ISLAMABAD: The Pakistan Institute of Development Economics (PIDE) has recommended increasing the minimum monthly wage in Pakistan from Rs40,000 to Rs45,000 for the upcoming fiscal year, arguing that higher wages would help low-income workers cope with inflation and improve their purchasing power.

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Report links wages to inflation and economic stability Call for wages aligned with economic realities

The recommendation is part of a new evidence-based framework on wage policy prepared by PIDE. If adopted, the proposal would result in a 12.5 percent increase in the minimum wage and affect millions of workers across the country.

According to the report, a higher minimum wage would provide greater financial protection for low-income households facing rising living costs. PIDE said wage policy has a direct impact on poverty levels, employment, household consumption and broader economic activity.

Report links wages to inflation and economic stability

PIDE noted that the issue of minimum wages extends beyond labor administration and should be considered within the broader context of economic planning and social welfare.

The report stated that average inflation during the July-April period of fiscal year 2025-26 stood at 6.19 percent, while the annual inflation rate reached 10.9 percent in April 2026.

Call for wages aligned with economic realities

The institute urged policymakers to align wage levels with inflation and prevailing economic conditions to support social stability and reduce financial pressure on lower-income groups.

According to PIDE, a more responsive wage policy could help strengthen domestic demand, support economic activity and contribute to poverty reduction efforts.

The recommendation comes as policymakers prepare budget and economic measures for the next fiscal year amid ongoing discussions about inflation, income levels and labor welfare.