Wages continue to rise while inflation remains benign

Wages in Sri Lanka are continuing to make gains while general consumer prices remain subdued making the wage earners economically better off. However, higher wages have made businesses and industries to scramble to find affordable labour to stay competitive in the market place. 

Sri Lanka’s wages measured by the wage rate indices for both the public and the informal private sector employees continued to advance during December 2020, with the former making the highest gain. 

Accordingly, public sector employees saw their wage rate rising by 5.7 percent in December 2020 from the same month in 2019 as the index ended at 114.6. Meanwhile, wages for the informal private sector workers rose by 2.1 percent to 188.6 index points in December 2020. 

While the reading of a wage index doesn’t mean that everyone gets a higher pay that leads to a better life financially, the development is good particularly when consumer prices of an economy remains relatively muted. 

Sri Lanka’s inflation measured by the widely used Colombo Consumer Price Index rose by 4.2 percent in December 2020 over the same month in 2019 before decelerating to 3.3 percent in February 2021.

 
A bloated public sector remains a huge burden on the government. Often, the government has to give into the demands of higher pay by the public sector due to strong trade union activities, in spite of the sector still remaining woefully unproductive. 

Some public servants these days misuse the COVID-19 pandemic as the easy excuse to delay or escape from their official responsibilities, while they still receive their monthly paycheck without a day’s delay. 

Some public officials have structured their offices in such away that they have veiled their desks with massive curtain walls, even after wearing two facemasks and a visor in front of their faces. 

If the people are lucky they get to sit about ten feet away, making the two people to scream at each other to communicate, or they are left to remain standing while talking. 

Some officials completely shun meeting clients and some leave for their houses at anytime they wish, hours before 4.00 p.m. citing the same pandemic excuse. But this practice wasn’t too different even before the pandemic.

The government continues to recruit thousands of unemployed youth into the public sector who get soon accustomed to the rotting culture there. The President’s unannounced visits to some of these public institutions have made no difference to their lethargic practices and deep-rooted corruption. 

Meanwhile, the continuous increase in the pay to informal private sector employees have caused a massive pay imbalance in the society, forcing people to turn into DIY— ‘Do It Yourself’ activities— from plumbing to cleaning to wiring and other electrical works.

The bargaining power has dramatically shifted from white-collar to blue-collar types during the last couple of decades as a result of over manufacturing white-collar types. The blue-collar types who do the real work became short in supply over time, in a massive shift of economic power to them.