Sri Lanka will not legislate private wages but talks ongoing: Deputy Minister

COLOMBO (EconomyNext) – Sri Lanka cannot legislate private sector wages but discussions are on with business on raising wages, Deputy Economic Policy Minister Harsha de Silva said as unhappiness among workers grew following a massive salary hike to state workers.

Operating costs of businesses have come down and businesses could pass down some of the costs to the workers, de Silva told reporters.

All households in the country have benefited from tax cuts in essential goods, cooking gas and fuel, he said.

But the administration cannot legislate to force businesses to increase salaries, he said responding a question from a reporter why the state cannot pass a law in parliament to force private businesses to raise salaries.

The minimum wage of a state worker along with allowances will rise to 30,040 rupees a month after 5,000 rupee granted this month, on top a 3,300 increment given by the last administration.

The new administration will pay another 2,000 after June taking the total increment up to 10,000 rupees.

There has been growing unhappiness among private sector workers with the possibility of industrial action also emerging.

A 10,000 rupee salary increment raises the possibility of bankrupting private firms and the country losing export competitiveness.

De Silva is a proponent of creating a ‘Social Market Economy’ (Soziale Marktwirtschaft), the most prominent example of which was West Germany, after the defeat of the National Socialists.

Mandated wage increments were a lynchpin of an earlier failed Sozialpolitic policies which pre-dated the Nazis and led Germany into hyperinflation and economic collapse.

Price controls were also a key part of the economic strategy of both the Nazis and the earlier Social Democrats.

This week Trade Minister Rishad Bathiudeen issued price controls through gazette, saying prices were not falling fast enough and said about 300 traders will be taken to court.

De Silva insisted that no money will be printed to pay the salary increment and it will be achieved through re-allocating expenditure.