Rethinking the value of labour

01 Apr 2015 - Commentary

What does the current “100 days” reform campaign mean for the working classes? In addition to the current raft of constitutional reforms proposed during the campaign, workers have taken up the opening in the political space to advocate for wage increases in the private sector.Currently unions are demanding a Rs. 2,500 increase across the board, to be passed as a legally-binding parliamentary act similar to the budgetary relief allowance of 2005. As it stands, the minimum wage paid to workers is around Rs. 10,000, though this also varies across sectors. This contrasts with employees in the state sector, who while receiving a minimum salary of Rs. 11,370, have nevertheless benefited from significant increases in the form of allowances. The gross salary is now Rs. 25,040, according to Deputy Minister of Policy Planning and Economic Affairs, Dr. Harsha de Silva.

The Rs. 2,500 demand is part of a longer struggle to achieve parity between private and public sectors, the latter has many benefits. At the same time, however, private employers are opposed to a mandated increase. The employers’ argument as articulated by the Employers’ Federation of Ceylon (EFC) hinges on two main claims: 1) the private sector can’t afford wage increases across the board and 2) there are already existing arrangements between workers and employers to negotiate for salary increases. In order to grasp the true implications of the current wage campaign, however, the debate must shift to take into account the real determinant of the value of labour. This is based on popular struggles to achieve fair compensation.

Costs of production

With regard to the EFC’s arguments, firstly, employers are shifting the burden to workers to cover costs, keeping wages low. In reality the question that should be asked is, what other material factors are at stake in the process of production? The EFC proposes the argument, for example, that smaller enterprises will be hurt by the wage increases. This ignores, however, systemic issues affecting the economy, including access to credit for small businesses, which was undermined by the global financial crisis.

Moreover, workers’ productivity is constrained by what’s available to work with. To use one example, in the Free Trade Zones (FTZs) people are physically pushing themselves to the limit to sustain production targets.

The argument that wages must be kept down in order to maintain profit for private enterprises ignores these factors that are outside workers’ control.

Secondly, employers claim that there are already pre-existing arrangements that cover workers’ bargaining with employers. These include the Wages Boards along with sector-specific Collective Bargaining Agreements. Nevertheless, these only cover a small proportion of workers.

According to an International Labour Organisation report, around 12 to 15 per cent of Sri Lanka’s 8 million-strong workforce is unionised, including the public and private sectors. The proportion of unionised workers would be significantly reduced if we only take into account the private sector, especially given the extent of unorganised labour, which constitutes 61 per cent of the labour force according to the Department of Census and Statistics.

Moreover, unions are undermined by fissures and splits, including some employers’ attempts to further fragment workers’ representation. Even as the EFC points to existing methods for achieving wage increases, it ignores the historical context and politics of patronage that has undermined workers’ organisation. As T.M.R. Rasheedin of the Ceylon Federation of Labour, puts it in the Sunday Times on March 1st, it appears to be an argument based on bad faith to assume that there are indeed effective mechanisms of redress for workers’ wages outside of government intervention. Instead it could be argued the real point of contention is that the Rs. 2,500 campaign highlights the possibility of creating a larger consciousness among workers, including breaking down arbitrary barriers between the private and public sector. It’s clear then that the justification for the wage and the method to achieve it must be sought elsewhere.

Value of labour

As Marx once noted, the value of labour is determined according to a “historical and moral element” that defines what workers need to reproduce their standards of living. In the case of Sri Lanka, these have been defined by policy-making analyses of the consumption basket. Currently an average household in Colombo requires Rs. 51,000 to sustain itself (calculated from Colombo Consumer Price Index, updated February 2015, base value 2006/07). As a trade unionist pointed out recently at a discussion, however, it would be preferable to create sector-specific consumption baskets that deal with people’s realities. These must take into account the often miserable conditions in which many in this country are forced to live, such as line rooms and hostels. As we get a better sense of how people actually survive, we come to the realisation that wages must be increased according to what is defined as a reasonable living.Moreover, wages are similar to recent proposed increases to subsidies in the budget and reduction of prices of key goods, insofar as they express collective assumptions about fair living standards. Debates about economic issues after the war have focused on issues of consumption such as the cost of living and corruption. It’s now time to deal, however, with questions raised by production. For example, FTZ workers are leaving jobs to migrate abroad. The struggle to find work even in degraded conditions is a critical issue facing many enterprises in the private sector, including the pressing question of the 16,000 vacancies in the FTZs. Workers in Sri Lanka and other southern countries demand a fair living, and this will continue to be brought to the forefront as people get onto the streets, as demonstrated by union protests this past month.

Deepening “good governance”

In the current conjuncture, concepts such as fairness and representation have reappeared in the political discourse with Maithri’s “good governance” campaign. The shift in rhetoric is a positive step that must be taken further. The fundamental relationship between state and society must be revisited. This must go beyond the narrow purview of the current constitutional debates. The question is why worker’s demands have been ignored amidst loud calls to reform society. Why is the popular media focussing almost exclusively on corrupt politicians? The answer should be to broaden the scope to tackle larger issues facing society. This will require further mass mobilisation to put pressure on the government to fulfill its promises, in order to counter-balance the lop-sided emphasis on making Sri Lanka attractive for investors.

Incorporating wage demands, contrary to employers’ arguments that it would “scare away capital,” would in fact strengthen Sri Lanka’s democracy and realise the promise of its institutions in achieving a fair society for all.

Currently there have been much discussion about the perks and privileges given to the previous regime’s cronies, but the next step should be to engage people’s everyday economic concerns. This returns us to the question of what democratisation after the defeat of the Rajapaksa regime actually means, and what deeper, more substantive meaning we attribute to it. Toward this end, increasing workers’ wages by Rs. 2500 is a fundamental aspect of the progressive transformation in the relationship between state and society.

This piece is also available in the Sunday Times on 29 Mar 2015