Sri Lanka will set a minimum wage for all private sector workers, including those in the garment industry. The legislation will see wages backdated to May 1. Under the plans, private sector workers will see their wages increase by 15 to 35 per cent. The increase is a step to reduce the huge gap between private sector employees and state sector employees.

Garment worker salaries are based on market conditions and are higher than the rates set by national wage board for state employees. The garment industry is the second largest forex earner. Women constitute about 85 per cent of the country’s industrial workforce, and majority of these are between 25 and 30 years of age.

The industry initially flourished on the basis of low cost labor, but an increase in the cost of living has made factory work much less attractive for workers. At one time, foreign garment buyers were asked to pay a few cents more for garments bought from Asian countries, including Sri Lanka, to help pay decent wages to garment workers.

Big western retailers like Walmart, Carrefour control large shares of the western garment retail markets. This gives them bigger bargaining power on how much they pay local factories for garments they buy from Sri Lanka and other Asian countries. Right now there is growing pressure on local factories by big buyers to reduce their selling prices.