A National Wage Policy Is The Need Of The Day!

By Rusiripala Tennakoon –JUNE 23, 2021

Rusiripala Tennakoon

Not many choose to get involved in highly controversial issues because of inevitable retaliations and reprisals to follow. Few dares confrontation, hence things continue unabated. National Wage policy is one such that remains an outstanding with no remedy possible for want of someone to bell the cat! Besides the objectives, concepts and considerations underlying  a Wage Policy a new requirement has arisen due to the rapidly changing land scape centered round the Covid-19 pandemic that has engulfed the globe in all spheres of the socio-economic web. I therefore decided to court danger and share some of my own experiences as well as current developments related to the field to invoke, some kind of constructive dialogue on the subject.

What Are The Concepts Underlying A Wage Policy?

A wage policy should be country specific although covered by certain basics guidelines under accepted norms such as those specified by the ILO. Wage policy is tied up with socio-economic factors prevailing in the country and determined according to the political objectives and aspirations of each country. Of the member countries in the ILO more than 90% are bound by the principles of collective bargaining and have declared minimum wages covering the majority of worker categories which are periodically revised and made applicable under the laws of that country. But a National Wage Policy encompasses many other concepts to provide for a rational and sound outlook from an economic and social point of view. In addition to a minimum wage such a policy should be reasonable, fair and ideal as basic requirements to be acceptable from a humanitarian point of view. Such a policy would contribute to ensure;

1. Industrial Peace,

2. Guarantee the smooth operations among Organized and unorganized workers,

3. Non-exploitation of workers and to fix their wages recognizing the productive capacity,

It should be noted that while the Organized sectors of workers will successfully negotiate terms and conditions applicable to their members ensuring they are not exploited while the unorganized sectors will have to be at the mercy of the employers in fixing a proper wage. Nevertheless, they face many obstacles which limit their chances of fixing a fair wage and often the government intervention is required. Especially when it comes to the question of dealing with a Living Wage it becomes important to consider several factors beyond what is provided only for the bare necessities unlike in the case of a mere Fair Wage. The guiding principle underlying the concept of a living wage is defined as, “a wage for the needs of the average employee regarded as human beings living in a civilized community and moreover sufficient not merely to provide bare necessities of life but also a frugal comfort estimated by current human standards.”

The pandemic situation has made us realize that it is the unorganized workers who play an active role in running the economy and keeping it live. Many unorthodox and make- shift arrangements are all handled by them during the crisis. Organized sectors are adequately accommodated and facilitated to maintain their normal standards (except those in the essential service sectors) while there remains much to be done in this regard in the informal sector which is growing in size rapidly as a global phenomenon.

Most importantly the main objective of an acceptable National Wage Policy is the achievement of maximum economic welfare for the society. This could be accomplished under the following conditions and requirements;

1. An equitable distribution of wealth (national income) among the members of the economy;

2. National Income to be maximized under declared policies;

3. Maintenance of sustainable stability in the national income.

To achieve these, the main objective of the Wage Policy should be, the prioritization of maximum income security for all sections of the community, with the provision of full employment opportunities and the allocation of resources optimized.

Growing Disparities Affecting Unorganized Industries And Sectors 

The Trade Unions in the Organized sectors are powerful and are traditionally involved in demanding, negotiating and concluding agreements periodically while the employers yield to their demands in fixing proper wages. We witness this often happening in a universal application and as a regular phenomenon. Even the worst affected  Estate Labor, manage to secure some improvements with strong bargaining. Formal sectors are better off in this regard and most of the well-organized industries in both State and Private sector manage their periodic revisions through the collective bargaining process. The vulnerability of the essential nature of their public services, help them to achieve exceptional beneficial terms and conditions sometimes. It is observed that this happens smoothly virtually automatically and without the parties concerned having to resort to any collision course, except for some orchestrated rare shows staged for exhibition purposes. Such negotiations appear to take a friendly discourse seemingly with hidden collusion instead of the usual collision that spring up in such instances. This is due to the exclusive situation of some of the beneficiaries themselves being involved in the ultimate decision-making process.

I am reminded of the pioneering role by Trade Unions in the past for securing very small increases with long drawn battles with much sacrifice of pay and running heavy risks sometimes of dismissal. In 1972, the banking Industry launched an island wide general strike which lasted 108 days (longest strike in the industry) demanding the equivalent of 3 annual increments Rs.6/= (an increase of Rs 18/=) ! We were threatened with not only dismissal but confiscation of our properties if we did not return to work on the 7th day of the Strike!

In such a background it is important to observe some of the current developments that we witness as incredible manifestations in the response by some leading industries and how yielding  they are for automatic periodic enhancements in their sectors keeping to a very regular and constant rate of revision in terms of percentages. Banking Industry, Electricity Board, Water Supply and Drainage Board, Ports Authority and Petroleum Corporation are in the forefront in this regard. It is to be noted that all these SOEs are either continuing as loss making institutions OR burdened with serious operational mismanagements causing national alarm. None of these negative factors have become deterrents for them to obtain their regular periodic salary increases.

But in the unorganized industries with no Trade Unions to assist them, government interference and intervention of laws of the land become essential even to ensure the payment of guaranteed minimum wages without default.

Global situation

Pandemic related issues;

In order to assure the authenticity of some information we are going to deal with, I thought of quoting from some recent presentations by the IMF at the 3rd APEC Structural reform Ministerial meeting held on 16th June 2021.   

It is recognized that the structural reform programs for global economic recovery have virtually taken a back seat and are now proceeding in a slow phase due to the break out of the Covid pandemic. Nevertheless, world authorities are focusing seriously on structural reforms considering it as a timely critical need which should take the center of any agenda of reforms following the pandemic aggravated adversities affecting the world. There is a common understanding about the factors to receive priority attention in this regard classified and summarized as follows;

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