'Ad hoc wage increases disastrous to economy'

By Gamini Warushamana

Trade unions and the Employers Federation of Ceylon (EFC) have locked horns over the private sector salary increase issue.

Trade unions warn that stern action will be taken if the demand is not met while the EFC claims any government-backed ad hoc wage increase in the private sector would be disastrous to the economy.

Joint Secretary, Free Trade Zones and General Service Employees Union, Anton Marcus said that employers should understand the present situation in the sector which is experiencing a serious labour shortage. Some private sector industries are not attractive for workers and there are over 30,000 vacancies in the apparel industry alone.

The estimated labour shortage in the whole private sector is estimated at 700,000. This proves that private sector wages are not attractive or fair to attract workers.

The basic salary of a private sector employee is Rs.10,000 while it will be Rs.35,000 in the public sector with the latest salary increase, he said.

A meeting of trade unions was held on Thursday and all unions agreed to reiterate their demand to the government and employers.

"We have submitted our demands to President Mithripala Sirisena and the Finance Minister to increase salaries and wages in the private sector in line with salary increase of the public sector," Marcus said.

In the budget proposals government called on the private sector to increase salaries by minimum Rs. 2,500 but according to trade unions, the employers have not yet responded, he said.

“Our main demand is to come up with new legislation in Parliament to increase private sector salaries and mere requests alone will not work. This matter was discussed recently at the Labour Advisory Council meeting which trade unions, employers organisations and the government represent. However, employers’ organisations are opposed to any salary increase through government intervention,” he said.

The president of the Inter-Company Employees Union, Wasantha Samarasinghe said that the government is attempting to evade the salary increase issue of the private sector.

The only way to increase private sector salaries is by bringing a Bill to Parliament. But it is not happening and it seems that the Minister of Justice and Labour Relations has sided with the employers, he said. Samarasinghe said that the government's proposal to revise salaries through Wages Boards (WB) is not practical and, therefore, they opposed it.

Because there are 44 WBs and they only cover 2.5 million of the eight million workers in the private sector. The WB can increase only minimum wages of the workers and it will benefit new recruits but existing workers get nothing. The only way to increase salary is by bringing a Parliamentary Bill similar to Budgetary Relief Allowance of Workers Act No. 36 of 2005. Meanwhile, the EFC has warned that mandatory wage increases without appreciating the capacity of the private sector entities to pay will undoubtedly be disastrous to the sector.

In a letter addressed to President Mithripala Sirisena, the Federation pointed out that the private sector salary structure is totally different from that of the public sector. Private sector salary increase depends on the nature of the industry, capacity of the employer, market conditions and performance of the employee.

Therefore, government intervention to enforce ad hoc wage increases in the private sector will be disastrous, EFC said.The EFC pointed out that similar mandatory salary increases by the Government in 2005 created much confusion and anomalies within private sector enterprises and even after 10 years there are still disputes. EFC points out that the formidable piece of legislation on private sector wage fixation is the WB Ordinance which fixes wages for various industries.

The WB revises wages every year and the last revision was in 2014. Private sector employers have different ways of increasing the salaries of the employees.