By Mandana Ismail
Wages and salaries, both in the public and
private sectors have not kept pace with the
rise in inflation. Yet, the members of the
legislature have been one sector that has
recorded a positive growth in salaries.
While the masses are left to fend for
themselves under the dire conditions
experienced at present, the government
members and legislators are once again
gearing to increase their salaries.
This increase is allegedly being pushed
along with the proposed salary increase to
The Supreme Court last week ordered the
National Salaries and Cadre Commission to
formulate a final proposal with regard to
the increased salaries by June 3.
Parliamentarians, led by the Prime Minister,
are moving to get their salaries increased
in parallel to a pay hike for judges,
according to reports.
The law had placed the salary of the prime
minister on par with that of the chief
justice and the speaker's salary with that
of the Attorney General as Clause 68 (1) of
the Constitution brought the salaries of
judges and parliamentarians to the same
level in 2005.
Parliamentarians to benefit
Therefore, along with the pay hike to
judicial officers, parliamentarians too are
to benefit from the move, as their salaries
have been placed on par with those of
judicial officials depending on the position
Effective from January 1, 2007, the Prime
Minister draws a monthly salary of Rs.
71,500 in keeping with the new law and the
Speaker Rs. 68,500.
Cabinet and non-cabinet ministers have their
salaries on par with that of Supreme Court
judges (Rs. 65,000).
Deputy ministers, the deputy speaker and the
deputy chairman of committees draw a salary
of Rs. 63,500, which is on par with that of
Appeal Court judges.
Other parliamentarians and High Court judges
get paid the same remuneration (Rs. 54,285).
However, the pay rises received by
employees, both in the public and private
sectors, so far have been lower than the
rate of inflation, which means that the
income of employees have declined in real
terms over time.
Central Bank statistics have revealed that
the salaries drawn by a majority of the
country's workforce have recorded a negative
growth since 2005.
Private and public sector salaries
While only 16% of the country's labour force
was employed in the public sector, 63% was
engaged by the private sector.
Statistics reveal that the salaries of the
public sector employees have seen a positive
increase while the private sector employees'
wages have seen a negative growth.
According to the Labour Department, the real
percentage change in private sector salaries
has seen a negative growth 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
was drawing a salary that obviously was not
commensurate with the expenditure, given the
rising cost of living.
JVP parliamentarian and trade union wing
leader, K.D. Lalkantha has said that the
country has recorded the highest increase in
the cost of living index between 2005 and
2007 - since President Mahinda Rajapakse
Cost of living
He says that the cost of living has
increased to such a level that a minimum Rs.
30,885 a month is required to maintain a
"The index has gone up by 2000 points since
the Rajapakse regime came to power. If Rs.
2.20 was given to each point the salaries of
public servants should be increased by Rs.
5,000 a month," he has said.
Lalkantha has warned that the JVP would
mobilise the masses to win this demand. (See
Even the income of the Samurdhi recipients,
the poorest of the poor, has seen a decline.
The government admitted to the decline in
the income of Samurdhi recipients in
parliament responding to an oral question
raised by UNP Parliamentarian Ravi
Responding to an oral question on Samurdhi
beneficiaries, comparing the Rs. 1000 in
2004 with its value in 2007, the government
responded by saying that the present value
stood at Rs. 560.
Economists as well as donor agencies have
been highlighting the disparities in the
country's economy from region to region.
Per capita income
Be that as it may, the government has now
taken to using per capita income, which is
said to stand at US$ 1,600, to paint a rosy
picture of the country's economy and the
people's living standard.
Analysts point out that one could basically
take the total income - where say, 10
persons get US $10 million per person
while the balance get only US $2 per
person - and use the average as the per
capita income, which would work out to US $
"What US $1600 per capita means is that you
are receiving roughly Rs. 15,000 per month.
Just how many workers get that? So where is
this per capita distribution?" they question
These analysts say that the per capita
income used by the government is misleading,
since it has been worked out at current
Principal Researcher, Point Pedro Institute
of Development, Dr. Muttukrishna
Sarvananthan says that the per capita income
worked out from the national income accounts
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 the
Household Income and Expenditure Survey (HIES).
The HIES captures the income and expenditure
of households, 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
According to the latest Household Income and
Expenditure Survey 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
receive less than Rs.4,043 per person per
"All the foregoing figures pertain to the
country as a whole. There are of course
district-wise variations in the above
figures. The HIES was conducted among a
representative sample of households in 19
out of 25 districts in the country. All five
districts in the north and 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.
The Rs. 20 increase in the price of
a litre of diesel by LIOC has had a
cascading effect with private bus
owners threatening to increase
A litre of diesel sold by LIOC now
stands at Rs. 100.
The CPC however has not yet
announced any plans to increase its
fuel prices although President
Mahinda Rajapakse at last week's
cabinet meeting made a statement
that the CPC was incurring heavy
losses due to the non-revision of
prices. He said the CPC was losing
Rs. 40 on each litre sold.
The private bus operators on
Thursday said that if the CPC also
increased diesel prices, they would
be compelled to increase bus fares
within 24 hours with or without the
However, an increase in diesel
prices apart from affecting the
transport sector will have an impact
on the prices of consumer goods as
well as power generation.
Mismanagement of EPF
The negative wage increases apart
the private sector workers have also
been hit badly due to the losses
incurred by the country's main
private sector retirement fund,
Employees Provident Fund (EPF).
It has been reported that the EPF
has lost Rs. 23 billion in real
terms in 2007 due to the increase in
The Central Bank's handling of the
EPF has been criticised due to the
billions lost by the fund.
It has been alleged that the fund
recorded the loss since the
government utilised the system to
inflate away debt.
Statistics given in the Central Bank
Annual Report for 2007 reveal that
in 2007 the level of inflation as
recorded by the CCPI stood at over
16% while the rate of return to
members of the EPF stood at 11.40%,
which created a real loss of 5%.
According to economic analysts, it
is bad management at its worst.
Analysts say that although there
have been a discussion for some time
on the issue, no final solution has
According to economists, while the
Central Bank on the one hand has to
manage the debt of the government
while also trying to raise the
cheapest funds for the state, on the
other, it has to maintain the EPF,
which is to give positive returns to
the fund members.
"There is a huge conflict of
interest," an economist said, adding
that the management of the EPF has
to be freed from the Central Bank.
It has also been reported that the
International Monetary Fund (IMF)
has also called for the independent
governance of the EPF.
According to the IMF, "a sound,
robust and independent governance
structure" was needed for the EPF
with a "clear objective of seeking
the best investment returns for
Trade unions to agitate
Trade unions have decided to launch
an islandwide agitation campaign
calling on the government to
increase the salaries of public,
private and estate sector workers.
The main coalition partner of the
UPFA, the JVP has decided to launch
an islandwide agitation campaign
calling on the government to
The JVP has decided to launch the
campaign through its trade union
The JVP affiliated National Trade
Union Centre (NTUC) said that there
were plans to launch an islandwide
campaign and that the steering
committee would decide on it when it
meets this week.
According to the JVP, although the
trade unions have been threatening
to launch an islandwide strike for
some time, it did not happen due to
the prevailing situation in the
country. However, due to the
government's failure to provide any
relief to the working masses, the
unions affiliated to the party have
decided to resort to severe trade
As a first step, teachers in
government schools have already
threatened to report sick and keep
away from duties on June 11 and 12
as a protest against the
government's failure to resolve
their salary anomalies.
General Secretary of the JVP
affiliated Sri Lanka Teacher
Services Union, Mahinda Jayasinghe
has said the government has failed
to respond to the demands made by
the teachers' unions that anomalies
in teachers' salaries be rectified.
He says that even President Mahinda
Rajapakse at a discussion with
representatives of teachers' unions
on February 29 has admitted that
teachers have been unfairly treated
and that there was a need to amend
the salary structure. However,
Jayasinghe claims that necessary
action has not been taken yet.
Several other unions are to join the SLTSU in its protest
campaign next month.