State sector cadre continues to remain worse off as wages failed to budge

Roughly 1.5 million state sector employees have continued to see their real incomes plunged, leaving them further worse off from where they were, as they haven’t seen their wages rising at all.

For instance, the public sector employees’ Wage Rate Index stayed still at 133.1 index points in the month of November between 2022 and 2023, the latest data available through November last year showed.  

The Financial Sector Stability Review showed that the crisis dealt a much deeper hole in the household balance sheets than of the corporates, forcing them into different coping mechanisms just to put basic food on the table.

While there were instances where the private sector employees received some relief by way of travelling allowances or salary increments, they were too, however in no way near sufficient to make up for the purchasing power they lost during the last three years.

This may perhaps be one of the compelling reasons for the government to announce a Rs.10,000 increment in the cost of living allowance for the state sector employees from January onwards, from the budget, although the payment would start from the April salary, with the arrears for the first three months to be settled in six months, starting from October.

Given the multifold increase in the prices of everything from goods to services during the last two years, it could take at least another three to five years for the people in Sri Lanka to return to their pre-crisis and pre-pandemic level lifestyles and consumer habits, as the crisis ripped through the lives of the masses, pulling them down from how they used to live their lives for years.

A faster return to their normal lifestyles is only possible with a much higher growth in the economy, which isn’t expected in the near term.

For instance, the officials do not forecast more than 2 to 3 percent growth in the economy for 2024, with inflation running at 5 percent.

Meanwhile, the informal private sector employees saw their wages rising by 6.2 percent in the year through November 2023, roughly in line with the inflation rate in the country. While the prices rose by 3.4 percent in November from a year ago, the pace of increase quickened in December to 4.0 percent, with further runaway expected up to between 5 and 7 percent in the near term, due to the impact of the increase in the Value Added Tax rippling through the economy.