Sri Lanka’s decision to review and strengthen its wage-setting institutions marks an important turning point in the country’s post-crisis economic management.
The three-day workshop held from 8–10 September, organised by the Ministry of Labour and the Department of Labour in partnership with the International Labour Organization (ILO), and has placed a long-neglected question at the centre of policy: how can wages protect workers without undermining enterprise survival, employment and export competitiveness?
The discussions brought together government officials, employers’ and workers’ organisations, members of the Labour Law Reform Committee, academics and ILO technical experts. Their objective was not merely to revisit existing wage-setting practices, but to identify practical reforms based on reliable evidence, national circumstances and social dialogue.
That approach is particularly significant after Sri Lanka’s recent economic collapse, when exceptionally high inflation sharply eroded purchasing power.
Although macroeconomic indicators have improved, many households continue to face elevated living costs, while enterprises remain under pressure from financing constraints, taxation, energy expenses and uncertain demand.
A wage-setting system that ignores either side risks worsening the very economic vulnerabilities the recovery seeks to overcome.
Labour Ministry Secretary S. M. Piyatissa emphasised that adequate wages, higher productivity and sustainable enterprises must advance together.
His remarks reflect the central policy challenge: wage increases cannot be treated as an isolated administrative decision.
They must be connected to productivity, business sustainability and the country’s ambition to attract responsible investment and expand ethical, high-value exports.
ILO Country Director for Sri Lanka and the Maldives Joni Simpson stressed that effective wage policies must be informed by reliable evidence and meaningful dialogue among governments, employers and workers.
She also highlighted the need for gender-responsive policies and equal remuneration for work of equal value.
The workshop examined ILO principles governing minimum-wage setting, including workers’ and families’ needs, economic factors, labour-market trends, collective bargaining, implementation and compliance.
Experiences from India, Indonesia and Malaysia offered comparative lessons on how wage decisions can be made more transparent and economically grounded.
However, the real test begins after the workshop. Sri Lanka has previously relied on fragmented wage boards, periodic political interventions and decisions that do not always reflect changing household costs or sectoral conditions.
Strengthening institutions will require clear mandates, timely data, predictable review mechanisms and effective enforcement.
The issue is especially urgent in export-oriented sectors such as tea and ready-made garments. These industries must remain competitive internationally, but competitiveness cannot depend indefinitely on suppressing wages.
A credible system could help employers plan, workers negotiate and international buyers assess Sri Lanka’s labour standards with greater confidence.
The ILO’s 2024 tripartite agreement on living wages and the 2025 High-Level Regional Dialogue on Living Wages in Colombo provide a broader foundation. Yet implementation must remain nationally owned.
As ILO Wage Specialist Anoop Satpathy observed, Sri Lanka’s recent experience has demonstrated the need for wage institutions that are transparent, predictable and responsive. The government must now convert that recognition into durable institutional reform rather than another round of consultations without measurable outcomes.
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