The Sunday Leader

A Nation Battling For Survival

  • Families living in the red since 2006

By Mandana Ismail Abeywickrema

Trade unions in the country have started to beat war drums against the government over the increasing cost of living and the decline in the people’s purchasing power.

Economists warn that the fuel price hike in February coupled with the latest electricity tariff increase would once again push the inflation rate into a double digit soon.

With International Workers’ Day just around the corner, when the country’s administrators greet the working people with more hollow pledges of a better life, many trade unions have started to agitate over the difficulties faced in battling for survival.

Opposition trade unions are currently engaged in forming a joint alliance to fight for common causes and key among them is the battle against the rising cost of living.

The cost of living has been on a steady increase since 2006 while the salaries of the working masses has shown little or no progress at all in increasing according to the cost of living index. The Mahinda Chinthana policies aimed at taking Sri Lanka to becoming the Miracle of Asia has been implemented since 2006 and families have been battling for survival since then.
The cost of living index that was 140.8 in January 2006 has increased to 170.8 by March 2013.

According to the statistics of the Census and Statistics Department, the cost of the market basket of a family of four was Rs. 25,344 (140.8×180). By March 2013, the value has increased to Rs. 47,824 (170.8×280).

The cost of living has therefore increased by Rs. 22,480 between January 2006 and March 2013.

Head of the National Trade Union Centre (NTUC), K.D. Lalkantha observed that a family four members has not been able to increase their income according to the increase in the cost of living.

“If the monthly income of a family has increased by Rs. 22,480, then that family could continue to enjoy the same purchasing power as they did in 2005,” he said. He explained that with the decline of the purchasing power, families have started to cut bank on their expenses.

“The government needs to understand that development means uplifting the areas of politics, economics and society,” he said.
The head of the NTUC observed that while the self-employed like labourers, etc., have managed to increase their prices for the services provided, the fixed income earners have faced a severe problem in battling against the increasing cost of living.

According to Lalkantha, fixed income earners who work for a monthly wage are unable to receive a pay according to the increase in the cost of living.

The minimum salary of a public sector employee that was Rs. 11,730 in 2006 has now increased up to Rs. 20,089.50. However, it is still not on par with the monthly value of the current market basket, which is Rs. 47,824. Nevertheless, the plight of the private sector employees and that of the estate sector workers is far worse than that of the public sector workers.

The minimum salary of a private sector employee that was Rs. 5,000 in 2006 has increased to Rs. 9,625 by 2013. An estate worker’s salary that was Rs. 6,500 in 2006 has increased to Rs. 15,500.

The numbers above are a clear indication of the plight of the working people in the country.

The 6.5 million private sector work force and the 1.3 million public sector employees add to a total of 7.8 million.
However, Lalkantha points out that the number of persons who actually depend on fixed incomes would be far greater when you calculate the family members as well.

“As you can see, there are a large number of people in the country who are affected by the slow growth of salaries in comparison to the burgeoning cost of living,” he said.

Raising another factor that has affected the working people, Lalkantha said the government has failed to gazette the new value of the cost of living index.

He explained that a unit of the cost of living index was valued at Rs. 180 in 2006 and the Census and Statistics Department had later stated that the new value of a unit would be Rs. 280 following a survey.

“As a result most of the employees in the private sector and the public sector have been deprived of receiving the cost of living payment that is due to them. Most employers calculate the cost of living allowance according to the old unit value of Rs. 180,” Lalkantha said.

Be that as it may, the expressions on every worker’s face are now the same – frustration and impatience. The outcome of these frustrations if not addressed prudently would not be desirable to see.


Struggle To Increase Private Sector Salaries

Head of the Inter Company Employees’ Union (ICEU), Wasantha Samarasinghe says that the salaries of the private sector employees are not increased according to the rising cost of living and that there is a huge disparity between the minimum wages of the public and private sectors.

He explained that the minimum wage of a public sector employee is Rs. 20,089.50 while the minimum salary of a private sector is a mere Rs. 9,625.

“The minimum salary of a private sector is no way sufficient according to the rising cost of living, but it should at least be on par with the minimum salary of a public sector worker,” Samarasinghe said.

He observed that the minimum salary paid to the private sector worker was in fact a violation of fundamental rights.
The ICEU has commenced a campaign demanding an increase of Rs. 10,463 of the minimum wage of a private sector employee.
“Our demand for a salary increase has a basis. We want the minimum salaries of the public and private sectors to be on par,” Samarasinghe said, adding that the government only looks at the private sector employees during elections.


“Inflation Would Hit Double Digit”

Development Economist, Principal Researcher, Point Pedro Institute of Development, Muttukrishna Sarvananthan says that inflation would hit the sensitive double-digit sooner than later due to the fuel and electricity price hikes.

He explained that according to the latest Household Income and Expenditure Survey (HIES 2009/10) undertaken by the DCS, the average (mean) monthly household expenditure (nationally) was Rs.31,331; out of which Rs.18,064 (57.7%) was non-food expenditure. Out of the total non-food expenditure the second highest expenditure (after housing) is spent on transport. That is, on average, every household spends Rs. 2,317 (or 12.8% of the total non-food expenditure) for transport.

In addition, average monthly household expenditure on fuel and light is Rs. 1,278 or 7.1% of the total non-food expenditure. Thus, almost 20% of the non-food expenditure is spent on transport and fuel/light.

He observed that the foregoing figures are averages for the country as a whole. Of course, there are differences between urban, rural, and estate areas, between different districts, and between different income groups.

“The 20% national average expenditure (out of the total non-food expenditure) for transport and fuel/light will have considerable impact on inflation. Inflation would hit the sensitive double-digit sooner than later due to the fuel and electricity price hikes,” Sarvananthan said.

When inquired about the current disparity between household income and expenditure, he said that according to the latest Household Income and Expenditure Survey the mean monthly household income was Rs. 36,451 whereas the mean monthly household expenditure (food + non-food) was Rs. 31,331.

As for whether the salary structures of the public, private and estate sectors geared to meet the rising cost of living, Sarvananthan said that salary structures cannot be solely determined on the basis of cost of living.

“The productivity of labour should also be factored into the structures of salary in different sectors. There is a mistaken notion in Sri Lanka that salaries should be upwardly revised keeping in line with the rising cost of living. In fact, pay hike without commensurate increase in productivity is also a cause of price hikes. This fundamental economic principle should be understood by the citizens of this country,” he said.

2 Comments for “A Nation Battling For Survival”

  1. marcus fernando

    Sir you have forgotten the pensioneers. They are very badly hit. Specially the honest retired people.

    • gamarala

      Parliamentary pensions are increased with increases in cost of living. Public service pensions are static except for occasional ad-hoc increases.
      Parliamentary “pensioners” qualify after 5 years.Public servants need 40 years for full pension which is only 70% of last salary.

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