The FTZ&GSEU is leading an agitation in a collective of 16 private sector trade unions demanding a monthly wage increase of Rs.2,500.

The letter signed by FTZ&GSEU Joint Secretary Anton Marcus to PM Wickramasinghe says, all tax and duty concessions and exemptions given to investor-employers are on legal provisions, based on regulations and parliamentary Acts.

For the year 2010 the revenue the public was denied over such concessions and benefits given to employers was around Rs.6.6 billion quotes Anton Marcus.

“We therefore wish to emphasise here, the employers thus have no right to oppose legal provisions to increase wages of the employees.” The letter says, requesting the PM to make legal provisions for a wage increase of Rs.2,500 per month.

The Full text is as follows :

By fax and registered post

2015 March 06

Hon. Prime Minister
Mr. Ranil Wickramasinghe
Minister of Policy Planning, Economic Affairs,
Child, Youth and Cultural Affairs
PM’s Office
Temple Trees
Colombo

Dear Mr. Prime Minister,

Appeal for Private Sector Workers’ Wage Hike of Rs.2,500 / month
Against Concessions & Benefits Granted to Investors/Employers

This appeal once again is further to our previous appeals made, both in writing to you as well as through public campaigning by 16 private sector trade unions, including ours.

We are perturbed and disappointed in how your government approaches the issue of wage increase to the private sector workers. We have previously made it clear that it is the private sector labour which makes tremendous contributions to our national economy by way of increased earnings on foreign trade. We therefore requested your government to make the wage increase mandatory through a bill passed in parliament as was the case in October 2005 when a Rs.1,000 budgetary relief allowance was made.

Your government instead works on the premise the employer should not be compelled to make such wage increase, but the employer should be allowed the discretion to make such decisions. Any steps by the government in making wage increases mandatory would have a negative effect on employers and on foreign direct investments, goes the argument.
We wish to straighten this crooked argument that hides all benefits doled out to the employer by successive governments at the expense of society, its Citizens and the labour it hires under depressing and exploitative conditions. Ever since the stable doors of the national economy were opened in 1978, it was the employer who was given every benefit and not workers. Tax holidays, tax concessions, import duty wavers, infrastructure facilities at State expense, special legal provisions for land use, etc., etc. were handed out on the sole argument the employer needs incentives to attract foreign and local investments. The official website of the BOI-SL says a new incentive regime was introduced since 2012/2013 to attract private investments both foreign and local. These tax concessions mainly include exemptions on Corporate Income Tax, Customs Duty, Value Added Tax and Ports & Airports Development Levy.

For your easy reference, we list details of these concessions and benefits below, as recorded by BOI-SL.
1. Tax incentives with no minimum investment threshold
Small & Medium Scale Enterprises (based on the Investment Value)
Small Scale - New Enterprises
Medium Scale - New Enterprises
Large Scale - New Enterprises (based on the Investment Value)
Strategic Import Replacement New Enterprises (based on the Investment Value & Product)
Expansion of Existing Enterprises
Customs Duty, VAT & PAL Exemption on Imports
Reduced Corporate Income Tax Rates
Taxation of BOI registered enterprises after the expiry of tax holiday
Permissible Deductions
Exemption for Tax on Dividends
Land Transfer Tax Exemption
Strategic Development Projects
Commencement of Corporate Income Tax Holiday
Taxation of BOI registered enterprises after the expiry of tax holiday
We wish to ask, what benefit all such incentives have brought to the larger society, to Citizens and the workers during the past 35 plus years. There is no monitoring of incentives and benefits given to investors/employers in terms of social returns. There is no social audit too. Yet we don’t dispute the fact such massive concessions have created a new rich class of Colombo based urbanites and a comparatively very small number of rich business people, who have turned out as sponsors of political regimes, making it difficult for governments and ministers to decide independently.

Sri Lanka’s most reputed think tank and research organisation, the IPS in one of their research papers titled “Incentivizing Foreign Investment in Sri Lanka and the Role of Tax Incentives” has this to say [quote] Estimating the costs vs. benefits of tax incentives is not easy and can be contentious, as widely acknowledged in the literature. Although this was one of the items specified in the mandate of the Presidential Commission on Taxation 2009, it is learned that the Final Report of the Commission has refrained from providing such a cost-benefit outlook. However, rough estimates suggest that, for 2010 the revenue foregone from tax incentives could amount to around Rs. 6.6 billion or close to 1 per cent of tax revenue.[unquote]
What it clearly means is that employers are continually given benefits and concessions in terms of billions of rupees annually denying the people their legitimate revenue, on which there is not even a cost benefit estimate or an audit. And these unaudited benefits and concessions are provided to employers through legal provisions with the parliament enacting necessary laws and regulations. We therefore wish to emphasise here, the employers thus have no right to oppose legal provisions to increase wages of the employees.
In such an unholy context where investors/employers are allowed to enjoy unaccounted benefits and profits, we believe and are convinced, the workers have an undisputed right to share such benefits. We therefore appeal once again to your government to provide the private sector workers with a monthly wage hike of Rs.2,500 through legal provision passed in parliament as previously done in year 2005 and without further delay.

Thank you.
Yours sincerely,

Anton Marcus
Joint Secretary/FTZ&GSEU

Cc.
1. Minister of Justice and Labour Relations
2. Minister of Finance
3. Minister of Highways, Higher Education and Investment Promotion
4. Deputy Minister of Highways, Higher Education and Investment Promotion
5. Deputy Minister of Deputy Minister of Policy Planning, Economics Affairs, Child, Youth and Cultural Affairs
6. Chairman, BOI-SL
7. All mainstream & digital media