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Who benefits from the budgetary relief allowance?


2 June 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}


The private sector always carry out surveys on industry-wise salary averages to ensure that their employees are paid proper wages that ensure the retention of their services

As a part of the private sector, why are we worried about salary revisions being forced on us? We feel that despite the government describing the private sector as an “engine of growth”, it has yet to understand the working of the private sector and its role as a partner in the growth and development of Sri Lanka. 

In addition the authorities have failed to understand the mental and physical struggle endured by the private sector in order to generate income and the hardship we face as industrialist to ensure the satisfaction of employees and partners alike. If we go back a few decades in the recent history of Sri Lanka, anyone can understand the extent of the private sector’s contribution towards the growth of the country’s economy by uplifting the living standards and the buying power of the population. 

Though we faced much unrest due to the then on-going civil war, forced shut down by a simple chit, still  the private sector managed to survive without a single request for retrenchment. Most of the private sector companies even managed to carry out annual increments and bonus payments without a break while continuing the  cooperate  social responsibilities. Thus proving our resilience whilst even the US economy had to freeze salaries following 9/11.We do not think any government has yet realized this important factor. The main contribution government can make to ensure a profitable private sector is to prepare the “pathway “for the sector to move forward.  The government can ensure the proper periodical revision of minimum wages for all industrial sectors.  In addition the government should create legislation to ensure that the private sector maintains proper ethics where all stake holders and employees are concerned. It is important that the government ensures good governance.  Leave it to the private sector to   work towards in creating  “smiling factories” where they can be partners of progress to ensure a better life for its employees and they will become contributors towards  the government revenue by way of taxes to improve free education, free medical facilities etc. to the entire  population.

If the government can enforce minimum wages for all industrial sectors, why should they worry about salary revision? So far we can see only one reason. “ The government can use the salary revision as a slogan to be used specially on May day, by taking credit for the salary revision and taking over the profit due to the private sector for the efficient management that helped to revise income of its employees on yearly basis ‘.

Basis of the revision 
As a policy the private sector carries out salary revisions every year based on 

  • Performance of each employee 
  • Achievement of Key performance indicators 
  • Achievement ofSpecific and challenging tasks are given in advance. 
  • This is the best tool the private sector uses to motivate its employees in  improving  the  productive
  • Rate of inflation

The private sector always carry out surveys on industry-wise salary averages to ensure that their employees are paid proper wages that ensure the retention of their services. Best performers are recognized and rewarded with the highest  possible salary revisions. It is necessary that the government understands that in  private sector “Increments or salary revisions are not given by the management on a silver tray, they (the operators) have to earn it” by contributing to create value. 

So, we in the private sector couldn’t help but worry when the very” foundation of the free market economy “is forcefully disturbed and the basic right of the employers to revise salaries is taken over by the government without any glance at the balance sheet. This will lead to the creation of an inefficient, unproductive labor force in Sri Lanka, and it will destroy the hopes of the new government converting our country in to a prosperous economical hub in Asia. Furthermore every intelligent person is aware that the Sri Lankan market with a 21.0 million population is being saturated for most of the consumer items .  In order to go global we need a very sound foundation.  The foundation for export is the stability we have gain through the local market. Thus if the local foundation weakens and if their forced to liquidate, going global will be a dream that will never become a reality.
In addition the automatic salary revision will be counterproductive to ensure a higher standard of productivity and the efficiency required to get in to export markets.  It will completely destroy the efficient culture we are trying hard to establish within the private sector.  

Need to adopt best practices 
When the exporting world is adopting so many motivational steps, a 360 degree turn on private sector operation will only result in  demotivating  the entire work force and all hope of a better life for future generations will become a mere mirage.  We must be strong-minded and the government must be clear in adopting all the best practices from the rest of the world. Destroying the interest to work hard in a smart manner will surely weaken the real enthusiasm of all the work force and “idle and earn more“ will become the “tag line” of our labor force. If we are forced to adopt similar measures this will become a reality soon.

The major damage has not stopped with the forced salary revision. The government has forced us to carry out the salary revision in a retrospective manner commencing from the month of May 2015. We do not think it is appropriate to go down and try to explain how the private sector carries out the costing of their products and the way in which we fix the selling prices etc.  As some products are very price sensitive, the private sector spends most of the time to cutting down the costs to ensure, we give value to the money of our dear customers. In addition the members of the private sector are always concerned about cost reduction and any tax changes taking place throughout a financial year in a haphazard manner with no long term planning.  This affects our bottom line.    We cannot add to the current cost of the products another  additional burden. It will lead to a drop in sales and in the long run it can lead to the closing down of the industries and bankruptcy! On top of all the above, as most of the industries are using imported raw materials fluctuation in the currency has created uncertainties regarding the survival of the private sector. Our main worry is how SME’s will face this situation where they operate with very thin margins.  On top of this how can they bear the cost of EPF payment retrospectively?  Even calculating EPF payments in a retrospective manner will demand that the employees to divert labor for unproductive exercises. We are even compelled to make the calculations concerning former employees, who have left the service during this stipulated period. All the above points prove the haphazard manner the whole exercise is being carried out. This can lead to a lot of harassment towards  private sector institutions in the near future by law enforcing officers.The BRA has created so many complications.  The proposed BRA   has to be shown as a separate item in the pay slip, this will create additional unproductive work. We hope this revision by the government will be the first and the last. Otherwise Sri Lanka can easily become the country that has the lengthiest pay slip, as each budgetary relief allowance enforced up to now and those that will follow in the future, has to be shown on a separate column in the pay slip. (Similar to our ballot papers)

(The writer is a Past Chairman of Ceylon National Chamber of Industries (CNCI). He can be contacted via

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