• Battle continues between income and expenditure

While record high food prices have forced households to drastically reduce consumption, the adjustments required vary widely across different income tiers and sectors. 

To consider the requirements for a household against their income, according to the Advocata Institute’s ‘Bath Curry Indicator’ (BCI) – which tracks the weekly prices of a basket of goods for four people, reflective of what Sri Lankans eat – a packet of rice comprising essentials such as samba rice, beans, pumpkin, tomato, brinjals, dhal, red onion, coconut, green chilli, and fish (balaya) cost Rs. 2,538 as of January. 

Prior to the economic recession, as per the Government’s ‘Household Income and Expenditure Survey – 2019,’ the average monthly household income was estimated at Rs. 76,414. Moreover, the average income of an urban household was at Rs. 116,670, while a rural family generated an average income of Rs. 69,517 and an estate family Rs. 46,865. Meanwhile, the poorest 20% only earned Rs. 17,572.

However, the ensuing pandemic and economic crisis have led to falling incomes and hyperinflation, eroding the value of people’s nominal incomes. 

Meanwhile, the Department of Census and Statistics’ (DCS) ‘Sri Lanka Labour Force Survey Annual Report – 2022’ recorded the mean monthly gross salary for the urban and rural sectors for 2022 as Rs. 63,867 and Rs. 44,572, respectively, for monthly earners, while daily earners reportedly earned Rs. 29,545 in the urban sector and Rs. 26,990 in the rural sector. 

Given the minimum monthly wages of Rs. 24,000 in the State sector and Rs. 16,000 in the private sector, alongside a Rs. 1,000 daily minimum wage in the estate sector, one such packet of rice becomes prohibitively expensive, as evidenced by anecdotal and Government data on people increasingly turning to coping mechanisms such as reduced consumption. 

State sector

Speaking to The Sunday Morning, National Trade Union Centre (NTUC) Secretary Mahinda Jayasinghe noted that the State sector’s minimum wage was Rs. 24,000. 

“The current salary is completely insufficient to live on, which is why we launched a campaign for an additional minimum allowance of Rs. 20,000. This is not sufficient either; at least Rs. 50,000 is required, but since this is not possible we requested a minimum of Rs. 20,000. The recent Rs. 10,000 increase is not at all sufficient. Even the DCS notes that the minimum monthly expenditure for a family of four is over Rs. 100,000.”

This has led to the public having to adjust their consumption patterns, he noted. “Accordingly, the people have made cuts to many things in their lives, such as their children’s education and health. Either the price of goods has to be controlled or there should be a corresponding salary increase.”

Noting that food security had decreased significantly, Jayasinghe noted that many were unable to fulfil their food needs, with people either reducing their meals or not consuming sufficiently nutritious meals. He pointed out that a family of four would require a minimum of over Rs. 100,000 monthly to fulfil their food requirements 

“Those who are self-employed may be able to increase their salaries, but those in the State and private sector cannot do so at will. For the State sector, the Government needs to intervene and increase salaries; otherwise, State sector employees are facing a steep challenge in fulfilling their daily requirements.”

Private sector

Meanwhile, Inter-Company Employees’ Union President Wasantha Samarasinghe observed that the Rs. 16,000 minimum wage of private sector employees had come into effect through three acts – Rs. 12,500 from the National Minimum Wage of Workers Act, Rs. 1,000 from the Budgetary Relief Allowance of Workers Act No. 36 of 2005, and Rs. 2,500 from the Budgetary Relief Allowance of Workers Act No. 4 of 2016.

He noted that the increase in power bills, VAT, taxes, and interest rates had created an impossible economic situation for the ordinary worker. “Despite this being the minimum wage, not a single employee in this country can live on this salary. Not just the private sector alone, but those working in companies in the economic zones are also leaving their jobs. 

“This salary is insufficient to pay utility bills and meals. Around 75% of the people in this country don’t receive a liveable wage. A majority of them work in factories, garment factories, and shops and their salaries are below Rs. 30,000, even with overtime allowances.”

Moreover, he stressed that people were finding it extremely arduous to fulfil their food requirements on their salaries: “People cannot consume even two meals on such a salary. According to Government calculations, a four-member family spends around Rs. 140,000 monthly in order to eat three meals per day. Today, there’s only a very limited number of families who earn Rs. 140,000. 

“People are in extreme difficulty, with around 90% of those in the private sector facing a food crisis. They are unable to eat three meals and most have to skip one meal.”

“People should receive a salary of at least over Rs. 50,000 to even live on two meals per day, let alone three,” Samarasinghe continued, noting that salaries were insufficient across all State, private, and estate sectors for people to fulfil their basic food needs. 

Estate sector

Similarly, All Ceylon Estate Workers’ Union President Kithnan Selvaraj noted that estate workers earned a minimum daily wage of Rs. 900, with an allowance of Rs. 100. 

“Those in the estate sector have reduced food consumption by 75%. Women who go to work only eat two meals; they drink tea in the morning and pack up some lunch and eat it around 11 a.m. Then they return home after around 5 p.m. and eat dinner.”

He further noted that they had reduced the consumption of certain essentials drastically. “If a family used to consume eggs four days a week, now they barely eat eggs even on four days a month. They are unable to eat mutton even once in six months and beef is scarcely eaten now. This wasn’t the case before; people used to eat meat and eggs at least once a week. 

“Earlier, estate workers also used to eat roti very often, around six times a day. However, this has dropped to around twice a day due to the wage situation.”

Selvaraj said that a family of four would require Rs. 700 per day to manage their food requirements according to the present prices.

Given these straitened circumstances, he noted that people were using alternative means to get by. “People go to the field in the morning and engage in some other work in the evening in order to manage for the day. Some even grow a small plot of vegetables or own goats or cows. Others get support from their children who work in outside districts. However, this is not the same for everyone. For an estate worker, it is not possible to live on their wage alone.”

“We propose that the estate workers’ daily wage be increased to Rs. 2,000. The Central Bank says that a family needs around Rs. 100,000 monthly for expenses, according to which the daily wage will need to be around Rs. 3,000. However, since estate workers have lower expenses, we have formulated the wage of Rs. 2,000.”

Poor policy support 

University of Peradeniya Department of Economics and Statistics Professor in Economics Wasantha Athukorala noted that Sri Lanka’s poor policy formulation compounded these dire straits. 

“In Sri Lanka, there is a large gap between inflation and wage determination. The national poverty line for December 2023 was Rs. 16,524, which implies the minimum a person needs for a month. Given an average family of four members, one household will need at least Rs. 66,000 per month for survival. However, considering the lower-income earning families in the public or private sectors, their salaries are significantly low.”

Prof. Athukorala stressed that developed countries, unlike in Sri Lanka, adjusted the minimum wage according to the cost of living. “Sri Lanka determines the minimum wage in a particular year and continues for years without adjusting it according to the cost of living index, with no consideration of labour market dynamics or people’s requirements,” he pointed out.