How to sustain employment in Sri Lanka under the current cost-of-living crisis
Cost-of-living crisis: How to help the employees
The cost of living crisis is a situation in which the cost of basic, essential items such as food and energy bills have increased rapidly in a short period of time, and much faster than average household wages (Livingcost, 2022).
This article shows employers how to reduce the financial burden placed on their employees by the cost-of-living crisis.
Current Status in Sri Lanka
Sri Lanka has been reeling under a severe economic crisis since March 2022. Petrol, diesel and Gas Supplies are limited, and kilometer-long fuel queues have become common in the capital and all other cities. Inflation has hit consumer goods and food items alike. Experts blame a variety of factors: ballooning debt, a drop in tourism and foreign remittances, and political mismanagement (Livingcost, 2022)
| Cost of living | One person | Family of 4 |
|---|---|---|
| 💰 Total with rent | ||
| 🛋️ Without rent | ||
| 🏨 Rent & Utilities | ||
| 🍽️ Food | ||
| 🚐 Transport | ||
| 💳 Monthly salary after tax | ||
| 💸 GDP per capita | ||
| 😃 Human freedom index | ||
| ❤️ Life expectancy | ||
| 🌐 English speaking % | ||
| 🏙️ Population | ||
The cost of living in Sri Lanka is $316, which is 2.95 times less expensive than the world average. Sri Lanka ranked 196th out of 197 countries by cost of living and the 96th best country to live in.
The average salary after taxes in Sri Lanka is $144, which is enough to cover living expenses for 0.5 months (Livingcost, 2022)
Employees' trust in their employers is declining as a result of the continuous cost of living problem. 30% of workers believe their company cares about their financial wellbeing, down from 52% prior to the height of the cost of living crisis, according to research from financial wellbeing platform Wage stream. From 22% to 35% more people now believe their company doesn't care about their financial security than they did previously.
Impact of the cost of living crisis to Employees
- Rapid price hike of foods
- Due to increase of prices of foods employees trying to skip their main meals. Its badly effect the Efficiency and the productivity.
Employers struggle to close the gap between salaries and cost of living
- Due to the continued uncertain economic outlook, most companies remain unable to predict whether salaries will rise or not over the next 12 months, mostly saying that the decision will depend on their organization's performance at the time. It is private sector services firms that are most uncertain about what their next pay decision due to manufacturing and production being less tentative. In addition, of those employers questioned have already decided to postpone any pay decision until later on in the year
- Power and Energy Crisis
- Work attendance, punctuality problems , early exit from work place could be increased due to the fuel issues.
- Pay lot on Black market fuel
- Lay offs
- A a example , the privately-owned Blue Field tea estate, which has been forced it to reduce its workforce drastically, down to 150.
- In better days, it employed 250 workers, but that was before a nationwide ban on chemical fertilizers, pesticides and other agricultural essentials came into force in March 2021, causing a massive drop in production - and profits
- Pay Cuts
- Due to less demand, company cut down their over time and stick to one shift operations
- Drastically reduce the overtime pay of employ specially in worker category.
- Shortages of Medicines
- As per the UN says, Just as worrying are the indications that families are “deprioritizing” health because they cannot also get to health facilities, either because of high fuel costs, or because they are working to earn enough money to eat
How to Help Employ?
- Review your reward strategy – If you can afford to offer a cost-of-living bonus. At face value, employees will surely welcome this gesture. But for some low-wage employees in receipt of Universal Credit or Tax Credits, a one-off or lump sum bonus could interfere with their benefits payments and leave them struggling to budget and make ends meet
- Review the company financial well being - Adjust the pillars according to the socio economic environment.
- Review company benefits packages - Company can implement some strategies to give some subsidiaries to their employs. eg. Essential Goods pack, support for fuel ,Education pack for kids of the employees.
- Consider the legal implications - If employees want to undertake second jobs and cover rising living costs. Find out more about how this affects the contract between company and the employee.
- Empower employees to be heard – To create an inclusive environment that makes employees feel understood and recognized.
- Build communication strategy – To establish trust in challenging times and create dialogue between managers and employees
Conclusion :
As mentioned above, the cost of living in Sri Lanka has increased much more than expected. The biggest impact has been on the lower and middle income segments. Employment agencies have also suffered a major setback so far. However, it is also the responsibility of the employers to look after the well-being of their employees.
References:
Aljazeera, 2022. Cost of living: ‘How to manage?’
laments Sri Lankan market vendo. [Online]
Available at: https://www.aljazeera.com/economy/2022/7/28/cost-of-living-how-to-manage-laments-sri-lankan-market-vendor
[Accessed 14 11 2022].
CIPD, 2022. CIPD.
[Online]
Available at: https://www.cipd.co.uk/knowledge/culture/well-being/cost-living-crisis#gref
[Accessed 14 11 2022].
Crush, P.,
2021. Soaring cost of living prompts calls for financial support for
employees. [Online]
Available at: https://www.hrmagazine.co.uk/content/news/soaring-cost-of-living-prompts-calls-for-financial-support-for-employees
[Accessed 14 11 2022].
Livingcost,
2022. Cost of living in sri Lanka. [Online]
Available at: https://livingcost.org/cost/sri-lanka#:~:text=The%20cost%20of%20living%20in,living%20expenses%20for%200.5%20months.
[Accessed 14 11 2022].
UN, 2022. Sri
Lanka: Cost-of-living crunch threatens to sink millions already facing hard
choices. [Online]
Available at: https://news.un.org/en/story/2022/11/1130502
[Accessed 14 11 2022].
Woods, D.,
2012. Employers struggle to close the gap between salaries and cost of
living. [Online]
Available at: https://www.hrmagazine.co.uk/content/other/employers-struggle-to-close-the-gap-between-salaries-and-cost-of-living-says-cipd
[Accessed 14 11 2022].
Chamara - The current cost of living in Sri Lanka is very much high as you have clearly mentioned. Its very Interested to see that your image says that most people are doing their day to day shopping at Sathosa. The only reason is that the main commodity prices are less and affordable. Really appreciated the contents related to the subject matter.
ReplyDeleteyes vino. Cost of living crisis badly effect each and every segment of the country. people not concerning the quality of goods. They try to purchase as low as possible. companies continuously try to cut down the cost of products.
DeleteYou have taken steps to present a timely topic at the level we expect. If the authorities see your post the next steps will be more successful than the current one.
ReplyDeleteThanks for your valuable comments. yes this is timely topic all employees are facing this uncertainty of economy. employer should hang around to safeguard their employees as much as possible.
ReplyDelete