Wage growth slips in August while continuing to underperform inflation

Sri Lanka’s wage growth, which accelerated in July, slipped in August and continued to remain under the headline inflation, weighing on the purchasing power of the people. 

The growth in Sri Lanka’s wages, as measured by the nominal wage rate index of the informal private sector, covering all three key economic sectors—agriculture, 

industrial and services—decelerated to 2.8 percent in August from the year ago period, after gaining by 3.1 percent in July. 

July’s wage growth is an acceleration from the 2.2 percent growth in June, as wages in both the burgeoning agricultural sector and the recovering services sector pushed up the earnings of the individuals engaged in these sectors. 

In August, the industrial sector contributed mostly to the wages, as the industrial sector wages grew by as much as 3.3 percent from the year earlier levels. 

Analysts said this represented the factory recovery kicked off from mid-May and the continued acceleration of the manufacturing activities, after the government stamped out the coronavirus until a new cluster was found in the early days of October. 

Meanwhile, the wage rate index for agriculture and services grew by 2.6 percent and 2.4 percent, respectively, in August from the same months in 2019.