“Clash of the Titans” continues as employers battle unions over wage hike
View(s):Disagreement between Sri Lankan employers and trade unions over a wage hike as prescribed in the last budget for the public and private sectors continues with an exchange of letters between the two sides.
The latest ‘missile’ was sent on Wednesday by Employers Federation of Ceylon (EFC) Director General Ravi Peiris who wrote to a group of unions disputing many of the issues they have raised over the wage hike to the private sector.
Excerpts of the letter:
“At the outset, let me first dispel a misconception or a misunderstanding you seem to have in making this demand. You are justifying this demand on the basis that the government has granted salary increases to the public sector employees. Comparing the public sector with the private sector in terms of wage fixation is worse than comparing apples with oranges. The fundamental basis on which the private sector operates in terms of wage fixation is the capacity of the employer and the market forces. These are the two determiners in wage fixation. This position is further strengthened by the legislative framework we have through the Wages Boards Ordinance for the establishment of Wages Boards trades for minimum wage fixation. Once the minimum wage is fixed there is ability for parties to fix wages in terms of capacity, supply and demand and collective bargaining. Furthermore, you will also agree that an employee in the private sector not only receives a monthly wage. In most cases, depending on the nature of the industry, there are other monetary and non-cash benefits that these employees receive, which are not available to a public sector employee.
Total earnings
Therefore, what needs to be taken into account is the ‘total earnings’ of an employee in terms of a package and not only the basic salary that an employee receives. Incentives, bonuses, meals, transport are some of the additional benefits afforded to private sector employees depending on the nature of the industry
Quite apart from this, we also do not agree with your position that the government should intervene through a mandatory wage increase through legislation because ‘the private sector employees have not been given any increase’. You are well aware that even right now, we are engaging with your unions in different work establishments with regard to revision of Collective Bargaining Agreements. Such revisions take place along with revision of wages and other benefits. Quite apart from this, you are also aware that many employers have wage policies whereby wages are reviewed annually on the basis of a transparent performance management system.
Collective bargaining
Another important matter that we wish to highlight is the fact that your unions have negotiated Collective Bargaining Agreements in respect of your members in different companies, on different terms. The salary increases have never been uniform. Your demands in the collective bargaining processes have also been different from company to company. Furthermore, there are subsisting Collective Agreements entered into with some of your Unions whereby you have agreed to a wage increase less than Rs. 2,500.
In this scenario, how could you justify a demand to the government to legislate a mandatory wage increase of Rs. 2,500 to all private sector employees?
You will recall that the government has not intervened in private sector wages for the last 10 years. This does not imply that the private sector employees have not received wage revisions for 10 years. The last intervention was through the Budgetary Relief Allowance of Workers Act No.36 of 2005 which created many anomalies and disputes in respect of wages in many private sector establishments. The fact that this piece of legislation exempted Collective Bargaining Agreements did not safeguard collective bargaining in some cases.
Different enterprises
The very foundation of collective bargaining, which culminates in a Collective Bargaining Agreement, envisages agreement being reached on terms and conditions of employment after considering each other’s interests. This has been the basis on which we have negotiated with your unions over the years. The fact that your unions have been able to negotiate different terms in respect of different enterprises (depending on their capacities) is a clear acknowledgement of the fact that there cannot be a mandatory uniform wage increase imposed on the private sector. You are well aware that already 26 Wages Boards have sat and agreed on a revision of minimum wages in respect of different trades. These revisions also vary from industry to industry. This further reiterates that there cannot be a ‘one size fits all’ approach in wage fixation in respect of the private sector.”