The spread of the Co-vid 19 pandemic in Sri Lanka has affected the nations private and public sectors in a dualist manner with a stark contrast being observed when comparing the two sectors.
According to the Annual Report of the Central Bank of Sri Lanka although the informal and formal sectors have been affected differently the general price level has remained largely unchanged despite the demand pressure from the wages.
In taking a look at the public sector the nominal wages of employees has shown a growth of 9.2% in 2020 in comparison to the previous year. Experts point out to the addition of a new non-pensionable monthly interim allowance of LKR 2500 effective from 1st July, 2019 and the final tranche of the special allowance & interim allowance to basic salary effective from the 1st of January, 2020. Additionally a tripartite agreement was reached between the Ministries of Skills and Development, Employment & Labour Relations, Employers Federation of Ceylon and Trade Unions to pay 50% of the last paid basic salary is considered to have also contributed to the favourable growth in salary in the public sector.
While the public sector has experienced a growth in salaries the story of the formal and informal private sector is the opposite where the real wages in the formal private sector have shown a decrease of 4.2% in comparison to the previous year.
Nominal wages in the informal private sector showed a significant decrease during May 2019 when the pandemic reached landside but however showed a gradual recovery in until September. The 2nd wave in October once again resulted in a decrease of salaries but once again by November and December 2020 the prices recovered as the government took control of the pandemic situation.
Due to the fluid nature of the situation private firms have had to constantly reorganize their salary structures as they are experiencing a significant lack of cash inflow due to the lack of business resulting from the pandemic.
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