Business Times

Government to tighten belt to pay public sector salary hike

The Ministry of Finance is struggling to cut government spending in order to include the Rs.2,500 salary hike for public servants which would cost Rs.36 billion, Finance Ministry officials said.

There are 1.2 million public servants and financial allocations for ministries, and state institutions should be pruned if the proposed salary increase is to be paid, a senior Ministry official said. Trade unions are demanding the pay hike for all employees including the private sector and plantation workers.

Secretary General of the Sri Lanka Nidahas Sevaka Sangamaya Leslie Devendra said “the need for a pay hike for public servants and salary anomalies of employees will be brought to the notice of President Mahinda Rajapaksa at a pre budget meeting of trade union leaders soon”. Trade unions affiliated to the Janatha Vimukthi Peramuna have already launched a leaflet distribution campaign demanding a pay hike of at least Rs. 8,000 in accordance with the Cost of Living index.

In the meantime the government will introduce new salary scales for government employees in order to rectify salary anomalies prevailing in the public sector, the senior official said. The new wage scale has been prepared and this will be applicable to the employees of state corporations and statutory bodies as well, he said, adding that it will be submitted to the President before budget proposals are finalised.

The Government is deeply in debt due to heavy spending on infrastructure development with interest and principal debt repayments together amounting to slightly less than the total 2011 budget revenue, other Ministry sources said. Total public debt continues to rise from Rs. 767 billion in 2010 to a projected Rs.858 billion in 2011 which is just Rs.42 billion less than the 2011 budget revenue target of Rs.900 billion. Under this set up the government is resorting to further borrowing to meet its recurrent as well as capital expenditure. The senior official said this will result in further increases in debt servicing costs.

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