Ensuring a Fair Daily Wage Without Politicising the Private Sector
Photo courtesy of Al Jazeera
The 2026 budget proposal to uplift plantation workers through higher daily wages is a positive step. Yet the decision to grant attendance incentives directly from the government raises deeper questions about governance, equality and the autonomy of private enterprise. This article argues that fair wages must be ensured through law and tripartite consultation, not political intervention, to protect both workers’ dignity and private sector independence.
The budget’s proposal aims to uplift the living standards of plantation workers by ensuring that they receive a fair daily wage commensurate with the value of their labour. The proposal, on the surface, represents a long awaited policy response to the socioeconomic neglect endured by one of the most marginalised labour groups in Sri Lanka.
At present, the government is implementing a three phase salary increase for public sector employees. Simultaneously, the minimum wage applicable to employees in the private sector has been revised. Effective from April 1, 2025 the monthly wage is Rs. 27,000 and the daily wage is Rs. 1,080. Effective from January 1, 2026 the monthly wage is Rs. 30,000 and the daily wage is Rs. 1,200.
These revisions, already gazetted, must be legally complied with by all employers.
However, the budget goes further in proposing to raise the minimum daily wage of plantation workers from Rs. 1,350 to Rs. 1,550, a welcome step that recognises their long neglected contribution to the national economy. It is the government’s decision to add a Rs. 200 attendance incentive that warrants closer scrutiny. While this measure is presented as a compassionate attempt to improve attendance and productivity, it risks blurring the critical boundary between public policy and political intervention in the private sector.
A tripartite framework
Sri Lanka’s wage determination system is one of the oldest institutionalised labour frameworks in Asia. Established under the Wages Boards Ordinance No. 27 of 1941, it currently covers 44 industries across the private sector. Each industry’s wage structure, working hours and leave entitlements are determined through consultation under this mechanism.
Central to the process is the National Labour Advisory Council (NLAC), a tripartite body composed of representatives from the Ministry of Labour, Trade Unions and Employers’ Federation of Ceylon. This system of dialogue has been a cornerstone of industrial relations for over eight decades. It ensures that decisions regarding wages are made through consensus rather than coercion, balancing the interests of employers, employees and the state.
Bypassing this mechanism even under the banner of welfare undermines both the spirit and the legitimacy of that tripartite model. When political authorities dictate wage components directly to private employers or employees, it creates a precedent for future governments to use wage policy as a political tool rather than a social justice mechanism.
When populism overrides policy
The dangers of politicising wage policy are not theoretical. In 2011, the proposed EPF Pension Bill was introduced without adequate consultation with trade unions or employer groups. What followed was widespread industrial unrest, a tragic loss of life and the eventual withdrawal of the Bill. That episode stands as a reminder that labour policy cannot be unilaterally imposed even with good intentions without the participation of social partners.
The current proposal’s approach of granting allowances directly to plantation workers rather than through their employers echoes a similar risk. It effectively allows the government to intervene in private employment relationships, weakening the independence of enterprises and the credibility of collective bargaining processes.
Principles of fairness and equality
Plantation workers undeniably deserve better wages and living conditions. For decades, their pay has lagged behind the national average and they continue to face structural disadvantages linked to their historical marginalisation. Yet, introducing government funded incentives in selected sectors raises fundamental questions of fairness and equality:
- If the government provides incentives to plantation workers, should employees in the other 44 industries governed by Wages Boards also expect similar benefits?
- If not, are we inadvertently creating divisions and hierarchies within the private sector workforce?
- Could this lead to renewed demands and unrest across other industries, destabilising the wage determination process itself?
Such questions go beyond economics they speak to the governance principles that underpin a rules-based economy. Wage policy, like taxation or fiscal management, must operate through transparent, predictable and institutionally legitimate mechanisms.
The case for private sector independence
The private sector contributes over 70% of Sri Lanka’s employment and is the primary driver of productivity, innovation and export competitiveness. For it to function effectively it must retain the autonomy to manage its workforce in accordance with the law of the land not political pressure or populist sentiment.
Private sector independence is not synonymous with exploitation; rather, it ensures that employment relationships are governed through law, contract and collective bargaining rather than direct government intervention. It is this separation that upholds the rule of law in labour relations, prevents favoritism and sustains investor confidence.
When governments begin to pay incentives directly to workers even temporarily they take on a quasi-employer role without the corresponding accountability. This distorts market mechanisms and creates confusion about who holds responsibility for wages, productivity and compliance. In the long run, it risks eroding the culture of industrial self-regulation that Sri Lanka’s labour system has carefully built over decades.
Towards a rules-based wage policy
Wage justice must be pursued through institutional dialogue not executive directives. The tripartite system remains the most democratic and inclusive model for wage governance, aligning with international labour standards promoted by the International Labour Organization (ILO), to which Sri Lanka is a founding member.
If the government seeks to uplift wages in plantation or other sectors, the path forward is clear:
- Initiate formal consultation through the National Labour Advisory Council
- Engage trade unions and employers’ federations to build consensus
- Align wage revisions with existing Wages Board Orders and collective agreements;
- Support productivity linked wage incentives through fiscal or technical support, not direct subsidies.
This approach preserves transparency, accountability and fairness across industries. It also ensures that public resources are used to strengthen systems not create political dependencies.
The broader governance context
This debate also exposes a deeper issue in Sri Lanka’s governance culture – the tendency to treat labour policy as a populist instrument rather than a matter of legal and institutional coherence. Every time a government intervenes in the wage relationship between private employers and workers, it weakens both the law and the legitimacy of social dialogue.
Such tendencies are particularly concerning at a time when the country is under intense pressure to rebuild investor confidence, restructure debt and attract sustainable private investment. Industrial relations instability or politicised wage policies send the wrong signal to investors and development partners alike.
The government’s role should therefore be facilitatory, not interventionist, enabling employers to comply with fair wage policies through supportive regulation, skills development and productivity initiatives rather than substituting itself for the employer.
Fair wages, strong institutions
Paying a fair wage is both an ethical and economic imperative. But fairness must be pursued within the framework of law, not populism. The independence of the private sector to manage its workforce as guaranteed under existing labour laws must be respected as a cornerstone of economic stability.
The only sustainable way forward is through genuine tripartite dialogue among the government, trade unions and employers to determine any wage adjustments. Wage increments or allowances should be channelled through employers, not as government subsidies, to preserve transparency and accountability.
Ultimately, fair pay should strengthen dignity at work not create a platform for political intervention. Responsible wage policy must protect both the welfare of workers and the independence of private enterprise. This balance, once lost, will be difficult to recover.
