EFC addresses unions and govt. on demand for private sector wage hike

"Don’t set house on fire by trying to heat your food when the oven is hot"



The Employers’ Federation of Ceylon (EFC) last week wrote to the major trade union organization it deals with, with copies to the prime minister, finance minister, justice and labour relations minister, deputy minister of policy development and economic affairs (Dr. Harsha de Silva) and all relevant officials expressing concern over the demand for government intervention in private sector wages.


"We Employers are conscious that you are ‘trying to heat your food when the oven is hot.’ Doing so, in this instance, would set the house on fire!," Mr. Ravi Peiris, Director General of the EFC said.


The letter made the point that that the unions are justifying the demand on the basis that the government had granted a salary increase to its employees. Comparing public sector wage fixation to that of the private sector "is worse than comparing apples with oranges," he said.


"The fundamental basis on which the private sector operates in terms of wage fixation is the capacity of the Employer and the market forces. These are the two determiners in wage fixation," Pieris said.


"This position is further strengthened by the legislative framework we have through the Wages Boards Ordinance for the establishment of Wages Boards trades for minimum wage fixation."


Following is the text of the letter:


We have noted with concern your recent demands and protest campaigns attempting to exert pressure on the government to intervene in private sector wages.


You will no doubt agree that the Employers’ Federation of Ceylon, being a Trade Union of Employers and engaging in collective bargaining during the last 86 years of its existence, has been directly dealing with your Union, recognizing the right to freedom of association and collective bargaining. We recognize your Unions as formidable Collective Bargaining Agents subject to the legal requirements governing it.


At the outset, let me first dispel a misconception or a misunderstanding you seem to have in making this demand. You are justifying this demand on the basis that the government has granted salary increases to the public sector employees. Comparing the public sector with the private sector in terms of wage fixation is worse than comparing apples with oranges. The fundamental basis on which the private sector operates in terms of wage fixation is the capacity of the Employer and the market forces. These are the two determiners in wage fixation. This position is further strengthened by the legislative framework we have through the Wages Boards Ordinance for the establishment of Wages Boards trades for minimum wage fixation. Once the minimum wage is fixed there is ability for parties to fix wages in terms of capacity, supply and demand and collective bargaining. Furthermore, you will also agree that an employee in the private sector not only receives a monthly wage. In most cases, depending on the nature of the industry, there are other monetary and non cash benefits that these employees receive, which are not available to a public sector employee. Therefore, what needs to be taken into account is the ‘total earnings’ of an employee in terms of a package and not only the basic salary that an employee receives. Incentives, bonuses, meals, transport are some of the additional benefits afforded to private sector employees depending on the nature of the industry.


Quite apart from this, we also do not agree with your position that the government should intervene through a mandatory wage increase through legislation because "the private sector employees have not been given any increase". You are well aware that even right now, we are engaging with your Unions in different work establishments with regard to revision of Collective Bargaining Agreements. Such revisions take place along with revision of wages and other benefits. Quite apart from this, you are also aware that many Employers have wage policies whereby wages are reviewed annually on the basis of a transparent performance management system. In fact, we are happy to place on record that some of your Unions have also subscribed to these performance based earnings through Collective Bargaining Agreements.


Another important matter that we wish to highlight is the fact that your Unions have negotiated Collective Bargaining Agreements in respect of your members in different Companies, on different terms. The salary increases have never been uniform. Your demands in the collective bargaining processes have also been different from Company to Company. Furthermore, there are subsisting Collective Agreements entered into with some of your Unions whereby you have agreed to a wage increase less than Rs 2,500/-.


In this scenario, how could you justify a demand to the government to legislate a mandatory wage increase of Rs 2,500/- to all private sector employees?


It is disappointing to note that, on the one hand, your demand for such an increase undermines your own bargaining strength. On the other hand, on a more serious note, it directly undermines collective bargaining in this country. Why should Employers negotiate with your Unions and enter into Collective Bargaining Agreements if you are now requesting the government to legislate on a mandatory wage increase?


You will recall that the government has not intervened in private sector wages for the last 10 years. This does not imply that the private sector employees have not received wage revisions for ten years! The last intervention was through the Budgetary Relief Allowance of Workers Act No.36 of 2005 which created many anomalies and disputes in respect of wages in many private sector establishments. The fact that this piece of legislation exempted Collective Bargaining Agreements did not safeguard collective bargaining in some cases. There were a few cases where Companies had entered into Collective Agreements with Unions granting less than Rs 1,000/-. When such establishments were exempted, naturally there was dissension amongst workers when the government intervened when granting Rs 1,000/- to others.


The very foundation of collective bargaining, which culminates in a Collective Bargaining Agreement, envisages agreement being reached on terms and conditions of employment after considering each others interests. This has been the basis on which we have negotiated with your Unions over the years. The fact that your Unions have been able to negotiate different terms in respect of different Enterprises (depending on their capacities) is a clear acknowledgement of the fact that there cannot be a mandatory uniform wage increase imposed on the private sector. You are well aware that already 26 Wages Boards have sat and agreed on a revision of minimum wages in respect of different trades. These revisions also vary from industry to industry. This further reiterates that there cannot be a "one size fits all" approach in wage fixation in respect of the private sector.


Finally, we would like to conclude with the words of E.F. Schumacher who explained the essence of Collective Bargaining, which we all need to protect.


"If we cannot achieve a real ‘meeting of minds’ with the people nearest to us in our daily lives, our existence becomes an agony and a disaster. In order to achieve it, I must be able to gain knowledge of what it is like to be ‘you’ and ‘you’ must be able to gain knowledge of what it means to be like me."


We Employers are conscious that you are "trying to heat your food when the oven is hot". Doing so, in this instance, would set the house on fire!


In the circumstances, as an Employers Trade Union which has always been dealing with your Unions, recognizing your bargaining strength and your right to represent and collectively bargain, it is important we get together and uphold the principles of Freedom of Association and Collective Bargaining without surrendering or undermining our rights to the policy makers. We are confident that you will seriously consider what has been explained above and not pursue any irresponsible action that would be detrimental not only to the economy but also to the employment of our workers.


The letter has been addressed to the general secretaries of the SLFP-oriented Sri Lanka Nidahas Sewaka Sangamaya, Inter Companies Employees Union (JVP), Ceylon Federation of Trade Unions (CP), Jathika Sewaka Sangamaya (UNP) and the CMU.


In addition to the political authorities, it has also been copied to the Secretary of the Labour Ministry, Commissioner General of Labour, Chairman of the ETF, Chairman of the EFC and its members.


 
 
 
 
 
 
 
 
 
 
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