Minimum wage bill evokes mixed sentiments from private sector

The passing of a bill on minimum wage in parliament on Friday received mixed views from the private sector stakeholders, but they did not hold back their dismay over the government continuing to intervene in their affairs, an act least expected when the new regime took control last year. The disconnect between the new wage structures and productivity appears to be the key concern the private sector representatives have.

However, they said they were yet to gain clarity on the execution process. According to the Employers’ Federation of Ceylon (EFC), the employers are not generally opposed to either implementing or adjusting the minimum wage rates. But they appear to be worried about the implications that would arise when the authorities interfere in the mechanism and processes that have been followed by them granting wage increases beyond the minimum rates.

Citing the newly passed ‘budgetary allowance’ as an example, the EFC said the employers would not welcome such interventions. Sharing with Mirror Business the implication of the recently passed bill, EFC Director General Kanishka Weerasinghe said,

“In relation to the National Minimum Wage Bill, we have always maintained the position that such interventions should be made after a careful study. “The EFC is not opposed to having national or industry-based minimum wage rates, but ideally we would like to see such rates linked to productivity. We also hope that these mechanisms are used only when it is essential and not based on political decisions.” When the chamber heads were contacted, similar sentiments were expressed. “The minimum wage is good. In fact, we are paying much higher rates than that. The unwanted allowance that we are asked to give is the question.

For the way things are going, it seems as if it is done for political gain,” said Ceylon National Chamber of Industries Chairman Tissa Seneviratne. Ceylon Chamber of Commerce Chairman Samantha Ranatunga stressed the need to look at Sri Lanka’s competitiveness in the national and global fronts before deciding on wages.

According to him, Sri Lanka is already losing jobs to lower wage countries. “I think on a global competitiveness basis we should benchmark our wages against global conditions,” said Ranatunga. Meanwhile, National Chamber of Exporters President Sarada de Silva said the members of his institution are no way in favour of the government intervention. “On principle, we do not agree with the government legislating on private sector salaries. If the government legislates we will have to pay, will abide by the law, but we are not for this,” said Silva, while pointing out smaller companies will be placed in a more challenging position

While it is still not clear as to how companies failing to abide by the move would be penalised, the EFC said it hopes the authorities would be lenient in dealing with the employers without rushing to penalize them, as the private sector is considered as the engine of growth. With the provisions pertaining to minimum wage scheduled to apply to all employers in the country, including the small and medium enterprise (SME) sector, the EFC stated that the authorities would have to be careful on how they implement the new measures.

Pointing out that the SMEs represent almost 67 percent of employers and businesses in Sri Lanka and contribute significantly to the gross domestic product (GDP), the EFC said, “One hopes that these measures will be implemented without additionally burdening them (SMEs) or dampening their enthusiasm and growth.”