The Sunday Leader Online

The country has been pushed to the brink of chaos with the working masses agitating for an increase in salaries to meet the skyrocketing cost of living while the farmers have begun agitating against the government's decision to slash the fertiliser subsidy.

The protest campaigns calling for wage hikes that commenced early June have now intensified with people from different social strata taking to the streets.

Reality

The drastic increase in the cost of living has led to the agitation with the Judiciary too weighing in. The working masses have pointed out that the cost of living index that was 4304 in January 2006 has increased to 6527 by April 2008. This 2223 point increase in the cost of living index they say is reality and could not be changed by the government by simply changing the index and introducing a new one that understates the figure.

The unbearable increase in the cost of living and the government's inability to resolve the crisis has now compelled the people to take to the streets calling for an increase in salaries, to address the existing salary anomalies in the public sector and not to slash the fertiliser subsidy offered to farmers.

Last week saw a string of protest campaigns held against the high cost of living and demanding that the government rectify salary anomalies in the public sector.

Graduate employees last Tuesday stormed into the BMICH where the office of the Salaries and Cadre Commission is located. The protestors called on the commission to rectify the salary anomalies faced by them.

Massive protest

A massive protest campaign organised by the JVP's Socialist Farmers' Union was held in front of the Fort railway station on Tuesday demanding the government to withdraw its decision to slash the fertiliser subsidy.

A large number of farmers participated in the protest campaign and took to the streets distributing leaflets and calling on the government not to withdraw the subsidy. JVP parliamentarian and Socialist Farmers' Union, National Organiser S.K. Subasinghe led the protest.

Subasinghe at the protest said the present government, instead of increasing production, stopping wastage and fraud within the government was defending corrupt officials while maintaining the world's largest cabinet and slashing away welfare measures of the people to burden them further.

He said the government's attempt to slash the fertiliser subsidy, making use of the soaring prices of fuel, is for its ministers to lead luxurious lives.

Subasinghe warned that the JVP would not allow the government to slash the fertiliser subsidy and said that all governments that tried to slash the fertiliser subsidy were voted out of power and were forced to sit in the back rows of the opposition in parliament.

Meanwhile, the teacher trade unions resorted to trade union action against the government's failure to address the salary anomalies in the sector.

Teachers sick

The sick note campaign launched by the teacher trade unions resulted in the closure of all government schools in the island for two consecutive days. The only response the government had with regard to addressing the issue of salary anomalies in the teaching sector was to allow the trade unions to continue with its sick note campaign and to close all public schools.

Apart from these protests, the government's one time ally, the JVP has now become the most vociferous critic of the Rajapakse administration. The party warned of continuous agitation campaigns calling on the government to reduce the cost of living by reducing the wastage of public funds and called for an increase in salaries in the public, private and estate sectors.

The party has so far carried out a massive poster campaign against the rising cost of living and pickets at electoral level simultaneously.

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 assumed office.

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 five-member family.

"The index has gone up by 2000 points since the Rajapakse regime came to power. If Rs.2.20 is given to each point the salaries of public servants should be increased by Rs. 5,000 a month," he has said.

Island wide strike

Lalkantha also threatened to launch an island wide strike by the first week of July if the government failed to address the issue of the increasing cost of living and increase the salaries of the public, private and the estate sector workers.

According to a senior trade union activist, the government agreed to pay Rs.2.50 to each increasing point of the cost of living index. However, the idea was later scrapped and a payment of Rs.375 was paid instead.

He said that the workers as a policy did not accept the decision to pay the Rs.2.50 for each index point, as the July 1980 strikers called for a payment of Rs.5.00 for each increasing index point. "In 1980, the call was for Rs.5.00. How can the government now say they are paying Rs.2.50 for each point when the cost of living has seen such an increase?" he questioned.

Convener, JVP affiliated National Trade Union Centre (NTUC), Samantha Koralearachchi told The Sunday Leader that the government, instead of providing solutions to the people burdened by the rising cost of living, has resorted to make changes to the index that calculates the increase in the cost of living.

Not the answer

"Changing the cost of living index by introducing a new one that understates the increase in the cost of living is not the answer," he said.

Koralearachchi said that while the cost of living index has in real terms seen a drastic increase, it was in 2006 that the government last gave a salary increase.

"The last salary increment for the public sector was given through the 2006 budget, but that too was what remained from the proposal made in 2005," he said.

However, he said that although the public sector was given a minimum wage of Rs.11,730, the minimum wage of an employee in the private and estate sector remained at Rs.5,000.

"This amount is insufficient for a person to survive given the high cost of living," he said.

Chosen few

The present situation has led to a certain section of the people being unable to even have three square meals a day while a chosen few enjoy all the perks, and that too at public expense.

The government response to the rising cost of living so far has been to blame the world prices, increase prices in the local market and slash the fertiliser subsidy.

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 economy.

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 skyward.

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 economist said.

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 inevitable.

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 been released.

2005 4055.5

2006 4610.8

2007 5416.1

2008 January 6302.5

183.5 (CCPI(N))

February 6345.4

188.6 (CCPI(N))

March 6441.7

191.9 (CCPI(N))

April 6527.1

195.4 (CCPI(N))

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 the world.

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 coffers.

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

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 month.

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 additional allowances.

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.

Rules change

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 allowance.

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.

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