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Amidst pay cut spree, George Steuart and Baurs assure full salaries

12 Apr 2020

[caption id="attachment_48950" align="alignleft" width="300"] Dilith Jayaweera speaking at the ceremony[/caption] [caption id="attachment_79350" align="alignleft" width="258"] Baurs CEO/Managing Director (Sgd.) Rolf Blaser[/caption]
By Madhusha Thavapalakumar
Two large conglomerates have reached out to their employees with the assurance of paying their salaries in full amidst a spree of salary cut decisions made by a number of companies over the past two weeks.
Dilith Jayaweera, Chairman of George Steuart & Co., the first group of companies ever to be registered in Sri Lanka, last week assured his employees that they will continue to receive their full salaries as they understand the weight of the current uncertainty on their employees and their families.
“We will re-engineer our offering, use our creative thinking, and work harder, faster, and smarter to somehow weather the storm ahead. Your relentless commitment, determination, and adaptability are needed more than ever before,” Jayaweera said in a statement to his employees. George Steuart is the oldest corporate house to be established locally 184 years ago and one of the oldest mercantile establishments in the world. Meanwhile, in early April, A. Baur & Co. (Pvt.) Ltd., a 120-year-old company with just under 1,000 employees, confirmed to its employees that despite the turmoil, it will settle 2019 bonuses in the month of April as per their earlier commitment. Issuing a statement to his employees, Baurs CEO/Managing Director (Sgd.) Rolf Blaser stated that resorting to termination of employees or cutting salaries to cope up with the ongoing situation is premature and not in the spirit of how one would treat their family. “Please don’t be misled by our generosity. Even our customers are delaying their payments, sometimes misusing the current situation as an excuse. Some of the Government’s payments too are outstanding; the outstanding payments from the State Pharmaceuticals Corporation are reaching the highest levels ever. Cash is king at a time of crisis, and everything needs to be done to look at both the short and long-term financial health of our organisation,” Blaser said.
Two large conglomerates implemented salary cuts last week due to Covid-19, namely premiere blue-chip John Keells Holdings PLC and Softlogic Holdings PLC.
Softlogic on Wednesday (8) implemented salary reductions of all employees with a salary of Rs. 50,000 or above for a period of three months. Accordingly, the salary reductions will be between 5% and 30%, with employees in the salary range of Rs. 50,000 to 100,000 being docked 5% while those in the Rs. 1 million and above salary range being docked 30%. All bonuses and pay increases have also been put on hold for these three months. Furthermore, the diversified conglomerate has frozen all recruitments and halted all new business plans and capital expenditure. The company has also stopped overtime payments and all expenses related to training and development. Earlier last week before Softlogic, John Keells implemented salary cuts of between 5% and 35% on the basic salaries of all employees in executive levels and above, whose basic salaries are over Rs. 50,000. Two weeks ago, Sri Lanka’s largest apparel exporter Brandix Lanka Ltd. too stated that it is cutting all executive cadre salaries by between 5% and 60% depending on salary levels, while its Board and CEO were foregoing their compensation for the next six months. When contacted, Laugfs Holdings Ltd. Chairman W.K.H. Wegapitiya stated that his group has not reached any decision regarding salaries at the moment as they have to think about their employees and their families. Furthermore, Wegapitiya noted that Laugfs is a diversified conglomerate and has subsidiaries in the oil, gas, and power sectors which are comparatively less affected than sectors like engineering. However, he was non-committal as he did not confirm whether or not there will be salary cuts in his group. Laugfs, a two-decade-old company, has expanded in over 20 industries with 4,000 employees across various sectors in Sri Lanka, Bangladesh, the UAE, the US, and the Netherlands. The Sunday Morning Business also contacted Melstacorp PLC Managing Director Amitha Gooneratne, who refused to comment on whether there would be any salary cuts within the group or not. Melstacorp is a diversified conglomerate based in Sri Lanka and is home to 19 direct and indirect subsidiaries as well as two associate companies and employs approximately 12,700. When contacted, Employers’ Federation of Ceylon (EFC) Director General/CEO Kanishka Weerasinghe told The Sunday Morning Business that these salary cuts are equitable for companies as despite reduced working capital, they are trying to retain their employees and at the same time pay wages to them while still looking after other commitments. “The depreciating rupee is another hit on companies’ working capital. The companies have to be ready to purchase raw materials and goods to resume work, other than paying wages; of course, paying wages is important too. We agree with that, but they also have to look at business continuity. If the business continues, the job, the company, and everything else will be there. This is why the companies are resorting to this,” Weerasinghe stated. When asked whether the companies are or will be misusing the prevailing situation in the country to cut the salaries of employees who they have been wanting to even before the crisis, he vehemently rejected it, stating that those are baseless allegations. He further supported his statement by adding that in the companies that announced or will announce pay cuts for their employees, top-level people like directors and chairmen are having a bigger percentage of their salaries cut.

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