Manipulated statistics and calculations are now the order of the day as the government struggles to downplay the real problems faced by the people.

The latest ruse adopted by the government to paint a rosy picture of the country’s economy and the people’s living standards is to highlight the per capita income, which is said to stand at US$ 1,600 according to the Central Bank (which amounts to a monthly income of nearly Rs. 15,000 per month for each Sri Lankan).

Analysts say that the per capita income used by the government is misleading.

"That is, the Gross National Product (GNP) at current prices (3,538,630 million) in 2007, which is called the nominal GNP, is divided by the total population (20 million) in 2007. This gives an annual per capita income of Rs.176,932 and monthly per capita income of Rs.14,744 (i.e. average income per person per month in Sri Lanka) in 2007," said Principal Researcher, Point Pedro Institute of Development, Dr. Muttukrishna Sarvananthan.

According to him, if we use the GNP at constant (2002) prices (2,208,137 million), which is called the real GNP, the annual per capita income in 2007 would be Rs.110,407 and monthly per capita income would be Rs.9,201 (i.e. average income per person per month in Sri Lanka). "This is the realistic measure of per capita income because it takes into account the rise in prices, i.e. inflation," he says.

Furthermore, according to the latest Household Income and Expenditure Survey (HIES) undertaken by the Department of Census and Statistics (DCS) during 2006/2007 the mean per capita income per month was only Rs.6,463 (i.e. the average income per person per month) and the median per capita income was only Rs.4,043 (i.e. 50% of the population in Sri Lanka received less than Rs.4,043 per person per month).

"All the foregoing figures pertain to the country as a whole. There are of course district-wise variations in the above figures. HIES was conducted among a representative sample of households in 19 out of 25 districts in the country. All the five districts in the north and the Trincomalee District in the east were not covered by this survey. Therefore, it does not cover the entire country. Sri Lanka’s national income accounts also do not fully cover the LTTE controlled areas in the north," Dr. Sarvananthan explained.

Advantages and disadvantages

However, he says that there are disadvantages and advantages of HIES over the national income accounts.

Since HIES is a representative sample survey it does not cover each and every household in the country, which is a disadvantage vis-à-vis the national income accounts. The advantage of HIES is that it covers the informal economy as well in addition to the formal economy.

In the case of national income accounts it covers only the formal economy and informal economy is not captured.

Therefore, it could be argued that the national income account is an underestimation of the actual income of the country.

"The wages and salaries, both in the public and private sectors, have not kept pace with the rise in inflation. Whatever pay rises received by employees (both in the public and private sectors) have been lower than the rate of inflation. Therefore, we can conclude that the income of employees have declined in real terms over time," the economist said.

Dr. Sarvananthan says that the per capita income worked out from the national income account is deceptive because it includes income of institutions as well (government, non-government, private, etc.), which may not necessarily filter down to the household incomes, which is in contrast to HIES which captures solely the income and expenditure of households, and which is the real disposable income of households and by extension, individuals.

Thus, a significant part of the per capita income derived from national income accounts is ‘ghost’ income as far as individuals are concerned, which is reflected in the significant discrepancy between per capita income derived from the two sources, viz. HIES and national income accounts.

Flaunting

With the government flaunting the figure of per capita income to tide over the allegations of economic mismanagement and claiming Sri Lanka has now graduated to a middle-income country, the work force in the country is left to grin and bear with a lot less than the Rs. 14,744 they are supposed to have in their pocket at the end of each month.

Meanwhile Central Bank statistics show that salaries drawn by the majority of the country’s workforce have recorded a negative growth since 2005.

While only 16% of the country’s labour force is employed by the public sector, 63% is engaged by the private sector.

Disparity

Statistics reveal that the salaries of the public sector employees have seen a positive increase while the private sector employees’ wages have seen negative growth.

According to the Labour Department the real percentage change in private sector salaries has been an increase in the negative growth rate of -4.8% in 2004 to -9.9% in 2006. The real percentage change in the public sector worker’s salary has been quite the opposite as it has recorded an increase from 14.0% in 2004 to 15.1% in 2006.

The statistics clearly reveal that the majority of the labour force in the country is drawing a salary that obviously does not commensurate with the expenditure, given the rising cost of living.

Even the income of the Samurdhi recipients has seen a decline.

Responding to an oral question raised in parliament by UNP Parliamentarian, Ravi Karunanayake on Samurdhi beneficiaries, comparing the Rs.1000 in 2004 with its value in 2007, the answer provided by the government was that the present real value stood at Rs.560.

The mathematics

Asked about per capita income Karunanayake said, "one could basically take the total income and 10 people can get 10 million dollars per person and the others can get $2 per person, but when you average it, they will say a person gets $1600. What $1600 dollars means is that you are receiving roughly Rs.15,000 per month. Does even a police constable get that? So what is this per capita distribution?"