Sri Lanka Seeks Fairer Wages Without Weakening Business Growth

The workshop builds on the ILO’s 2024 tripartite agreement on living wages and the 2025 High-Level Regional Dialogue on Living Wages held in Colombo.

Sri Lanka is working to strengthen the institutions that decide wages, bringing government officials, employers and workers into the same conversation about fair pay, business sustainability and the country's changing economy. The International Labour Organization is supporting this national process, which places reliable evidence and social dialogue at the centre of wage decisions.

A three-day workshop organized by the Ministry of Labour and the Department of Labour with the ILO took place from 8 to 10 September 2026. Representatives of government, employers' and workers' organizations joined members of the Labour Law Reform Committee, academics and technical specialists to review current wage-setting practices and identify realistic improvements suited to Sri Lanka's economic and labour market conditions.

Ministry of Labour Secretary S. M. Piyatissa said adequate wages, stronger productivity and sustainable enterprises must develop together. Better labour practices could also improve Sri Lanka's position within global supply chains, attract responsible investment and support the growth of ethical, higher-value exports.

Reliable evidence can lead to more balanced wage decisions

Workshop discussions examined principles contained in ILO international labour standards on minimum wage setting, including the needs of workers and their families, economic conditions, labour market trends, collective bargaining, implementation and compliance. Participants also studied experiences from India, Indonesia and Malaysia to understand how other countries use evidence when setting wages.

ILO Country Office Director for Sri Lanka and the Maldives Joni Simpson stressed that wage policies should reflect national realities and be shaped through meaningful participation by governments, businesses and workers. She also highlighted the need for gender-responsive policies that reduce pay inequality and promote equal remuneration for work of equal value.

Transparent and predictable institutions can give workers greater confidence that wages will respond to living costs, while giving employers clearer expectations when planning investment, recruitment and production. Decisions based on incomplete data or limited consultation can leave families unable to meet their needs and place sudden financial pressure on enterprises.

Economic recovery makes wage reform increasingly urgent

The discussions carry particular importance after exceptionally high inflation weakened workers' purchasing power and increased operating pressure on businesses. Many households found that their earnings could buy less, while enterprises faced higher costs and an uncertain economic environment, exposing the need for wage-setting arrangements that can respond more effectively when conditions change.

Export-oriented industries such as tea and ready-made garments are central to the debate because they employ large numbers of workers while competing in international markets. Collective bargaining and constructive social dialogue can help these sectors pursue wage outcomes that protect livelihoods, support productivity and maintain their standing in global supply chains.

The workshop builds on the ILO's 2024 tripartite agreement on living wages and the 2025 High-Level Regional Dialogue on Living Wages held in Colombo. ILO Wage Specialist Anoop Satpathy said Sri Lanka's recent economic experience showed why wage institutions need reliable data, sound analysis, transparency and the ability to adjust to changing labour market conditions.

A stronger wage-setting system will need to balance the daily needs of workers and their families with the realities faced by enterprises. Giving all three parties a meaningful role can help Sri Lanka develop pay policies that are fairer, more stable and better equipped to support economic recovery.