By Imesh Ranasinghe  Even before the dollar was floated against the rupee earlier last month, many of the Information Communication Technology (ICT) companies in Sri Lanka started pegging their salaries to the US Dollar, a practice which by now has received much popularity within those sectors. A survey conducted by Open University Department of Electrical and Computer Engineering lecturer and Gold Microsoft Learn Ambassador Indrajith Ekanayake covering 91 companies in Sri Lanka showed that at least 30 companies in Sri Lanka have already pegged their salaries to the US Dollar, while other companies have pegged their salaries to other foreign currencies such as the Great Britain Pound (GBP), Euro, and Australian Dollar (AUD).   Who has pegged their salaries to foreign currencies?   Companies that have pegged salaries to the US Dollar 

• Surge Global
• Mitra Innovation
• Ascentic 
• SyscoLABS
• Calcey Technologies
• Emojot Inc.
• RigServ 
• Villvay
• GrubTech
• BlackSwan Technologies
• KochaSoft
• Multiplier
• Sana Commerce
• Cloud Solutions International
• WSO2
• Fcode Labs
• Embla Software Innovation
• Treinetic (Pvt) Ltd.
• Corzent
• GoGetDo
• Cesova
• Random Software Ltd. 
• ITS the1 Solutions LLC
• SigScale Lanka (Pvt) Ltd.
• Ceylon Solutions
• ZOOZ.LK
• CMS (Pvt) Ltd. (Pegged to USD and Euro both)
• RozieAI
• Fortude
• Fidenz Technologies
• Kimp
• InEight
• Champsoft
• Aeturnum
• Tech Venturas
• Techlabs Global (Pvt) Ltd. 

  Companies that have pegged salaries to the Euro  

• Yenlo
• Serviceform
• Gapstars
• Prime One Global
• Yukon software Sri Lanka
• H2Compute
• CMS (Pvt) Ltd. 
• Ifonix

  Companies that have pegged salaries to the AUD   

• :Different 
• Planlogic
• XigeniX Lanka
• OpusXenta SL
• Insighture
• MyBudget
• RedBlocks Technologies (Pegged to AUD, SGD, and HKD as well)
• Data Capture Experts Pty Ltd.
• Aeturnum 
• Swivel Group
• JRC Software

  Companies that have pegged salaries to the GBP   

• Codification
• Brand Finance Lanka
• Trust Payments
• Thirfort 
• Enactor
• Third Space Global
• Thirdfort Limited 
• Enactor 
• Codelantic (Pegged its performance bonus to GBP)
• OntoMatrix (Pegged its performance bonus to GBP)
• CodeLantic (Pegged its performance bonus to GBP)

  Companies that have pegged salaries to the Singapore Dollar (SGD)

• Spaceworx.io
• Eutech Cybernetic
• RedBlocks Technologies
• Rhino Partners

  Companies that have pegged salaries to the Swedish Krona (SDK)

• IdeaBits
• Cambio

  Companies that have pegged salaries to the New Zealand Dollar (NZD)

• SilverStripers

  Companies that have pegged salaries to the Hong Kong Dollar (HKD)

• RedBlocks Technologies

  Entities that pay in Bitcoin (BTC)

• Ceylon Cash

  Companies in the process of adopting pegged salaries  

• Covalent Systems Limited
• Aeturnum 
• ConceptVines 
• Eyepax 
• Intrepid Colombo 
• Global Market Access Network (DIFC) Ltd.

  Based on this survey, a website called peggedplacetowork.lk was created, including information on all companies in Sri Lanka which have pegged their salaries to various foreign currencies. According to the website there are about 101 companies in Sri Lanka with pegged salaries so far.   What could be the reasons for adopting pegged salaries?   Speaking to The Sunday Morning Business, University of Peradeniya Professor of Economics Ananda Jayawickrama said that the main reason for IT companies to peg the salaries of employees to the dollar was to make sure that the exchange rates were stable during the process. According to him, although some banks have also adopted this technique, pegging the salaries to the dollar was evident in the IT/BPO industry as they have more international dealings compared to other industries. The IT industry in Sri Lanka generated $ 1 billion in export revenue in 2020 and is expected to have generated $ 1.2 billion in 2021 according to the Information and Communication Technology Agency (ICTA) of Sri Lanka. Over 300 companies are representing the sector with over 150,000 employees. It is expected to generate $ 1.8 billion in the year 2022. “So when they [IT/BPO companies] hire service providers for their contracts, the company will have to pay more depending on the fluctuating exchange rate,” Prof. Jayawickrama said. In order to eliminate this uncertainty over the exchange rates, the companies will ignore the day-to-day fluctuation and reach a fixed exchange rate for payments. According to Prof. Jayawickarama, it will reduce uncertainty for the IT companies and they will decide the price for the services provided for outside parties based on the rate on a specific day or time.  Using this fixed rate, companies will pay those hired to do the job. Since the Central Bank decided to free float the dollar on 10 March 2022, the rupee has depreciated by at least 28% against the US Dollar by 29 March 2022. An agreement is reached between the employer and the employee to agree on a fixed exchange rate for the services provided by the employee, and this exchange rate will be used to make the payments for the employees. However, Prof. Jayawickarama said that it is the employer of the company who will make the final call on the specific rate used to make the payment, because the employer has to manage payments based on the income generated by the sale of the final product. Although companies peg salaries to dollars to minimise the risk of exchange rate fluctuations, he noted that with the current fluctuating exchange rate, companies could earn more revenue by the time they received the payment for the final product after pegging the dollar at a lower rate, compared to when the agreement was signed among the employees and resource people. Technology Consultant Asela Waidyalankara told The Sunday Morning Business that an employee who received Rs. 100,000 before the rupee was floated was considered to be receiving about $ 500 based on the previous exchange rate. Therefore at present, the same employee would be receiving the equivalent of that $ 500 in rupees, which amounted to Rs. 150,000, if $ 1 was taken as Rs. 300.   New framework for IT/BPO companies    Commissioner General of Labour Prabath Chandrakeerthi stated that companies did not require any kind of approval to peg their salaries to dollars, as there was no existing framework in relation to this area.  However, he said that the Department of Labour was undertaking discussions with the relevant parties in the IT/BPO sector to include a few amendments to the Shop and Office Employees Act to cover the relevant and other related areas legally.  Waidyalankara explained that there was no framework to cover pegged salaries in Sri Lanka and as long as the rupee equivalent of the dollar salary was paid, it was in line with labour laws. Sri Lankan labour laws do not allow companies to pay salaries to local staff in any foreign currency except for the Sri Lankan Rupee. When asked whether there had been any invitation from the Department of Labour regarding discussions on IT/BPO-related amendments to the Shop and Office Employees Act, Waidyalankara stated that there had been no such invitation from the Government so far. “SLASSCOM, which is the only association that represents the industry, was not invited for any discussion,” he added.