The going gets tougher

Construction sector workers will have recorded the best quarter in terms of wage increase since 1QFY20. The daily wages as tracked by the PBS on a weekly basis have appeared to increase 12 percent over the same period last year. Only that it is still going to be the second worst quarter, the previous one being the worst, in terms of real wages, as inflation continues to stay north of 20 percent. The real wage growth for 2QFY23 is likely to stand at a negative 13 percent.

Mind you, the construction wages here are pitched against CPI, and not SPI, which may well be a truer reflection, especially for the income class in question. The SPI for the lowest quintile, where most of the daily bread earners such as masons, painters, and plumbers would fall, has been consistently higher than the other 4 quintiles for most past 2HFY23. If anything, the electricity price change does not reflect completely as per the PBS methodology, which has impacted the low consumption categories much more than others, as the previous slab benefit has gone away.

And then there are food prices – perishable and non-perishable – both having increased manifolds since the PDM government took over in April 2022. While the commodity prices may well have come off from the peak, the adjustment in transportation fuel prices and the rather downward sticky nature of most non-perishable food items, meaning the pain is there for more months to come. The average wage of a daily wager in the construction sector is up 10 percent since April 2022, whereas a cup of tea is dearer by 22 percent in the same period. Wheat flour and a plate of cooked daal are up 32 and 24 percent, respectively.

With the flour prices going haywire, and gas availability getting scarce, expect Naan prices to go further up as tandoors opt for more expensive cooking fuel to keep the shop running. The Naan prices are not tracked by the PBS, but it is fair to assume they have risen more than the wheat flour prices in the recent past.

With the IMF increasingly appearing to be the only way to go for Pakistan to come out of the rut (temporarily), any respite in prices or relief to the marginalized appears highly unlikely.