Minimum wage necessary for Sri Lankan workers, says union grouping

The National Trade Union Federation has stressed the need for a minimum wage, urged a halt to outsourcing or contract labour and backed calls for a pension scheme for the private sector. These comments have been made through proposals submitted to the National Pay Commission by federation President K. Velayudam.


The federation comprises the Lanka Jathika Estate Workers Union, the Jathika Sewaka Sangamaya, the Public Service National Trade Union Federation, the National Estate Services Union, the Jathika Adyapana Sewaka Sangamaya, the National Health Services General Employees Union, the National Organization for Self Employed, the Migrant Workers Front and the National Building and Woodworkers Front.

Excerpts from the proposals:

I) Wages

a) The lack of a minimum wage causes conflicts since employers are in a position to pay whatever wages they chose and exploit the workers.

In the absence of a minimum wage, workers under the Shop and Office Employees Act, are paid different wages for performing the same or similar work.

Though Wages Boards decide minimum wages, the wage decided differs from trade to trade.

b) The minimum wage decided by Wages Boards is not duly updated and is much less than what prevails in the market. For instance the highest wage for a skilled worker of the Engineering Trade was Rs. 8,800 upto March 2013. It was then raised to Rs. 12,150. But, a skilled worker draws Rs. 18,000 upwards in the open market.

c) The removal of the Cost Of Living Allowance (COLA) when wages were consolidated was a setback. The COLA has a long history. It was at first named as the Dearness Allowance (because consumer items were dear). It developed into the COLA and was calculated on the Colombo Consumers Price Index (CCPI), in 1952. The CCPI was based on the cost of 85 items and counted for four members in a family. It was counted at Rs. 2 per point.

II) Terms and Conditions

a) Outsourcing or contracting out is being resorted to by more and more employers to circumvent worker rights, as it is difficult to apply labour laws on outsourced workers, comprehensively.

The latest such occurrence is in plantations where about 1000 tea bushes are handed over to a number of workers to maintain supplying manure and pesticides. The plucked leaves are bought by the owner of the estate.

Thus industrial democracy is adversely affected. In the long run a serious situation will arise. As a trade union we object totally to outsourcing and contracting out. In the migration field a few manpower suppliers hinder the worker rights such as bargaining for better wages, terms and conditions of service, security of employment etc. Sub-contract workers draw different and lower wages than regular workers. Their bargaining capacity is nullified. Ultimately, in the long run the country has to face a serious situation. It may even be acute worker unrest. At present section 45 of the Wages Boards Ordinance permits contracting out and covers basically minimum wages only.

The contract or casual workers are very often terminated just before they complete five years of service, as otherwise gratuity can be claimed.

III) Disputes

The present system of dispute settlement by conciliation is dilatory. Coercing parties to arrive at a settlement is not feasible always. Hence many cases are referred for compulsory arbitration.

IV) Social Security

a) The lack of a pension scheme for the private sector is discriminatory. Some enjoy a pension as well as EPF benefits as well like Central Bank and Bank of Ceylon employees.

The contributor to the EPF withdraws the benefits as a lump sum, which dwindles to nothing, having spent the amount on housing or on a marriage of a daughter.

A pension scheme (if formulated) should cover all workers, even those in the informal sector.

b) As stated earlier the large informal sector do not enjoy any social security benefit, such as EPF, ETF, gratuity, maternity leave or workmen compensation, etc.

A large amount of domestic servants are included in this informal sector and merits special recognition in granting redress.

c) The lack of a social insurance scheme covering death, sickness, accidents, etc is a heavy burden for workers. Where medical care is concerned public sector workers are provided with some care. The ETF also provides limited financial assistance. But, the grants are absolutely inadequate. For instance Rs. 3,000 is given for grafting lenses for eyes. The actual cost of the operation ranges from Rs. 18,000 to Rs. 3,000 or more.


a) The enforcement of the EPF and ETF acts cannot be considered as foolproof; so many employers have resorted to various ways of defaulting.

Outsourcing is one such ruse. Paying only on the minimum wages board rate and not on the actual wage is another.

b) The ETF provides for even self-employed persons to contribute and be members. But many such persons do not as they lack awareness of benefits entailed.


a) The National Minimum wage is said to be about Rs. 21,876. But it is not applied in the private sector. The Wages Board rate is Rs. 12,150. Also, according to the Census and Statistics Department a family of four members needs

Rs. 48,280 a month to exist.

It is proposed to fix a minimum wage based on the above figure.

b) The minimum wage decided by the Wages Boards with the COLA should be over and above the National Minimum Wage.

c) The cost of living is not a static figure. It varies or rises constantly. Hence, a base for calculating the initial index and the amount to be paid for each index higher to the base has to be decided.

The COLA in banks is Rs. 2 for each unit. It differs in some other private establishments. A flat rate has to be worked out applicable to all workers in all the sectors. The cost of living index should be published regularly in the Government Gazette for updating minimum wages and for collective bargaining purposes.

d) The plantation sector workers deserve special consideration. The workers in company estates covered by the Collective Agreement enjoy fair wages, though not up to an acceptable level. But, those in small holdings or in estates not bound by the agreement are exploited, paid less and denied the other benefits embodied in the agreement. Further, they lack even social security coverage.

A uniform wage, above the Collective Agreement rate, for all plantation workers, irrespective of whether they are employed in a company estate or not should be formulated and implemented.

Social Security

a) A pension scheme for the private sector including informal workers can be formulated, funded mainly from the surcharge fund and unclaimed contributions of the EPF and participatory contributions of workers or self-employed persons. Worker contributions are needed to instill proprietorship in their minds.

The scheme should be implemented on a voluntary basis. Over the years this fund will grow and membership will rise.

b) Unions, including our federation are urging the Government to ratify ILO Conventions 189 concerning domestic workers including migrants. It can be done only if a law is enacted to cover our domestic workers, who actually belong to the informal sector. Thus this law can encompass the entire informal sector, regulating pay, working conditions, OSH, social security and welfare, etc.

c) Establish a social insurance scheme, to provide assistance to workers in cases of sickness, accidents, unforeseen social expenses, marriages of children, educational expenses, etc.

d) A social insurance scheme to cover medical benefits, accident benefits and unemployment relief aspects, too.

e) Establish a welfare fund in line with the Indian Welfare Board system. The Indian entity is funded by levying a small percentage from the total cost of building and construction contracts serviced by employer – companies. The funds thus collected are ample to provide welfare facilities to all workers.


a) The EPF and ETF Acts should be further strengthened and the enforcement aspect emphasized.

b) The benefits of the ETF merit a wider and comprehensive awareness through the media.