The struggling employed

For them, it’s living from day to day

Amir is a driver for a large car rental company. His take-home salary is about Rs 14,000 a month. He works about 12 hours a day, sometimes longer if he has to drive out of the city or if guests have to be driven around Karachi at night. He has two children, a 6-year-old son and a one-month-old daughter. He lives in a rented house (Rs 4,000 a month). After rent, utilities, his son’s school expenditure (Rs 600 per month in school and tuition centre fees) and other sundries, he is almost always short of money even to pay for decent balanced diet for his family and himself. He has no savings and his wife cannot work as she has to look after the one-month-old and the six-year-old when he returns from school. Amir is determined to have his children educated in good English medium private schools so that they can have a much better life than him and his wife.

But this is not going to be easy. He used to work as an automobile mechanic (painter) and made more money. But then he fell seriously ill and the doctor told him that the fumes from the paints will kill him and he had to find something else to do. In the months he was ill and unemployed he came very close to starvation and complete desperation. He was lucky he knew an alternative skill and someone gave him a job as a driver. Even now he is just one health and/or employment shock away from starvation. Even the way he is, he is not able to save anything or invest for the future, and has to shave on food and other needed expenditures. What does the future hold for him and his family?

Amir is not alone in facing these odds. A huge number of low-skill service industry jobs in urban areas are keeping people in such a situation. Zahid, another driver working in Islamabad is only able to visit his family, living in Rawalpindi, once a week as he cannot afford daily bus fare. This after the fact that his wife, in addition to looking after children, does a job and so acts as a single mother for most of the week. Muzaffar is a security guard working for a big hotel in Islamabad. He stands on his feet, with a gun, for 10-12 hours a day. His take-home salary is only Rs 7,000. Many other security guards get only Rs 5,000 or so (though the minimum wage is Rs 7,000 a month now, there is no implementation of the law). Azam, a peon in an office, gets about the same, and Tahir, working as a delivery person for a courier firm, is in the same situation.

What future do these people have? Will they live on the edge for the rest of their lives? All of them are working hard. In fact, as hard as they can and they put in very long hours. The compensation they get, given demand/supply, is low. All of them have no possibility of learning another skill. They do not have the time, cannot afford to be unemployed, cannot pay for any skill training, and, most often, have limited education. And getting more education is similarly not a realistic option for most: they just do not have the time or money.

But given the lack of savings and the ability to bear shocks, the situation of all such hard-working low-earning employed is not sustainable. For some, joint families might be able to smooth some of the shocks, but for others, living in nuclear families or where joint families cannot help, the situation is not sustainable and they need help. In many other countries there is help available for such people and we can learn from some of these examples. Most countries provide decent quality education for free, through the public sector, for all children up to high school. For each of the family mentioned above this is a major worry and a significant monthly expense. If the state could take care of the education of children, it would be a huge contribution for most families in the lower middle-income range.

One of the biggest, if not the biggest, concern of most families is medical expenditure. Health shocks, for any member of the family, can destabilise even middle-class families, far less ones that are on the edge and have no savings. Offering better public health facilities, introducing health insurance, with employer and state contributions, given that employee contributions from lower middle-income group is not possible and/or fair, could be ways of doing this. Again, this is not something new. Many other countries have been able to do it and are managing these systems. If health issues were taken care of, it would be a huge pressure off from every family in Pakistan, especially from struggling families working in the service sector.

Other countries have many other options. Some, like India, are experimenting with employment guarantee schemes, some have cash transfers or nutrition programmes for children, some compensate mothers in low income families for staying home and taking care of their children, and others offer generous unemployment and other benefits to ensure consumption smoothing. We can experiment with these, but even if we cannot afford to do that for the time being, taking care of health and education expenditures, with provision of decent quality services in these areas, could not only ease the troubles of these families substantially, it could also ensure the next generation has better opportunities than the current one, and the families are able to, over time, invest optimally in education at the very least. There might be some space for savings too, given health/education are taken care of, but even if that does not happen, the advantage from health and education benefits would be large enough to justify the expense and effort.

The increasing income/wealth inequality in Pakistan is partly a feature of the economic model we are following. The rich have tremendous advantages when they enter the economic field and can make even more money over time. They poor or middle-class start with a disadvantage, and it is easy for them to fall further behind due to shocks of one sort or the other. Welfare state is a necessity for Pakistan. As a minimum, and for starters, offering good quality education and health facilities and providing health insurance would be a great starting point for a welfare state. It could help a huge number of families in Pakistan. We need some pressure on political parties and the state for this. Could this become an issue for political parties in the run-up to the coming election?

The writer is an Associate Professor of Economics at LUMS (currently on leave) and a Senior Advisor at Open Society Foundation (OSF). He can be reached at [email protected]