EFC raises concerns with Labour Minister on minimum wage revision process

The Employers’ Federation of Ceylon (EFC) has made special representations to the Minister of Labour, highlighting the employer community’s concerns within the private sector regarding the manner in which minimum wages are revised.

The EFC has very categorically stated that the minimum wage fixation process is clearly outlined in the Wages Boards Ordinance and what is highlighted as a concern is not in relation to the law as it stands, but the manner in which it is implemented.

Private sector wage fixation is regulated by Wages Boards set up under the Wages Boards Ordinance. These are tripartite Wages Boards with representatives of employers, workers and members nominated by the Minister of Labour.

In terms of Section 27 of the Wages Boards Ordinance, each Wages Board is under a duty to determine different rates of minimum wages, and take into account the circumstances that prevail in the different industries for which Wages Boards have been set up.

Therefore, every Wages Board member has a responsibility to be aware of what is happening in the specific industry they represent and to set a floor level for minimum wages, taking care to be mindful of affordability for even the smallest employer in that industry.

The EFC has recommended that the Commissioner General of Labour, who is the Chairman of each Wages Board, must give proper direction to all members of the Wages Boards in terms of their responsibility and, more importantly, have facts and figures in relation to what is happening in the industry.

Members of the Wages Boards must be made aware of the realities that are prevalent in different industries. For example, in the apparel industry, over and above the basic wage employers pay various types of bonuses in the nature of profit bonus, production bonus, etc. to increase efficiency and productivity. Therefore, it must be understood that the “minimum wage” that the Wages Board prescribes is not the actual wage that comes into the hand of the worker but it is something much more than that.

The EFC has also raised the importance of appointing representatives who possess the knowledge and expertise in the relevant Wages Board industry, as nominated representatives.  “It is extremely important that these representatives have practical knowledge of what is happening in the world of business,” said EFC’s Director General Ravi Peiris.

The thrust of the EFC submission is that proper direction and guidance should be given by the Department of Labour by taking the lead in minimum wage fixation in Sri Lanka.

“It must be understood that it is not a philanthropic exercise of being generous with money that does not come out of your pocket,” said Peiris, adding, “It is of national interest that we keep our industries sustainable if we are to achieve the development targets that the Government has set its eyes on in 2016.”