The recent announcement by President and Finance Minister Anura Kumara Dissanayake regarding the proposed increase in the minimum wage for private sector employees has sparked discussions across various sectors.
According to his statement in Parliament, the Employers’ Federation of Ceylon (EFC) has agreed to raise the minimum monthly wage from Rs. 21,000 to Rs. 27,000 in April, followed by an increase to Rs. 30,000 in 2026.
While this decision appears to be a step towards improving the living standards of private sector employees, a critical issue remains: the absence of employee trade unions in the consultation process. This unilateral approach raises questions about the fairness of the decision-making process, particularly in a context where both employers and employees are key stakeholders in labour relations.
“No consultations with employee unions’
Speaking to The Sunday Morning, Free Trade Zones and General Services Employees’ Union General Secretary Anton Marcus stated that employee unions had not been consulted regarding this matter. Instead, only the employers’ consent had been considered.
“The Government has made this decision based solely on employers’ views. It did not consult employee unions in this regard. In any decision affecting wages and labour conditions, employee representation is crucial.
“Trade unions exist to advocate the rights and welfare of workers, ensuring that their voices are heard in policy discussions. The exclusion of trade unions from negotiations regarding the minimum wage undermines the principles of fair labour practices and social dialogue,” he asserted.
Marcus also noted that this wage increase would not benefit private sector employees, as private sector employers already paid higher basic salaries.
“This will not be beneficial to employees. As the cost of living is higher than ever, employers must pay a minimum wage of around Rs. 30,000 to attract workers. Therefore, the Rs. 21,000 minimum wage is no longer relevant.
“Since employers already pay more than the legally mandated minimum wage, they will not need to implement this increase. This is the practical issue. Even with this increase, employees cannot cope with the current cost of living. Therefore, the Government should first calculate the minimum wage based on the cost of living and then increase it,” he said.
He further stated that the Government appeared to be suspending the budgetary relief allowance given to private sector employees earning Rs. 40,000 or less per month, which would negatively affect them.
“In 2015, Rs. 3,500 was given as a budgetary allowance to private sector employees earning less than Rs. 40,000. This allowance made the minimum wage Rs. 21,000. Now, it is said that the Government will suspend this allowance, which will worsen the issue. Ultimately, employees will gain nothing,” he pointed out.
He also stated that the Government should introduce a uniform minimum wage increase for all employees. “Some Budget proposals increase the inequality between the minimum wages of the private sector, public sector, and estate workers. This should not happen. If this is a national minimum wage, the Government should ensure it is uniform,” he said.
According to the trade unions, the Government’s decision to engage only with the EFC, which primarily represents the interests of employers, signals a lack of balance in policymaking. Trade unions have also raised concerns that by neglecting the voices of employee trade unions, the Government has failed to ensure that the proposed wage increase adequately addresses the needs and concerns of workers.
Need to mitigate impact on biz
Meanwhile, speaking to The Sunday Morning, EFC Director General and Chief Executive Officer (CEO) Attorney-at-Law Vajira Ellepola stated that the increase in the minimum wage should not negatively impact businesses, particularly Small and Medium-sized Enterprises (SMEs).
“If this is implemented immediately, it could have an adverse effect on businesses. Even enterprises with just one employee will be affected. Therefore, implementation should be carried out gradually over a period of three to four years to minimise its impact on businesses,” he noted.
Similarly, Anuradha Ramanayake, the owner of a medium-scale coir exporting company, told The Sunday Morning that this should be implemented gradually within the given timeframe. However, he claimed that many companies already provided this benefit to their employees.
“A higher minimum wage can have both positive and negative consequences for us. On one hand, increasing wages can enhance the purchasing power of workers, leading to greater production. This is particularly important for those of us engaged in SMEs, where economic recovery is a pressing concern. Higher salaries can improve living standards, reduce poverty levels, and contribute to overall economic stability. Ultimately, we can also attract more employees.
“However, we may sometimes struggle to cope with the additional financial burden, resulting in reduced hiring and job losses. These challenges highlight the importance of engaging both employers and employees in discussions about wage policies. Nevertheless, we already pay our employees more than the minimum wage, which raises the question of what exactly we need to implement,” he said.
Govt. plans to consult TUs
Nevertheless, speaking to The Sunday Morning, Deputy Minister of Labour Mahinda Jayasinghe said that the Government would consult the trade unions as soon as possible. He also stated that the Wages Board would meet this week and that further discussions would be held during the meeting as well.
“Trade unions must be consulted. We consulted the employers first as their consent is very important to get this done. However, the Wages Board is going to meet this week. We hope to discuss this broadly there as there is trade union representation as well,” he said.
Meanwhile, speaking to The Sunday Morning on condition of anonymity given the sensitivity of the matter, many leading private sector companies stated that they were not part of any discussions with the Government pertaining to this issue, indicating that their opinions had not been consulted.
As such, the proposed wage increase has raised concerns about fairness and practicality. While aimed at improving living standards, the exclusion of trade unions leads to issues of transparency.
Employers remain concerned about the financial strain, yet many already pay above the minimum wage, making the potential impact unclear. Suspending the budgetary relief allowance could further undermine benefits. The Government’s promise to consult trade unions is a positive step, but a more balanced, inclusive approach is needed for meaningful reform.