Sri Lanka’s inflation promoters call for higher minimum wage: report

April 02, 2007 (LBO) – A trade union connected to a Sri Lankan political party whose policy influence expanded the budget deficit and drove inflation to very high levels in the last three years is now calling for a higher minimum wage, reports said. But agitation for salary increments also usually follows high inflation.

Updated The Inter Company Employees Union (ICEU), has decided to go on the ‘war path’ to force the government to guarantee a 12,500 rupee minimum wage for private sector employees, the independent Daily Mirror newspaper reported Monday.

The ICEU is connected to the Marxist-nationalist Janatha Vimukthi Peramuna (JVP) which is credited by some analysts as being the principal driver of inflation in Sri Lanka in the last three years.

The party popularized an economic policy initiative called ‘removing the plug’ in 2004.

A key component of the policy was to subsidize oil prices and distance the Sri Lankan economy from global price influences.

Subsidy inflation

Though the oil prices were fixed with state-subsidies in 2004, after a government supported by the JVP was voted into office, inflation which was hovering below 2 percent shot up to 18 percent by the end of the year, as the central bank