SL employers urge government not to legalise mandatory wage increase for workers
Whilst agreeing to the need of granting a pay hike for private sector workers, the Employers Federation of Ceylon (EFC) reiterated its call to the government not to go ahead with the decision to introduce legislation making compulsory a wage increase. The legalising of a wage increase for private sector workers will bring disastrous effects for the private sector and the employers will have no option other than resorting to legal action to safeguard their private businesses, a top official of the EFC said.
The introduction of a uniform wage increase on private sector employers with different capacities can be totally counterproductive and may even lead to the closure of some of the businesses, EFC CEO Ravi Peiris told a discussion forum on the proposed private sector wage increase at the Central Bank’s Staff Training Centre Auditorium in Rajagiriya last week.
He added that the EFC held several rounds of talks with Prime Minister Ranil Wickremesinghe on the wage mechanism structure of the private sector and they emphasised the need of determining the wage hike on the nature of the industry, the capacity of the employer, market conditions and performance of the employee.
Mr. Peiris noted that whenever the government has directly intervened in granting ad hoc wage increases to the private sector, the implications of it have been disastrous. The last such intervention was when the government introduced the Budgetary Relief Allowance of Workers Act No. 36 of 2005 which created much confusion and anomalies within private sector enterprises.
Even after almost 10 years, there are still disputes and issues relating to the implications of the wage revision granted under this law, he pointed out.”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,” Mr. Pieris said.
“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,” he added. These Wages Boards sit from time to time and revise minimum wages. During the recent past, there have been revisions every year, the last of which was in 2014. He disclosed that the government is preparing to introduce a draft bill to raise the salaries of private sector employees.
The Cabinet has approved a proposal submitted by Labour Minister S.B. Navinna towards this end recently. This draft bill would include provisions defining the minimum monthly salaries of all private sector employees as Rs. 10,000 and from 1st May 2015 this would be included in their basic salary. According to the bill, the minimum daily wage of an employee will be Rs.400.
As the first phase towards increasing the salaries of private sector employees by Rs. 2,500, their current salaries would be increased by Rs. 1,500 with retrospective effect from 1st May and under the second phase an additional Rs. 1,000 would be added to their salaries as of December 31 2015. However the maximum salary should not exceed Rs. 40,000.
Several employers who attended the forum expressed their concern on the wage hike imposed on them by the government.
They noted that they have their own procedure on revising wages. Some of them have already granted wage increases at the beginning of this year according to their procedures.
A leading private sector employer pointed out that an employee in the private sector not only receives a monthly wage but also other financial benefits which are not available to a public sector employee. Therefore, it is essential to consider total earnings of an employee in terms of a package and not only the basic salary that an employee receives he said adding that the incentives, bonuses, meals, transport are some of the additional benefits given to private sector employees depending on the nature of the business enterprise.
Given these concerns, many private sector employers noted that they cannot agree to the government’s initiative to legislate a mandatory wage increase of Rs. 2,500 to all private sector employees.