The increase in expenditure
A senior trade union activist said that
according to surveys conducted on the
expenditure pattern of the people, 90% of
the earnings were spent on food.
He said that due to the increase in prices
90% of the earnings had to be spent on food
while only 10% was left for other
expenditure like electricity and water
bills, transport costs, etc.
The same survey in 2003 had revealed that
50% of the income was used for food, the
remaining 50% was used for other expenses.
He also said that according to the
Department of Census and Statistics, a
family of five now needed Rs.30,885 each
month to survive.
"The amount needed has been calculated as
Rs.30,885. But the present minimum wage of a
public sector employee is Rs.11,730 and the
private and estate sector worker is
Rs.5,000," he said.
Spiral wage inflation inevitable
The constant increase in the cost of living
has prompted the working masses to call for
a salary increase. However, a senior
government minister says that such an
increase would have a drastic impact on the
Consumer Affairs Minister Bandula
Gunawardena told The Sunday Leader earlier
that given the present economic conditions,
if salaries were also increased there would
be spiral wage inflation.
"When salaries are increased according to
the cost of living, there will be more money
at hand. Then there will be an increase in
demand. When the supply cannot meet the
demand the prices would once again see an
increase. Then salaries would have to be
increased again and the whole process would
continue," he said.
According to Gunawardena, the trade unions
that have made statements on the increase in
the cost of living and demanded a wage hike
need to also look at the next step that
would happen if the salaries were increased.
"The wage inflation spiral that I explained
earlier would happen. Trade union leaders
should look at increasing efficiency and
call for salary increases based on that. If
salaries were increased through increased
efficiency, it would not have an impact on
money supply," he said.
Economists say that a high cost of living
always prompts an agitation campaign by the
working class for a wage hike, which if
granted, in turn causes another round of
price increases and drives inflation further
They say that the government and especially
the Central Bank's inability to contain the
level of inflation has made the bank's
explanations on the present crisis
irrelevant in the eyes of the public.
"People who have seen the continuous
increase in the level of inflation have now
decided the only way to face the situation
is to demand a wage hike, which is only fair
from their point of view given the high
prices of essential commodities," an
However, with the working class agitating
for a wage increase given the increase in
the cost of living and inflation that has
been intensified by the increase in fuel
prices, economists warn that such a scenario
would push the country into a dangerous
cycle of spiral inflation.
However, they also say that the working
masses couldn't be blamed for spiralling
wage inflation, if it takes place, since it
would be once again the result of the
government's weak monetary policies, which
are not the fault of the workers.
Be that as it may, neither the government
nor the Central Bank have so far been able
to contain inflation and with the working
masses on an agitation for an increase in
salaries, spiral wage inflation would be
Change of index, but CoL on the rise
The cost of living index has seen a drastic
increase since 2005. The index points
according to the Colombo Consumers' Price
Index (CCPI), which was scrapped last month
by the state has shown a steady increase in
the cost of living as shown below.
However, with the country's cost of living
and the inflation rate on an upward spiral,
the government has resorted to quick fix
methods to hoodwink the public.
The latest is to continue with a price index
where the inflation rate is understated.
In a bid to control the rate of inflation,
the government last month called on the DCS
to scrap the old CCPI completely and confine
its statistics only to the new index, CCPI(N).
The cost of living statistics from January
2008 have been calculated according to the
CCPI(N), hence, till May, both figures -
CCPI and CCPI(N) - have been given. For the
month of May, only the CCPI(N) figure has
2008 January 6302.5
May 198.5 (CCPI(N))
Mind boggling state expenditure
The Mahinda Rajapakse administration has
thus far managed to create several world
records. Key among them is the record of
having the largest cabinet of ministers in
According to the opposition political
parties, Sri Lanka has a cabinet minister
for every 375,000 citizens.
However, maintaining such a large cabinet of
ministers has put much pressure on the state
The Public Administration and Home Affairs
Ministry says that the vehicle usage of
ministers has seen a drastic increase over
the past two years.
It has been reported that a cabinet
minister, non-cabinet minister and a deputy
minister are entitled to two official
vehicles and two back-up security vehicles.
However, every minister uses at least 10-15
vehicles apart from the back-up vehicles.
"Although most of the ministers use around
15 vehicles there have been instances where
some have used around 50-100 vehicles. If
there are any security threats to a certain
minister then the ministry has to provide
adequate security personnel, back-up
vehicles and also different types of
vehicles as a precautionary measure," an
official from the Public Administration and
Home Affairs Ministry said.
Wastage of public funds amounting to
billions of rupees has further deepened the
financial crisis faced by the country.
One such instance where public funds are
being wasted was revealed in parliament last
Leader of the House, Health Minister Nimal
Siripala de Silva responding to a question
raised by JVP Parliamentarian Ranaweera
Pathirana, told parliament that the six
Nation Building Ministers were using 43
vehicles, incurring a staggering monthly
fuel bill of Rs.752,500.
According to de Silva, the ministers using
these vehicles were Jagath Pushpakumara,
Susantha Punchinilame, Saliya Dissanayake,
Rohitha Abeygunawardene, S.M. Chandrasena
and Gunaratne Weerakoon.
Each minister is paid a monthly fuel
allowance of Rs.17,500 per vehicle.
All cabinet ministers receive a basic salary
of Rs.65,000 while a non-cabinet minister
and a deputy minister receive Rs.63,500 . A
parliamentarian receives a basic salary of
Rs.54,285. All of them receive a host of
Apart from the basic salary an allowance of
Rs.500 is paid for each parliamentary
sitting and Rs.200 for attending a Select
Committee meeting. Depending on how many
days they attend parliament sessions and
Select Committee meetings the allowances
vary and the final package that a
parliamentarian receives is more than
Rs.100,000 per month. Ministers and deputies
receive over Rs.130,000.
Further, every cabinet and non-cabinet
minister is entitled to a monthly fuel
allowance of Rs.75,000, a deputy minister is
entitled to Rs.50,000 and parliamentarians
are entitled to Rs.29,000 depending on the
distance to his/her constituency, before the
recent price hike. According to the Public
Administration and Home Affairs Ministry,
Rs.20,000 is paid for a private land phone
and Rs.10,000 for a mobile phone in addition
to unlimited local and IDD facilities for
official telephone lines every month.
Ministers are entitled to two drivers but
these rules change depending on the number
of vehicles. Most of the ministers employ
their kith and kin as their private
secretaries, coordinating secretaries and
public relations officers.
In addition every cabinet, non-cabinet and
deputy minister is entitled to four
secretaries. They are all entitled to
official vehicles, fuel and telephone
allowances and a limited entertainment
The government also spends Rs.100,000 on an
official residence for a minister.
Legislators who occupy the Summit Flats pay
Rs.6,000 while occupants at the Madiwela
Housing Complex and Colombo 7 pay Rs.2,900
and Rs.8,000 respectively, as rent.
The electricity and water bills too are
borne by the state. Ministers who occupy
official residences in Colombo pay only
Rs.2000 for maintenance and their water,
electricity and all other maintenance bills
are met by the state.