Kabeer Dawani's talk at the Review of 2015-16 National and Provincial Budget: Creating spaces for the vulnerable and poor in society.

1. Estimating the Living Wage
Kabeer Dawani
Collective for Social Science Research,
Karachi

2. Living Wage
• Living wage is recognized as a right by the
international community. It is also included in the
United Nation’s Universal Declaration on Human
Rights and the ILO’s constitution.
• Although, there is no consensus on its definition,
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.

3. Living Wage Estimation in Pakistan
• A Minimum of two and maximum of 6
estimations of Living Wage have been done,
depending on the size and diversity of countries.
• We are in the process of doing Living Wage
Estimation for Fair Trade Certified Companies
manufacturing footballs in Sialkot.
• Includes Urban, Peri-Urban and Rural Areas.
• This Work will only be representative of small
urban and rural north Punjab.

4. 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, more rigorous than previous ones and
provides intra-national and cross-national benchmarks.
• The methodology uses a mix of secondary data 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)
4. A 5% buffer for emergencies

5. PART I. FAMILY EXPENSES
Local
currency
USD
Food cost per month for reference family (1)
Food cost per person per day
Housing costs per month (2)
Rent per month for acceptable housing a
Utilities and minor repairs per month
Non-food non-housing costs per month taking into consideration post checks (3)
Preliminary estimate of non-food non-housing costs
Health care post check adjustment
Education post check adjustment
Transport post check adjustment
Additional 5% for sustainability and emergencies (4)
Total household costs per month for basic but decent living standard for reference family
(5) [5=1+2+3+4]
PART II. LIVING WAGE PER MONTH
Living wage per month, net take home pay (6) [6=5/#workers]
Mandatory deductions from pay (7) (list these in notes to table, e.g. taxes)
Gross wage required per month for Living Wage (8) [8=6+7]
WHEN LIVING WAGE STUDY HAS AN INDUSTRY FOCUS COMPLETE PART III
PART III: LIVING WAGE IN INDUSTRY CONSIDERING VALUE OF TYPICAL IN KIND BENEFITS AND CASH
ALLOWANCES IN INDUSTRY
Value per month of common in kind benefits in industry (9A) (list in notes to table)
Value per month of common cash allowances in industry (9B) (list in notes to table)
Living Wage take home pay in industry, when workers receive typical in kind
benefits and cash allowances in industry (10) [10= 6-9A-9B]
Living Wage gross pay in industry if worker receives typical in kind benefits and cash
allowance in industry (11) [11= 8-9A-9B]
Summary Table

6. Secondary data
• Using secondary data from HIES and PDHS, we
determined the following:
– Using family size data, fertility rates and mortality
rates, we arrived at the average family size = 5.4
– Using labour force participation rates,
unemployment rates and part-time employment
rates we arrived at the number of full-time
workers per family = 1.6
– Local housing conditions
– Proportions of household expenditure by category

7. Major expenditure
group (change if
necessary)
Secondary data Adjustments
Sub-major expenditure group
(change as necessary)
% Expenditure in
secondary data
Adjustments explanation % after
adjustment
Food
Food & non-alcoholic beverage 44.44 None 44.44
Alcohol (if included in food group) - Put into alcohol & tobacco major group &
use 0 here
0
Tobacco (if included in food group) .94 Put into alcohol & tobacco major group &
use 0 here
0
Meals away (if included in food
group)
- Put part* of this into restaurants &
subtract this part here
Cooking fuel (if included in food
group)
- Put into housing & use 0 here 0
TOTAL FOOD 43.5 43.5
Housing Actual rentals, imputed rentals,
maintenance, other housing
expenses
25.32 (WHEN cooking fuel was in food group)
Add amount to amount for housing.
25.32
Alcohol & tobacco
Alcohol - (WHEN alcohol was in food group) Add
here. Reduce if excessive.
(WHEN alcohol was here) Put same
amount here)
Tobacco - Exclude 0
Restaurants and
hotels
- (WHEN meals away was in food group)
Add part here (see notes below).
(WHEN meals away was here) Put part in
food group & subtract this here (see notes
below)
Clothing and footwear 5.48 No adjustment 5.48
Household contents
and appliances
.43 No adjustment .43
Health 3.05 No adjustment 3.05
Education 3.28 No adjustment 3.28
Transport
Private vehicle purchases 0.00 Subtract part of this when workers
expected to exclusively use public
transport (see notes below)
0
Private vehicle operation .36 .18
Public passenger transport 3.50 No adjustment 3.5
Communication 1.82 No adjustment 1.82
Recreation & culture .99 No adjustment .99
Miscellaneous goods
& services
4.05 No adjustment 4.05
TOTAL NFNH 23.02 22.84
Source: HIES
2011-12
Household
expenditures

8. Food Costs
• Model diet based on secondary data
– Purchased grams vs. Edible grams
– Edible grams into calories based on USDA
standards
– Minimum standards of carbohydrates, proteins
and fats to be met
• Primary data from food market surveys to be
entered to calculate cost for the model diet

9. Model Diet – Inputting purchased grams from secondary data

10. FOOD GROUPS FOOD
1.A Cereals and grains Wheat
Rice
1.B Prepared cereals Bread
(for example: bread and noodles)
2.A Roots and tubers Potato
(for example: potato, cassava) Onion
2.B Starchy fruit or vegetable
3. Pulses, legumes, beans Beans
(for example: legumes, beans, nuts) Lentils
4. Dairy Milk (cow)
(for example: milk, sour milk, curd) Yogurt
5. Eggs Eggs
6. Meats & Fish Chicken
(maximum of 3 meats and 2 fish) Beef
7.A Green leafy vegetables Spinach
7.B Other vegetables Tomato
Turnip
8. Fruits Banana
Apple
Orange
9. Oils & fats Oil
10. Sugar Sugar
11. Nonalcoholic beverages Tea
Model Diet:
The 11 food
groups

11. Model diet – Adjusting consumption according to
norms and protein, fat and carb requirements

12. Housing Costs
• Housing characteristics from secondary data
• Setting a housing standard – rural vs. urban
• Rental values
• Construction and maintenance cost to be
determined if no rental market

13. Name of local area Urban
Type of dwelling (e.g.
detached, flat, compound
house, hut, etc.)
Standard (with explanation when useful)
MATERIALS OF DWELLING
Walls Bricks with cement, cement wall, concrete – Mud
not acceptable
Roof Pakka, e.g. RCC, Tier-Girder – without steel and/or
cement not acceptable
Floor Mud not acceptable.
AMENITIES
Type of toilet Pit or piped. Less than that not acceptable.
Source of drinking water Boring is okay --- what depth?
Source for other water
Cooking fuel Gas; wood fine if proper ventilation
Source of lighting 1 window, 1 bulb
Electricity? Yes
Ventilation quality 1 window per room; 1 fan
Number of windows 1
LIVING SPACE
Number of rooms number of bedrooms + kitchen + toilet
Number of bedrooms 1 bedroom for 2 persons or for 3 children
Is kitchen inside house? Should be?
Separate kitchen room in
house (and if with chimney)?
Yes, with some ventilation, along with food storage
space and fridge
Number of rooms per person 0.8
Number of square meters of
space
50 sq. metres, 2+ marla
CONDITON IN GOOD REPAIR
Urban
Housing
Standard

14. Non-food Non-Housing Costs
• Communication
• Education
• Health
• Transport
• Recreation and Culture
• Miscellaneous

15. Arriving at the Living Wage
• Cost for average household
– Food
– Housing
– Non-food Non-housing
– 5% buffer
• Cost divided by number of workers to get
living wage