The Cabinet of Ministers had on Monday (25) given approval to a proposal to increase the monthly minimum wage by Rs. 5,000, i.e. from the current Rs. 12,500 to Rs. 17,500. With this decision, the National Minimum Wage of Workers Act, No. 03 of 2016 will also be amended.

While this decision seems like a worker friendly, timely one, especially given the state of the common man’s economy, how effective this decision will be in alleviating the burden of the economic situation is questionable.

Some may say that something is better than nothing. But, that sort of complacency is likely to undermine the concept of the minimum wage and the economic safety that one expects through such decisions. The minimum wage is supposed to be not only the minimum amount of money an employer can pay their employees legally, but also an amount that enables a worker to procure their most basic needs. In this context, deciding on the minimum wage should certainly take into account the economic situation which drastically deteriorated during the past two years, before the previous minimum wage, i.e. Rs. 12,500, was decided. But, in this case, it does not seem to have been considered, because inflation resulted in the prices of many basic goods and services being doubled or tripled, which a mere Rs. 5,000 is unlikely to make any difference to.

This decision also shows the double standards that the Government has adopted when it comes to addressing the grievances put forward by public sector employees and the rest in the country’s workforce. In the slight revival of the economy, about which the Government boasts, more public sector employees have received salary increments or other allowances than private employees. Needless to say, some of these increments or allowances were obtained through strict trade union actions that inconvenienced the public, and in order to restore the disrupted services, the Government was compelled to entertain these employees’ demands. In the case of the private sector, perhaps because private sector employees are not in a position to exert similar pressure on their employers or the Government, many of their grievances have gone unheard. The Government’s response to private sector salary demands is that it is a decision that should be taken by the private sector.

However, there is something that the Government can do to support private sector workers, without whom the country’s economy will collapse. That is, setting a minimum wage that actually provides some relief to the workers who are not protected by the Government’s policies. However, the abovementioned decision to raise the minimum wage by Rs. 5,000 does not seem to be a decision that has been taken with the economic situation in mind. The Central Bank of Sri Lanka (CBSL), which studies the changing economic situation more closely than any of us, thought that its employees deserve salary increments of around 70-80%. Although the decision was challenged by other parties, the CBSL opting for such staggering salary increments shows the true level of income increase an ordinary person deserves. Healthcare sector workers received a Rs. 10,000 salary/allowance hike out of the Rs. 20,000 that they demanded, and they are demanding more following the disturbance, availability and transport allowance hike given for doctors. 

It is true that the Government’s influence on private sector salaries is limited. However, the Government has the power and liberty to formulate laws, regulations and policies to direct the private sector to treat their employees better. The minimum wage is the best way that the Government can influence the private sector to pay their employees better wages. But, the Government wasted that opportunity by increasing a nominal amount that is not nearly enough to make any difference to the life of someone who lives on the minimum wage.