For a working people’s Budget in 2025

 The exclusion of informal sector workers from essential social safety nets like the EPF and ETF is a grave injustice  

The United Federation of Labour, a federation of nine trade unions representing diverse sectors, presents the following proposals for the 2025 Budget, with the aim of laying the foundations for a just and equitable economy for the people of Sri Lanka.

By United Federation of Labour

1. Indirect taxes on essential food, medicine, and education supplies such as the Special Commodities Levy, Ports & Airport Levy, VAT, etc., must be abolished with immediate effect. These levies disproportionately impact the poor, promote impoverishment and exacerbate existing inequalities. Government’s insatiable appetite for tax breaks for large corporations – a staggering Rs. 978 billion in 2022 (4.1% of GDP) according to the Ministry of Finance and the IMF – far outweighs the revenue lost by removing these regressive taxes on essentials. This reckless giveaway to the crony capitalists must be halted immediately to prevent escalation of budget deficits and ensure a more equitable distribution of the tax burden.

2. Instead of squeezing the poor with regressive taxes on essential food in the guise of protecting local farmers, the Government must prioritise reducing farmers’ production costs. Sri Lanka’s 25% poverty rate (World Bank, 2024) is a direct result of these policies. As a first step, slash agricultural machinery rental rates by 50% immediately and provide heavily subsidised agrochemicals. With nearly 30% of paddy cultivation costs tied to machine rent, the State must invest in a rental program to drastically lower these exorbitant fees benefiting a machine-owning upper middle class in the rural economy. This will boost the real income of both small farmers and consumers while simultaneously lowering the overall cost of production for the economy and export sectors.

3. To dismantle the exploitative system that enriches a few while crushing farmers and consumers, all large-scale paddy mills must be immediately nationalised. These largescale paddy mills have been allowed to profit at the expense of the country. Nationalisation is the only way to ensure fair prices and protect livelihoods.

4. The Department of Census and Statistics’ National Consumer Price Index of December 2023 and the Central Bank’s Annual Economic Review 2023 paint a stark picture of the rising cost of living in Sri Lanka. The data reveals that the minimum cost of basic necessities for a family unit is a staggering Rs. 105,921.32 per month by December 2023.

5. With an average of 1.8 income earners per household, as per the Department of Census and Statistics, a 40-hour workweek demands a monthly minimum wage of Rs. 58,845.18 simply to cover basic needs and avoid indebtedness. The United Federation of Labour proposes a national minimum wage of Rs. 59,000. This is bare minimum income which should be paid to all workers to prevent further economic distress for working families.

6. Companies are exploiting a technicality to deny workers their rightful Cost of Living Allowance. It is not paid by companies on the basis that the value of the ‘base index point’ calculated on the Colombo Consumer price index has not been gazetted by the government. Therefore the 2025 Budget proposals must include the undertaking to publish the gazette with the necessary data which includes the value for the ‘base index point’ calculated on the Colombo Consumer Price index which is used by the private sector to pay workers cost of living allowance.

7. Former Government’s predatory raid on the Employees’ Provident Fund, disguised as “domestic debt restructuring,” must be immediately reversed. Furthermore, the interest rate on treasury bonds purchased by the private sector must be capped at the current policy interest rate of 8% plus 50 basis points (8.5%). This critical step will drastically slash the exorbitant interest payments to local financial elites, reducing the 2023 figure of Rs. 1,800 billion to a more manageable Rs. 1,020 billion.

8. Sri Lanka holds the distinction of paying the highest percentage of government revenue as domestic interest in the world – a staggering 80% in 2023, according to World Bank data. This figure dwarfs even Ghana, which ranks second at a mere 44%. This reveals that a crushing 80% of the tax burden, which has plunged a quarter of our population into poverty, is squandered on enriching a counterproductive financial elite. This vicious cycle of exploitation must be broken immediately.

9. The proposed measures will significantly reduce government interest costs without destabilising the banking system. This is evident from the current low interest cost regime of the banking sector compared to the government. The banks, already enjoying substantially excessive net interest income margins, can easily absorb the necessary adjustments. These reforms will not only curb the brutal tax burden on the people but also contribute to a much- needed reduction in the fiscal deficit.

10. The Central Bank’s exclusive Employees Provident Fund, a blatant act of self-serving privilege, must be abolished immediately. This separate fund, sanctioned by the Monetary Law Act, is an affront to the principle of equality and a breeding ground for corruption. By operating a private fund while managing the nation’s finances, Central Bank officials have effectively legalised insider trading, an act punishable by severe penalties elsewhere. The 2015 forensic audit report on the People’s EPF Fund serves as a damning indictment, exposing the misuse of public funds for personal gain. This privileged access has enriched Central Bank employees while undermining the integrity of the public financial system.

11. The Central Bank’s exclusive EPF fund stands as a global anomaly. Unlike other institutions, the Central Bank possesses privileged access to confidential economic data and policy decisions before they are made public. This inherent advantage creates an unparalleled opportunity for insider trading, enriching Central Bank employees at the expense of the broader public. This shameful practice must be ended immediately. Merging the Central Bank’s EPF with the General Employees Provident Fund will not only eliminate this unfair advantage but also incentivise Central Bank officials to act in the best interests of all Sri Lankans, ensuring responsible and efficient management of public funds.

12. Both the Employees Provident Fund and the Employees’ Trust Fund should be subjected to forensic audit from 2015 onwards.

13. The Government must immediately launch a comprehensive forensic audit into foreign loans obtained by previous administrations, as promised in their election manifesto. This investigation must be conducted by an independent Audit Commission for Integrated Public Credit, modelled after the successful Ecuadorian model under President Rafael Correa in 2009. This commission will have the authority to recover misappropriated funds, seize the assets of those responsible for corruption, and ensure the full force of the law is brought to bear upon them. While debt restructuring may be complete, the Government retains the power and the responsibility to investigate and hold accountable those who plundered public resources through loan agreements.

14. The Sri Lankan tea market is exploited by an oligopoly of estates, franchised export companies, tea brokers and the few conglomerates who own the entire apparatus. These oligarchs manipulate the auction system, suppressing prices by an average of 50% below the actual export price. In September 2024, for instance, the average auction price was a mere Rs. 1,231.57 per kilo, while the export price soared to Rs. 1,780.47 – a staggering 44.6% higher (CBSL Monthly data). This predatory practice leaves producers with a pittance, considering the 2023 production cost of Rs. 885 per kilo (CBSL) over a 100% less than the export price.

15. The exploitation doesn’t end at the auction. After packaging, the same kilo of tea fetches exorbitant prices in the domestic market, often exceeding Rs. 3,000. This reveals the enormous profits raked in by tea traders, profits that are not reinvested in the sector or shared with the impoverished workers. Despite these astronomical profits, poverty in the estate sector remains endemic, likely exceeding 50% today, compared to the 33.8% recorded a decade ago by the Department of Census and Statistics.

16. The oligopoly’s stranglehold on the tea sector extends beyond price manipulation. By controlling the auction process, these interconnected conglomerates – encompassing regional plantation companies, franchised export firms, and tea brokers – have effectively suppressed wages. This collusion ensures that estate workers are paid a pittance, while the industry generates immense surpluses.

17. To break this exploitative system, we demand the immediate implementation of a legally mandated minimum auction price. This price must be set at no less than 90% of the prevailing export price. This crucial step will ensure that a significant portion of the industry’s surplus flows back to the estate sector, enabling a substantial increase in wages for the workers toiling tirelessly.

18. In this context the UFL calls on the Government to respect the demands of the plantation workers and increase the Plantation Workers’ Wages to Rs. 2,000.

19. Sri Lanka’s informal workers, including domestic workers, gig economy workers such as PickMe and Uber delivery workers, and those in the manpower sector, endure a brutal system of exploitation. They are denied of having any protections under formal labour laws. Domestic workers, in particular, are tragically excluded from many labour legislations including the Minimum Wages Act and the Budgetary Relief Allowance Act. We therefore demand the immediate inclusion of Domestic Workers within the scope of both the Minimum Wages Act and the Budgetary Relief Allowance Act.

20. Domestic workers deserve specific legislation to govern their hours of work, occupational status, safety and remuneration.

21. The exclusion of informal sector workers from essential social safety nets like the EPF and ETF is a grave injustice. We demand their immediate inclusion in these schemes, ensuring a measure of financial security.

22. Workplace anti-harassment laws have been a long-standing demand of women workers. Despite consecutive Governments promising to pass a workplace anti-harassment law to date no laws exist against harassment inside the work place. Therefore, it is proposed that the Government must pass a work place anti-harassment law in Sri Lanka. Further an Occupational Safety and Health Bill which was approved at the National Labour Advisory Commission has been pending since 2007. Immediate measures must be taken to pass the Occupational Health and Safety Law without modifications to the 2007 draft.

23. Union rights remain a reality only in the Constitution and the Law. In reality, workers are dismissed on a regular basis for forming and joining trade unions. Anti-union harassment by companies is the norm and not the exception. We propose a committee to be set up within the Labour Department to come up with a state mechanism to penalise unfair labour practice in a timely manner but also have affirmative actions taken by the State to encourage workers to join unions.

24. The State must cease all privatisation efforts of existing SOEs. For instance, the Sri Lanka telecom and insurance are two profit-making SOEs which are being pushed for privatisation. Further the CEB is currently profit making. Hence SOEs can become profit making institutions under competent leadership. Therefore, we urge the Government cease all privatisation efforts including repealing the Sri Lanka Electricity Act No. 36 of 2024 which aims to restructure the CEB in a manner which is detrimental to its long-term public function.