The Employers Federation of Ceylon (EFC) has raised a controversial issue, which is likely to stir up a hornet’s nest amongst workers and unions, by saying that the recent wage increases proposed in the January 29 budget will violate international conventions. At the National Labour Advisory Council meeting held recently, presided over by Justice and [...]

The Sunday Times Sri Lanka

Government intervention in private sector wages could infringe on ILO conventions

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The Employers Federation of Ceylon (EFC) has raised a controversial issue, which is likely to stir up a hornet’s nest amongst workers and unions, by saying that the recent wage increases proposed in the January 29 budget will violate international conventions.

At the National Labour Advisory Council meeting held recently, presided over by Justice and Labour Relations Minister Wijeyadasa Rajapaksha, the EFC Director General Ravi Peiris submitted that any Government intervention on private sector wages through legislation will be inconsistent with ILO Conventions No.100 and 98, both of which Sri Lanka has ratified.

According to a media release issued by the EFC, he said that ILO Convention No.100 relates to “Equal Remuneration”. This Convention very clearly emphasises the principle “equal pay for work of equal value”. It therefore recognises that there can be no uniformity in wages and ensures that work of equal value should be treated with equal pay. This also implies that there cannot be uniform wage increases across the board thrust upon private sector employers.

The Director General also stated that any intervention by the Government on private sector wages will be inconsistent with ILO Convention No.98 on “Collective Bargaining”, which the Government of Sri Lanka has ratified. He stated that the Convention on Collective Bargaining envisages both Employers and Worker Organisations to negotiate terms and conditions of employment. In doing so, obviously, one needs to take into account the capacity of the employers, the needs of the industry and the market realities. He further stated that if the Government is to intervene on private sector wages, it would also undermine the role of trade unions. Why should employers recognise trade unions? Or negotiate with trade unions on terms and conditions of employment and have Collective Bargaining Agreements?” he said in a EFC media statement.
Furthermore, it was pointed out that a uniform wage increase, if legislated, will destroy many private sector establishments and make them unviable. The private sector extends from the smallest entrepreneur, who conducts his business outside the formal sector in the streets of Colombo, to the biggest conglomerate in Sri Lanka. Obviously, their capacities are different and the salaries offered by them are also different. How can the Government impose a uniform salary increase on all employers,”: he asked.

Mr. Peiris was responding to the position taken up by the trade unions that the Government must legislate on the salary increase of Rs 2,500 requested in the interim budget proposals.

“On the contrary, the Director General requested the Minister of Justice and Labour Relations to make use of the legal mechanisms that are already in place in our legal framework with regard to wage fixation in the private sector. He stated that if the Government wishes to revise private sector wages, the only mechanism that should be made use of is the Wages Boards mechanism which could look at different industries and decide on a revision of minimum wages. This has been the way in which we have operated for the last 10 years without any intervention from the Government on private sector wages. It was pointed out that ‘good governance’ requires responsible decision making or it would destroy the sustainability of private enterprise,” the release said.

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