ECONOMYNEXT – Sri Lanka’s government should consult with private sector before raising minimum wages, a chamber official said, after the latest hike in minimum wages announced for multiple years in a budget.
“What the private sector is saying is, more than going for a blanket increase, come and engage with the Ceylon Chamber, engage with Employers Federation, engage with the stakeholders and have a discussion on this,” Sanjay Ariyawansa, Head of the Economic Intelligence Unit at the Ceylon Chamber of Commerce told forum organized by the Economics Students’ Association of the University of Colombo
“Because it’s important to engage, discuss, analyze and see the pros and cons. Not just take decisions in an ad hoc manner, because that’s what we have been doing on most of the issues.”
Raising minimum wages by budget was an ad hoc practice started by the so-called ‘Yahapalana’ administration of 2015, which also brought retrospective taxes and started price controls on drugs, opening fresh avenues for corruption through the National Medical Regulatory Authority.
In the current budget minimum wages were ordered raised from 21,000 a month to 27,000 in by April 2025 and to 30,000 from 2026.
It is not clear whether the current minimum wages are above market, given recent depreciation of the currency by the central bank in recent years.
Sri Lanka has to raise wages steeply as the central bank depreciates the currency after printing money to suppress interest rates.
Since 2015 the central bank has busted the rupee from 131 to 300 in the course of flexible inflation targeting (engaging in inflation targeting without a floating rate), potential output (printing money for growth) and real effective exchange rate (boost profits of export firms by reducing real wages of workers.
The current central bank administration has reversed some of the wage losses by appreciating the rupee from 360 to the US dollar to 300. The US Fed has also tightened policy bringing down the prices of food and energy commodities.
If minumum wages are set up above market minimum wages, will lead to closures of small and medium enterprise and higher unemployment overall.
In the US, black unemployment started to diverge from white persons after the introduction of the minimum wage. Before 1948, there was no difference between the unemployment rates between young black and white persons.
READ MORE : The Origin of the Minimum Wage in the Progressive Eugenics Movement
In the US, minimum wages were invented by Eugenicists who wanted to create a master race and disemploy the disabled and push them out of the broader society and also keep women out of work and in the home. The first such law was enacted in 1912 in Massachusetts.
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