Price of politics to the cost of living in Sri Lanka

By Dilshani Samaraweera

Trade unions are petitioning the government to increase minimum wages in the private sector to catch up with the run-away-cost of living. The private sector is bracing to fend off another mandatory salary increase.

Last week some trade unions petitioned the Minister of Labour Athauda Seneviratne and President Mahinda Rajapaksa to increase the minimum wage in the private sector to Rs 11,730 per month from the current minimum of under Rs 5,000.

Step-motherly treatment

A statement from the Free Trade Zones and General Services Employees Union points out that while public sector minimum salaries were increased repeatedly due to acknowledged increases in the cost of living, this relief was not available, in an equal manner, to people working in the private sector.

Although mandatory minimum salary increases were previously imposed on an unwilling private sector, the trade union says the increase is much lower than the salary increases for people working in the public sector.

The trade union says that after the latest public sector salary revision an “unskilled grade 3 labourer” in the government sector gets a minimum salary of Rs 11,730. On top of this, from July this year, government employee will get a monthly cost of living allowance of Rs 2,100 and an allowance of Rs 2.50 for each increased unit in the cost of living index.

However, the comparative private sector salary is less than half this wage although working in the same country and facing the same increase in cost of living. “The minimum monthly salary of a vast majority of employees in the private sector remains at below Rs 5,000,” says the trade union.

As the six million people working in the private sector are bringing in most of the country’s income, the trade union queries why private sector workers are treated as less valuable. The trade union says people working in the private sector are also squeezed by the increase in the cost of living and is asking for equal treatment.

JAFF protest

Having already experienced a mandatory salary increase this year, the country’s biggest employer in the private manufacturing sector, the garment factories, issued its own statement.

“While it is appreciated that the high cost of living and other increases in goods and services have prompted this demand it must be emphasized that such requests must be tempered by the realities facing the textile and apparel industry,” said a statement from the Joint Apparel Association Forum (JAAF), the umbrella representative of the garment industry.

The US$ 3 billion export business that employs over 300,000 people in garment factories and supports around 800,000 people though indirect and related employment says it cannot bear a cost increase in the form of a salary increase.

“The industry is experiencing severe difficulties following the abolition of garment quotas and the loss of business to China and other more competitive suppliers in the region. This is mainly due to our high cost of production at a time when selling prices continue to decline,” said the statement.

The JAAF also says that at least in the garment business, salaries of workers are better in Sri Lanka than in many other regional competitors like Bangladesh, India and Vietnam. The JAAF says that if the government accepts the trade union stipulated minimum wage, Sri Lanka’s garment industry will successfully out price itself.

“If the minimum wage is increased to the levels suggested by the trade unions we will be the most expensive garment manufacturing country in the world.

This is because already on top of the minimum wage we have to pay EPF, ETF and other incentives. Also we can’t employ people at the current minimum wage. No one will come to work for that amount.

You can’t get even a trainee for less than Rs 5,000. Even now it costs a garment factory about Rs 10,000 per head for a good machine operator when you add up all the benefits with the salary,” said the spokesperson for the JAAF on labour issues.

Price of politics

Given that the public sector salaries are paid through private sector contributions as well, perhaps it is time Sri Lankan governments and politicians think twice before handing out favours for political reasons. Favouritism is different from fair treatment. Increasing public sector wages without a corresponding improvement in public services is hardly fair by the rest of the country. Such favouritism could lead to dissatisfaction among other sectors of society and will also encourage the ‘waiting for a government job’ mindset among young people.

Things might work out better if decision makers come up with other methods rather than outright payouts, to motivate the public sector that has been de-motivated again largely through political interference.