"Also, our labour market is no longer only here," Jayasundera said.
Workers no longer feel uncomfortable in travelling abroad in search of work as long as they get their desired pay, he added.
Remittances from migrant workers are one of the island top foreign exchange earners and are expected to hit four billion US dollars this year.
"Therefore, when unemployment goes down people ask for more salaries because labour becomes a scarce resource," Jayasundera said.
"We can't now compete with Bangladesh, India, China and Indonesia." "Now the war is over and unemployment is now five percent," P B Jayasundera, secretary to the finance ministry said.
"When unemployment is five percent, there is no excess labour - you have to pay a price," he told a forum on the government budget for 2011 organised by the Ernst & Young audit firm.
Jayasundera said labour was not abundantly available even in the north which suffered the most