5 February 2021 09:13 am
Sri Lanka’s wages measured by wage rate indices for the public sector as well as the informal private sector have continued their climb unabated while the inflation decelerated, leaving real wages positive.
According to the wage rate index, a monthly gauge of the wages, public sector employees saw the index that measures their wages rising by robust 5.7 percent in November 2020 to 114.6 index points. This was at a time when the inflation measured by the Colombo Consumer Price Index was 4.1 percent, which further fell to 3.0 percent in January 2021, hitting a two-year low.
Monthly wage index in relation to the inflation is a better mix to gauge the living standards of the salaried people as the higher index over the inflation could spell improving purchasing power and thereby the living conditions, and vice versa.
However, the available wage indices cannot be considered as a conclusive matrix of wages and living standards of the entire population as they apply only to the public sector and the informal private sector. Meanwhile, the wage index of informal private sector employees rose by 3.0 percent in November 2020 as the index hit 188.4 points.
The people engaged in agriculture had the highest gain in their wage index, which grew by 4.2 percent over the same month in 2019.
People in the industry and services sectors saw their wage index rising by 2.7 percent each.
The wage indices also provide a mirror image of the economy during most of November as agriculture activities increased while the industry and services sectors slowed due to re-imposition of lockdowns in certain highly industrial regions.
The higher agricultural yield through 2020 earned higher incomes for those who are engaged in the sector as increased attention was given to food security and value added agricultural produce for exports.
A prolonged period of rising wages and benign inflation help people’s real incomes to rise steadily and thereby achieve higher living standards.