Estimating the Living Wage in Sialkot, Pakistan

ESTIMATING THE
LIVING WAGE IN
SIALKOT, PAKISTAN
Dr. Asad Sayeed
Director,
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 diet
2. Housing costs
3. 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 13.55
Rice 25 25 76.25 1.91
1.B Prepared cereals Bread 0 0 0 0.00
2.A Roots and tubers Potato 58 77 28 2.16
3. 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 14.04
Yogurt 20 20 103.333 2.07
5. Eggs Eggs 15 17 101.4 1.76
6. Meats & Fish Chicken 24 35 218.333 7.71
7.A Green leafy vegetables Spinach 46 64 14 0.89
7.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 1.11
8. Fruits Banana 30 47 60.24 2.82
Watermelon 40 77 19.04 1.46
9. Oils & fats Oil 34 34 153.33 5.21
10. Sugar Sugar 36 36 60.85 2.19
11. Nonalcoholic beverages Tea 3.6 3.6 750 2.70
Total cost of model diet excluding additional costs indicated below 70.30
Total cost of model diet including additional costs indicated below 82.95
Percentage 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 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 12.04
Rice 25 25 75 1.88
1.B Prepared cereals Bread 0 0 0 0.00
2.A Roots and tubers Potato 52 69 23.667 1.63
3. 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 14.73
Yogurt 20 20 100 2.00
5. Eggs Eggs 15 17 126.54 2.20
6. Meats & Fish Chicken 24 36 260 9.29
7.A Green leafy vegetables Spinach 46 64 20 1.28
7.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 1.40
8. Fruits Banana 30 47 85.34 4.00
Watermelon 40 77 20.52 1.58
9. Oils & fats Oil 34 34 136 4.62
10. Sugar Sugar 35 34 60.667 2.10
11. Nonalcoholic beverages Tea 3.5 3.5 825 2.85
Total cost of model diet excluding additional costs indicated below 71.57
Total cost of model diet including additional costs indicated below 84.45
Percentage 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 - Urban
PART 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 14
Total 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 - Rural
PART 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 13
Total 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

Estimating the Living Wage in Sialkot, Pakistan

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