Employers’ Federation slams private sector wage increase

1 December 2015 03:13 am Views - 3786

•     Expresses objection to legislate private sector wages
•     Points out legislation is poorly drafted and has many errors
•     Rubbishes FM’s claims of EFC is in agreement to increase salary

By Shabiya Ali Ahlam
Sri Lanka’s employers’ representative body to deal with labour issues, the Employers’ Federation of Ceylon (EFC) yesterday slammed the government for proposing to increase private sector wages. 

EFC Director General and Chief Executive Officer Kanishka Weerasinghe warned the mandatory increase of private sector wages through legislation would threaten the very ethos of the free market economy. 

“We are principally opposed to any move to legislate the private sector wages as it cuts across our policy of promoting productivity-linked wages, as well as norms followed by the sector over the years. The government imposing such a move will upset the entire budget of employers,” said Weerasinghe. 

He further said that soon after the announcement was made on November 20, the federation wrote to the relevant authorities seeking clarity on the proposal, but a response is yet to be received.

Finance Minister (FM) Ravi Karunanayake during his Budget speech urged the private sector employers to increase the monthly salary by at least Rs.2,500 per month, of which Rs.1,500 per month could be given in 2015 and the balance Rs.1,000 per month in 2016.

While the minister stated the EFC is in agreement with the increase and the necessary legislations would be brought in to implement the same, Weerasinghe dismissed the statement and asserted the agency did not agree and had made their stand clear during the consultation sessions. 

“We did not agree to any such. We are working with them to sort this out, to reduce the implication on the employers. The first piece of legislation that was sent to us was poorly drafted. We have been sharing our views, but we are not in agreement as a number of errors are there in that piece of legislation,” clarified Weerasinghe.

In a letter to Labour and Trade Union Relations Minister John Seneviratne, dated October 20, following a consultation session, the EFC has stressed a legislated increase will establish an unhealthy precedent in the industrial relations practices in the country.

“At a time when the nation should be implementing policies in pursuance of achieving higher productivity levels, supportive of rapid economic growth, any ad hoc intervention as proposed is likely to spread a dependency culture, even in respect of the private sector. 

This situation is likely to depress wages in the private sector by limiting the wage increase of employees in the sector to legal minimums and intervention by governments,” the letter read.

Furthermore, the EFC had stated that the agency believed it pertinent to place on record that the decision to “not interfere” with the private sector wages by the previous government, (as in 2005), had created a “much better” environment for the private sector employers to determine wages based on market-driven forces. 

It warned that while such a move is inconsistent with the ILO Convention on collective bargaining, it will lead to a further detachment of the important globally accepted wage fixing mechanism, which also encourages dialogue and engagement by social partners involved in the process.

The EFC expressed that it would maintain a continuous dialogue with the stakeholders as a fundamental obligation of a policymaker and a duty incumbent upon the agency to safeguard the best interest of its members.