EFC responds to ‘Implications of salary increment in the private sector’

Friday, 6 February 2015 00:00 -     - {{hitsCtrl.values.hits}}

The Employers Federation of Ceylon (EFC) has sent the following response to the article entitled ‘Implications of salary increment in the private sector’ written by the Special Correspondent in the Daily FT issue of 29 January 2015. The article claims to be in response to an article written by the Employers’ Federation of Ceylon earlier that week (Tuesday 27 January 2015), which warned the Government about the implications of a salary increase in the private sector. The special correspondent claims that the EFC article was written without “any proper base.” Does he not know that the EFC has representation from over 600 companies across all industry sectors and has for many, many years conducted regular salary surveys and various studies on pay and benefits, the data and the facts of which would not just fill this newspaper, but many newspapers a hundred times over! Perhaps this Special Correspondent should read a few of the numerous publications that the EFC has produced on the topic of salaries, wages and benefits before making such incorrect remarks in public. The EFC’s article was not meant to be an analytical feature article but instead a news article simply reporting that the EFC has cautioned the Government about salary increases for the private sector. The Special Correspondent points out that the EFC asserts that private sectors and public sectors are different, and asks “Do they have to be?” That’s not the point! The fact is they are different! America’s postal service, which he cites as an example, is all well and good, as is changing the mindset of the Sri Lankan people, but the reality is we are not American, our postal service is not American and our mindset is certainly not American either – this is fact. Our history, our attitudes, our culture and our laws and Government make us Sri Lankan – we can’t suddenly morph into America. Why would we want to? Or into Singapore for that matter – both countries’ economies are long established (with a very strong market-driven private sector by the way) and are not on the same growth trajectory as Sri Lanka’s. The correspondent is comparing apples with oranges. The writer further points out that salaries depend on whether a job is blue or white collar. This is true, but there are a whole host of other factors that determine a salary level – market forces, the industry sector and years of service to name just three. It’s not just about the colour of the collar. We were especially amused by the Special Correspondent’s comments on collective bargaining. “Collective bargaining mostly happens in the public sector whereas the private sector rarely has that concept even if they had that, the trade union in the private sector is not that powerful.” It would appear that this correspondent has never been exposed to private sector operations. Perhaps if he took one of the EFC’s training courses or read one of their case studies, which are all based on actual events in the private sector, he would realise just how much collective bargaining there is and also how strong the trade union voice can be in many private sector industries.   Plantation sector As for the comments about the plantation sector, does this reporter not know that the EFC is famous for being one of the most comprehensive sources of data and experience on the Plantation Sector in the whole island? Twenty-one out of 23 of the country’s plantations are members of the EFC. The EFC’s statement that costs are high in the plantation industry has not just been plucked out of thin air. It is based on years of dealing with this industry and the trade unions that represent it. The EFC regularly carries out many surveys, studies and research on this highly specialised area. The correspondent also makes another comment about the EFC’s assertion that the private sector has moved away from the cost of living index. “Did a messenger from heaven come and tell them not to link the cost of living to wages,” he cries, “How can they do that? Do they think people come and work for fun?” No, a messenger from heaven did not come, but a messenger called Market Forces, did. People do not work for free. If the salaries that are set are not enough for people to live, they will not work in that company and market forces will compel the company to raise salaries to a level which will attract the right skills they require to perform operations. This is what happens all over the world – especially in America and Singapore which this correspondent insists Sri Lanka should be more like. How can we be more like them if you also want companies to link salaries to a Government set cost of living? Finally, sir, as he admits to being a “novice social science student”, we respectfully ask that instead of offering suggestions from an economic theory, perhaps he should look at real world economies, before telling us that he would prefer Sri Lanka to push up consumption by increasing salaries and reducing taxes. We respectfully suggest that this correspondent look at the latest findings on productivity and salary increase, he would see that salary increases do not necessarily increase productivity. This correspondent also seems to be unaware of the major national debt and cash flow crises that have hit many high consumption countries like America and most of Europe. This article talks about economic theories. The EFC article was based on economic realities that could have a significant effect on Sri Lanka’s commerce. On balance, we feel this article is a poorly-researched and deeply unsubstantiated response to the EFC article. It is based on opinion rather than fact.