidestheirpieceratebasedearnings,theydidnotreceiveanyin-kindbenefitsorcashallowances.
14.1In-kindBenefitsasPartialPaymentofLivingWage
Workersinruralareasdonotreceiveanyin-kindbenefits.However,workersatmanylargerfactoriesinurbanareasareprovidedafreecompanybusthatpicksthemupfromdesignatedspotsaroundthecity.Thisistrueforamajorityofthelargersportsballestablishments,andexceptforthoselivingwithinwalkingdistanceofthefactory,mostoftheworkersusecompanytransport.
Therearevariouswaystovaluethisinkindbenefitoffreecompanybusesaspartialpaymentofalivingwage.Thewaywedecidedonwastosubtracttheamountneededbythereferencefamilyforalltransportotherthancommutingasestimatedinthepostchecksection(suchasfortripstotowntobuyfood,errands,visitstodoctors,somerecreation,sometravelforrecreation)fromtheamounthouseholdstypicallyspendontransportaccordingtostatisticson
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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urbanhouseholdexpendituresaccordingtothe2011/12HIES.18ThisdifferenceprovidesaveryroughestimateoftypicalexpensesforcommutingtoworkforurbanPakistan.WeusedthisamounttovaluetheinkindbenefitofafreebustoworkinalargesoccerballfactoryinSialkottoensurethatenoughfundsfortransportareincludedinourestimateofNFNHcostsandsoourlivingwage.
Weestimatethevaluepermonthofthisin-kindbenefitasRs.184.InSection9,wediscussedourpost-checkcalculationfortransportcosts.Ourestimateofurbantransportcosts,whichdidnotconsiderthecostofcommutingtowork,wasRs.810forourreferencefamily.ThepreliminaryestimateoftransportcostsincludedinourpreliminaryestimateofNFNHcosts(basedonsecondarydatafortransportcostsforourreferencefamilyinurbanareas)wasRs.1092.Wefeelthatthedifferencebetweenourpost-checkestimateandourestimateoftransportcostsincludedinNFNHcouldbeconsideredareasonablevaluefortheinkindbenefitofafreecompanybusforcommutingtowork.ThisisRs.282.However,sinceweassumethatthereismorethanoneworkerineachfamily,wedividethisbythenumberofworkersintheurbanreferencefamily(1.53)toarriveatavalueofinkindfreetransporttoworkperworker.ThisisRs.184andthisiswhatwefeelisreasonabletouseasourestimateforthevalueofthetransportin-kindbenefitprovidedtourbanworkersinlargeurbansportsballfactories.Ifwedidnotfollowthisapproach,thevalueoffreetransportwouldhaveexceededtheamountincludedfortransportinNFNH.
Anothermethodthatcouldbeusedtoestimatethevalueoffreetransporttoworkwouldbetoestimatethemarketvalueofthecommutefortheworker,i.e.iftheworkerhadtocomeontheirownandwasnotcloseenoughtowalkorbike,howmuchwouldtheround-tripjourneycostthem.WeestimatethatthiswouldbeRs.60perday.Onereasonwedidnotusethisvaluationmethodisbecausethecostofprovidingtransporttoworkerstothefactoryislowerthanthemarketcostandonecommonprincipleofvaluinginkindbenefitsaspartialpaymentofwagesisthatfactoriesprovidingthisserviceshouldnotmakeaprofitonthis.Therefore,thecostofprovidingtransportisnotequivalenttotheamount‘saved’byworkersfornothavingtopayfortheircommutetoandfromwork.Asecondreasonwedidnotusethisothermethodisthatprovidingfreetransporttoworkisamajorbenefittofactoriesandsofactoriesprovidebusesfortheirownbusinessreasons.Companybuses:(i)ensurethatworkersareabletocometoworkontimeand(ii)ensureasteadysupplyofworkersatcurrentwagessincemostworkerswouldnotbeabletoaffordoncurrentwagestocommutetoworkbypublictransportiftheyhadtopayforpublictransport.Inthecasethatfreetransportwerenotprovided,attendance18ThesituationinurbanSialkotisalittleunusualinthatworkersingeneralspendverylittleforcommutingtoworkandthisisreflectedintheavailablehouseholdexpenditurestatistics.Mostworkerseitherwalktoworkorcommutetoworkinfreecompanybuses.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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wouldvaryforthelegitimatereasonofaccessinganinefficienttransportsystemwhichoftenentailschangingoneortwovehiclestogettotheplaceofworkfromtheirhomes.Freecompanybusestoworkisthusinasenseanecessarybusinessexpense.
Anotherthingtobenotedisthatoneofthefactorieswevisitedprovidedlunchestoworkersatacost.Wedonotincludethisasanin-kindbenefitfortworeasons:first,becausewedonotknowwhethermealsweresubsidizedandsoldatlessthancost,andiftheywerebyhowmuch;and,second,becausemostworkersdidnotavailthisbecausetheypreferredtobringfoodfromhome(whichisaccountedforinourestimateoffoodcostsforthereferencesizefamily).
15. LIVINGWAGEINCONTEXT:WAGELADDERANDRECENTWAGETRENDS
Thissectioncomparesourlivingwageestimatewiththeprevailingaveragewageaswellasotherwageandpovertybenchmarks.
Figure3providesawageladderforurbanSialkot,depictingourlivingwageaswellasothercomparativebenchmarks.Ourgrosslivingwage(Rs.20,224)ismarkedlygreaterthantheprevailingaveragewageinthesportsballindustryinSialkot(Rs.13,812),thewagesderivedfromthePakistangovernment’sold(Rs.6,225)andnew(Rs.8,348)povertylines19aswellastheimpliedwagesfromtheWorldBank$1.9(Rs.5,665)and$3.1(Rs.9,243)povertylines.
However,thisdoesnotmeanourlivingwageisextravagantoranideal.ThesedifferencesaretobeexpectedgiventhataccordingtothenewpovertylineestimatedbytheGovernmentofPakistan,almostathirdofthepopulationlivesinpoverty(Khan,2016).Moreover,evenformanyofthoselivingabovethisline,standardsoflivingarequitepoor,thus,ourlivingwageprovidesaconservativeestimateforabasicbutdecentlivingstandard.
Figure4providesawageladderforruralSialkot,andshowsthegapbetweenourlivingwageestimateandthecomparativebenchmarks.Similartotheurbanestimate,ourrurallivingwageissignificantlyhigherthantheminimumwageaswellastheimpliedwagesfromthegovernment’sold(Rs.6,791)andnew(Rs.9,107)povertylinesandtheWorldBank’s$1.9(Rs.6,232)and$3.1(10,167)povertylines.Infact,ourlivingwageismorethantwicetheprevailingaveragewageinruralSialkot,whichitselfisalsomuchlowerthantheminimumwage.ThisreflectsthemuchlowerstandardsoflivingpresentinruralSialkotandinruralPakistaningeneral.
19ThegovernmentadoptedanewpovertylineinApril2016usingamorecomprehensivemethodology,whichiswhyweshowboth.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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Figure3:WageLadderforUrbanSialkot(inRupees)
Source:TheAuthor
13000
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13,812
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©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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Figure4:WageLadderforRuralSialkot
Source:TheAuthor
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16. CONCLUSION
Tables7and8providethesummaryoftheprocessthroughwhichlivingwagesinurbanandruralSialkotwereestimated.Table9indicatessomeofthekeyassumptionsusedtoestimateourruralandurbanlivingwages.ThetakehomeurbanandrurallivingwagesareRs.20,144andRs.16,993(US$193and$163respectively).Thereisvirtuallynodifferencebetweenthegrossandnettakehomelivingwagesbecauseoflowornon-existenttaxesandin-kindbenefitsinbothruralandurbanareas.Workersinruralareasareemployedinformallyandthusneitherpaytaxesnoraretheyentitledtoanyinkindbenefits.In-kindbenefitsandmandatorydeductions–bothsmallinmagnitude-almostcanceleachotheroutintheurbanareas.
Becausefactoriesinurbanareasgenerallycomplywithnationallaws,theaveragewageisonlyslightlyhigherthanthegovernmentprescribedminimumwageatthetime.TheexistingwagesarealsohigherthanthenewnationalpovertylinewageandtheWorldBank$3.1adaypovertylinewage.However,aswesawinSection16,thecurrentaverageurbanwageinthesoccerballindustryisonethirdlessthanoururbanestimatedlivingwage.Thewagegaptoalivingwageinruralareasisevenwider.Theexistingwageisnotonlylessthanhalfoftheestimatedlivingwagebutalso39%lessthanthenationalminimumwageand15%lessthanthenewnationalpovertylinewage.
Sofarastheestimationofthelivingwageisconsidered,wehaveensuredthatwhilecomplyingwithstandardsofsufficiencyanddecencysetoutinSection4,theleastcostoptionsofestimatingthiswerechosen.Wedidtwosurveysonfoodprices–inthewinterandearlysummer–togaugeseasonaldifferencesinprices.Sincepricesvaryagreatdealacrossseasons,particularlyforvegetablesandfruits,pricesusedinoursurveyrepresentthefoodpricesthatworkersandtheirfamiliesarelikelytoincur.Whilefoodconsumptiononthewholewasadequate,theconsumptionofproteinsisreasonablylowbecauseofhighcostofproteins.Themainsourcesofproteininourmodeldietsarechicken(othermeatproductsareconsiderablycostlier),dairyandlentils.Traditionallylowincomehouseholdsgotthebulkoftheirproteinsfromlentils.However,sincethe2008globalcommoditypricesshock,thepriceoflentilshaveremainedhighandthegapbetweenthepriceofchickenandlentilshasreduced.Soinadditiontoincludingthelowestpricedlentils,wealsoincludedtwochickenmealsandtwoeggsaweekinourmodeldietsalongwithmilktoprovidefortherequiredintakeofproteins.Mosturbanworkersweinterviewedatechickenonceaweekwhilemostruralworkerswespoketoatechickenonceintwoweeks.Wedonotconsidertheamountofchicken,milkandegginourmodeldietstobeextravagant.Ratherweconsideritnecessaryforgettingsufficientproteinsforanutritiousmodeldiet.
LivingWageforRuralandUrbanSialkot,Pakistan-withcontextprovidedinthesportsballindustry
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Housingintheurbansampleofworkerhousesthatwevisited,althoughbetterthanruralhousing,didn’tgenerallymeetourstandards.Thecoveredarea,ventilationandutilityprovisionwasofadequatestandard,butthenumberofoccupantsperroomandconditionsofthehouseswerenotacceptable.Inruralareas,inmostcaseshousesdidnothaveseparatekitchens,ventilationwasinadequate,andoftentherewerenoseparateroomsforchildrenmakinglivingextremelycramped.
Sialkotanditsenvironsareknownforproducingsportsgoodsandsurgicalinstrumentsformorethansixdecades.ThisdistrictaloneaccountsforonetenthofPakistan’smerchandiseexports.Exportsofsportsgoodsspecifically–allproducedinSialkot–havealsoseenanincreasingtrendintherecentpast.BecauseofthisuniquepositioningofSialkot,itisbestplacedtoreducethewagegapcomparedtoanyotherregioninPakistan.
Theonusonreducingthewagegaptoalivingwageinurbanareasrestswithemployersaswellastheentirevaluechainofsportsballproduction.Theemployersworkinacompetitiveglobalenvironmentandappearedinurbanareastocomplybyandlargewithdomesticlabourstandards.Itwillthusbedifficulttoconvincetheemployerstoworktowardsclosingthegaptoalivingwageforfactoryworkersallbythemselvesalthoughtheycouldbeaskedtoincreasewagesandprovidemorein-kindbenefitsintheformofhealthcare,educationalbenefitsforchildrenofworkers,andfreelunch.Thesewillcontributetowardsclosingthewagegap,albeitmarginally.Itistherestofthevaluechain,includingthestandardsorganizations,thatwillhavetoprovideadequateincentivesforemployerstoreducethisgap.
TheGovernmenthasaroleinrationalizingtheminimumwagebasedonthelivingwageassessmentprovidedinthisstudy.Whileitmaynotbepossibleforthegovernmenttosetaminimumwagefortheentireeconomyatalivingwage,itmaybepossibletoraisetheminimumwagesomewhat.Thiswillcontributetowardsreducingthewagegap.20
Addressingthewagegaptoalivingwageinruralareaswillrequireactionfromanumberofstakeholders.ThemostimportantinourviewistheGovernment.Thatworkersinruralareasareallinformallyemployedmeansthatthereisaconcomitantgapincompliancewithexistinglabourlaws.ThegovernmentshouldensurethattheminimumwageisprovidedtoruralworkersandensurethattheyareregisteredwiththeSocialSecurityInstitutethatprovideshealthbenefits.Havingsaidthis,thereishowever,theissueofatrade-offbetweenemploymentandwagesinthiscase.Ifruralemployersarecompelledtopaywagesasperthelaw,thenruralemploymentmightbesignificantlylowered,sincethiswouldreducethe
20ItisworthnotingthatoinJuly1,2016thegovernmentraisedtheminimumwagefromRs.13,000toRs.14,000permonth.Thisisa7.7%increase,whichisslightlyhigherthanthe4.1%yearonyearJuly2016inflationrate.
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©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker
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incentiveforemployerstocontinueproducinghandstitchedsportsballsinruralareas.Perhaps,therecanbealowerthresholdfortheminimumwagethatcanbeinstitutedforruralworkersthatislessthanthatforurbanfactorybasedworkers(justaswehavefoundalowerlivingwageinruralareasthaninurbanareas).TheGovernmentcanalsoprovidesocialprotectiontoallworkersintheruralareas.Presently,thereisalargecashtransferscheme–knownastheBenazirIncomeSupportProgram(BISP)–inPakistan.Becauseoffiscalconstraints,thebeneficiariesofthisschemeareconcentratedaroundthelowest2decilesofthepopulation.Sincetheworkersinthesportsballindustrywouldfallabithigherintheincomedistribution,ifthegovernmentexpandsthisschemefurther,thewagegaptoalivingwageforruralworkerswillreduce.
Theonusforreducingthegaptoalivingwageshouldalsobebornepartlybythevaluechainandconsumersofhandstitchedsportsballs.Ifcomplianceonpaymentofahigherwageismadeaconditionofcontractsbymulti-nationalcompanies,thentheemployerswillhavetobecompensatedbyincreasingtheunitpriceofballsinawaythatprofitmarginsaresufficientforsustainabilityofthesoccerballindustry.
Table7:SummaryTableforUrbanSialkotPARTI.FAMILYEXPENSES Pakistan
RupeesUSDollars
Foodcostpermonthforreferencefamily(1) 12,501 120Foodcostperpersonperday 82.2 Housingcostspermonth(2) 8,475 81Rentpermonthforacceptablehousinga 6,000 Utilitiesandminorrepairspermonth 2,475 Non-foodnon-housingcostspermonthtakingintoconsiderationpostchecks(3)
8,453 81
Preliminaryestimateofnon-foodnon-housingcosts 7,788 75Healthcarepostcheckadjustment 0 Educationpostcheckadjustment 664 Transportpostcheckadjustment 0 Additional5%forsustainabilityandemergencies(4) 1,471 14
Totalhouseholdcostspermonthforbasicbutdecentlivingstandardforreferencefamily(5)[5=1+2+3+4]
30,900 296
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PARTII.LIVINGWAGEPERMONTH
Livingwagepermonth,nettakehomepay(6)[6=5/#workers] 20,144 193
Mandatorydeductionsfrompay(7)(listtheseinnotestotable,e.g.taxes)
80ab
GrosswagerequiredpermonthforLivingWage(8)[8=6+7] 20,224 195PARTIII:LIVINGWAGEININDUSTRYCONSIDERINGVALUEOFTYPICALINKINDBENEFITSANDCASHALLOWANCESININDUSTRYValuepermonthofcommoninkindbenefitsinindustry(9A)(listinnotestotable)
184b 1.76
Valuepermonthofcommoncashallowancesinindustry(9B)(listinnotestotable)
0 0
LivingWagetakehomepayinindustry,whenworkersreceivetypicalinkindbenefitsandcashallowancesinindustry(10)[10=6-9A-9B]
19,960 191
LivingWagegrosspayinindustryifworkerreceivestypicalinkindbenefitsandcashallowanceinindustry(11)[11=8-9A-9B]
20,040 192
Notes:aRs.80aredeductedpermonthfortheworker'scontributiontotheEmployeesOld-AgeBenefitsInstitution(EOBI).bTransporttoandfromworkisprovidedbythecompanies.SeeSection15.
Table9:KeyvaluesandassumptionsforurbanSialkotLocation&industry UrbanSialkotExchangerateoflocalcurrencytoUSD 104.3Numberoffull-timeworkdayspermonth 26Numberofhoursinnormalworkweek 48Numberofworkerspercouple 1.534Referencefamilysize 5Numberofchildreninreferencefamily 3NFNH/Foodcostspreliminaryratio 0.623
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Table8:SummaryTableforRuralSialkot
PARTI.FAMILYEXPENSESPakistanrupees
USD
Foodcostpermonthforreferencefamily(1) 13,544 130Foodcostperpersonperday 80.96 Housingcostspermonth(2) 4,610 44Rentpermonthforacceptablehousing(usercostvalueindicated) 2,424 Utilitiesandminorrepairspermonth 2,186 Non-foodnon-housingcostspermonthtakingintoconsiderationpostchecks(3) 8,501 82
Preliminaryestimateofnon-foodnon-housingcosts 7,896 76Healthcarepostcheckadjustment 0 Educationpostcheckadjustment 604 Transportpostcheckadjustment 0
Additional5%forsustainabilityandemergencies(4) 1,333 13Totalhouseholdcostspermonthforbasicbutdecentlivingstandardforreferencefamily(5)[5=1+2+3+4] 27,987 268
PARTII.LIVINGWAGEPERMONTH
Livingwagepermonth,nettakehomepay(6)[6=5/#workers] 16,993 163Mandatorydeductionsfrompay(7)(listtheseinnotestotable,e.g.taxes)
0
GrosswagerequiredpermonthforLivingWage(8)[8=6+7] 16,993 163
Table9:KeyvaluesandassumptionsforRuralSialkot
Location&industryRuralSialkot–sportsballstitchingcenters
ExchangerateoflocalcurrencytoUSD 104.3Numberoffull-timeworkdayspermonth 26Numberofhoursinnormalworkweek 48Numberofworkerspercouple 1.647Referencefamilysize 5.5Numberofchildreninreferencefamily 3.5
NFNH/Foodcostspreliminaryratio 0.583
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