Sri Lanka to legislate minimum wage with 25-pct increment

COLOMBO (EconomyNext) – Sri Lanka will legislate a minimum wage of 10,000 rupees which will be pushed up by 25 percent in two stages, according to a decision made by the cabinet of ministers.

Labour Minister S B Nawinna had made submitted to proposal to prepare a bill to set minimum wages, a statement by the state information office said.

A 1,500 rupee increment will be made effective from May 01, 2015 and a second increment will be made effective from January 01, 2016.

Minimum wages can kill economic activity which are only viable below that age and also deny employment opportunities to any unemployed or unskilled person who is willing to work below that but no one is prepared to start such a business because it is illegal.

Minimum wages can also kill export industries.

However if the minimum wage is set by the rulers below the market wage, it will not destroy jobs or prevent low wage industries from being started.

Sri Lanka is now facing labour shortages in several sectors, which may result in higher minimum wages.

Politicians and other rulers make it difficult for people to make ends meet by increasing government spending with deficits, which generates high inflation and currency depreciation when central bank keep interest rates down. A depreciating currency will bring down all wages in real terms.

Rulers can also make life difficult for the poor by giving guaranteed prices or though import duties.

The current administration has imposed price controls on a series of small business, charged super gain taxes on small businesses.






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