Features
Greedflation, employment and poverty
The Sri Lankan cabinet has approved a significant 40% increase in the minimum wage, aimed at assisting workers struggling with the high cost of living amidst an ongoing economic recovery from a severe financial crisis that began in early 2022. This crisis, triggered by a sharp decline in foreign exchange reserves, resulted in notable inflation, currency devaluation, and a default on foreign debt. The minimum wage will escalate from 12,500 rupees ($42) to 17,500 rupees, with the added objective of supporting those in poverty.
According to the National Minimum Wage of Workers Act (No. 03 of 2016), the current minimum national salary stands at Rs. 12,500/-. A subcommittee, composed of representatives from trade unions and small to medium-sized businesses, recommended raising this minimum salary to Rs. 17,500/-. The Cabinet of Ministers has sanctioned the proposal to elevate the national minimum salary by Rs. 5,000/-, from Rs. 12,500/- to Rs. 17,500/- (Figure 1). Amendments to the Act are anticipated to implement this change, with the aim of increasing the daily minimum wage from Rs. 500/- to Rs. 700/-. (See Figure 1)

Labour Department statistics show that the monthly average minimum wage in the public sector was at Rs. 34,550 at the end of 2021.
Vajira Ellepola, the Director General of the Employers’ Federation of Ceylon, noted that the increase in the minimum wage didn’t necessarily translate to a rise in the basic salary for many private sector employees. This was because most private sector basic salaries already exceeded the minimum wage threshold.
For instance, if the current minimum wage is Rs. 12,500 and an employee’s basic salary is Rs. 20,000, a rise in the minimum wage to Rs. 17,500 may not automatically lead to a proportional increase in that employee’s basic salary.
According to the Central Bank, the Non-Performing Loan (NPL) ratio in the Household sector has been steadily rising due to the constrained ability of households to repay debts. By June 2023, the NPL ratio for households had increased to 17.7%, a significant jump from the previous year’s 14.1%. The Central Bank’s Financial Stability Review for 2023 highlighted that the proportion of non-arrears loans in the Household sector has been decreasing since early 2022, while arrears loans have been increasing, indicating a continuous decline in credit quality, likely to persist if adverse economic conditions persist.
State Minister of Finance Shehan Semasinghe had mentioned that 22% of the estimated 6.2 million household units had fallen into debt due to the economic crisis. Among these units, 24.3% were urban, 20.9% rural, and 42.8% estate households. He further noted that 60.5% of household units experienced a decrease in income, while 90% saw an increase in expenses due to the economic downturn.
Greedflation
Inflation may not be the only factor increasing the price of consumer goods. There is a noticeable trend where competing manufacturers are raising their prices at varying rates, not just in comparison to each other but also in contrast to the inflation rate.
Greedflation is the concept suggesting that the pursuit of higher corporate profits is adding to the problem of high inflation. This notion has shifted from being a less common viewpoint to becoming widely discussed in Europe and the US over the past year. Similarly, there is ongoing debate about this issue in Australia.
As households struggle with the increasing cost of living, certain large companies are generating record profits. Inflation is cooling in Sri Lanka. The most recent data showed the Headline inflation of March 2024 is 0.9 percent, down significantly from last March 50.3 (Table 1)

Not only are manufacturers adjusting their prices, but various entities throughout the supply chain—including shipping/transporting companies, wholesalers, and retailers—are also updating their pricing strategies accordingly.
While the yearly change in prices has decreased, the overall prices remain elevated due to previous increases. For instance, a carton of 10 large eggs still costs Rs650.00. This demonstrates that low-income households will continue to struggle with the already heightened cost of living. Hence, it is imperative that any increase in the minimum wage is supplemented with additional support measures, rather than being seen as a sole solution.
The true indicator for reducing inflation, according to some economists, is unfortunately tied to increasing unemployment. Now we’re facing the challenging reality that to curb inflation, we need to raise the unemployment rate.
Employment and minimum wages
Some people do not perceive a minimum wage as beneficial. One economic perspective suggests that minimum wages can hinder job creation by causing employers to avoid hiring more expensive labor while enticing more individuals to enter the job market.
Nobel laureate economist George Stigler expressed this viewpoint in 1976, stating that good economists typically do not support protectionist programs or minimum wage laws. However, other economists, such as David Card and Alan Krueger, have contested this notion. Their empirical studies in the 1990s found that increasing the minimum wage does not necessarily result in fewer jobs. Despite this, not all economists agree with Card and Krueger. David Neumark and William Wascher examined the evidence and argued that minimum wages do diminish employment opportunities for less skilled workers, particularly those directly impacted by the minimum wage. Consequently, there is no definitive academic consensus on minimum wages, and there is limited agreement on the conclusions drawn from the research literature.
Poverty and minimum wages
In Sri Lanka, the question arises whether minimum wage policies effectively alleviate poverty. However, research findings on this matter have been conflicting. A 2012 study conducted in New Zealand concluded that minimum wages do not necessarily lift people out of poverty. Similarly, an analysis using Irish data suggested that minimum wages might not be an effective tool for addressing poverty, describing them as “a blunt instrument.” Conversely, a 2021 study in the United States discovered significant positive employment outcomes for single mothers with young children, indicating that minimum wages could serve as a means to reduce child poverty. This issue holds particular significance in Sri Lanka due to the high prevalence of poverty among certain demographic groups.
Conclusions
In conclusion, the approval of a substantial 40% increase in the minimum wage by the Sri Lankan cabinet reflects efforts to alleviate the strain on workers facing the challenges of a recovering economy from a severe financial crisis. Triggered by a sharp decline in foreign exchange reserves, this crisis led to significant inflation, currency devaluation, and a default on foreign debt. The minimum wage rise from 12,500 rupees ($42) to 17,500 rupees aims to support those in poverty, but it may not proportionally affect all sectors due to existing salary structures.
However, the increase in minimum wage alone may not be sufficient to address the overarching issue of inflation. A broader approach, encompassing additional support measures, is necessary to mitigate the impact of the rising cost of living on low-income households. This is particularly crucial considering the steady increase in non-performing loans in the household sector, indicating ongoing financial strain. Furthermore, discussions around “greedflation” highlight the role of corporate profit expansion in exacerbating inflation, further underscoring the need for comprehensive policy responses.
In navigating these economic challenges, it is imperative to consider the interconnected nature of various factors, such as employment, poverty alleviation, and interest rates. While minimum wage policies may have differing effects on employment and poverty reduction, there is no definitive consensus, highlighting the complexity of the issue. Additionally, the management of interest rates and their impact on investors further underscores the need for careful consideration and coordination of monetary policies.
Ultimately, addressing these economic challenges requires a holistic approach that considers the diverse needs of different sectors of society and balances economic growth with social welfare objectives. It is essential for policymakers to remain vigilant and responsive to evolving economic conditions to ensure sustainable and inclusive development.
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and www.researcher.com)
Features
Rethinking post-disaster urban planning: Lessons from Peradeniya
A recent discussion by former Environment Minister, Eng. Patali Champika Ranawaka on the Derana 360 programme has reignited an important national conversation on how Sri Lanka plans, builds and rebuilds in the face of recurring disasters.
His observations, delivered with characteristic clarity and logic, went beyond the immediate causes of recent calamities and focused sharply on long-term solutions—particularly the urgent need for smarter land use and vertical housing development.
Ranawaka’s proposal to introduce multistoried housing schemes in the Gannoruwa area, as a way of reducing pressure on environmentally sensitive and disaster-prone zones, resonated strongly with urban planners and environmentalists alike.
It also echoed ideas that have been quietly discussed within academic and conservation circles for years but rarely translated into policy.
One such voice is that of Professor Siril Wijesundara, Research Professor at the National Institute of Fundamental Studies (NIFS) and former Director General of the Royal Botanic Gardens, Peradeniya, who believes that disasters are often “less acts of nature and more outcomes of poor planning.”
“What we repeatedly see in Sri Lanka is not merely natural disasters, but planning failures,” Professor Wijesundara told The Island.
“Floods, landslides and environmental degradation are intensified because we continue to build horizontally, encroaching on wetlands, forest margins and river reservations, instead of thinking vertically and strategically.”
The former Director General notes that the University of Peradeniya itself offers a compelling case study of both the problem and the solution. The main campus, already densely built and ecologically sensitive, continues to absorb new faculties, hostels and administrative buildings, placing immense pressure on green spaces and drainage systems.
“The Peradeniya campus was designed with landscape harmony in mind,” he said. “But over time, ad-hoc construction has compromised that vision. If development continues in the same manner, the campus will lose not only its aesthetic value but also its ecological resilience.”
Professor Wijesundara supports the idea of reorganising the Rajawatte area—located away from the congested core of the university—as a future development zone. Rather than expanding inward and fragmenting remaining open spaces, he argues that Rajawatte can be planned as a well-designed extension, integrating academic, residential and service infrastructure in a controlled manner.
Crucially, he stresses that such reorganisation must go hand in hand with social responsibility, particularly towards minor staff currently living in the Rajawatte area.
“These workers are the backbone of the university. Any development plan must ensure their dignity and wellbeing,” he said. “Providing them with modern, safe and affordable multistoried housing—especially near the railway line close to the old USO premises—would be both humane and practical.”
According to Professor Wijesundara, housing complexes built near existing transport corridors would reduce daily commuting stress, minimise traffic within the campus, and free up valuable land for planned academic use.
More importantly, vertical housing would significantly reduce the university’s physical footprint.
Drawing parallels with Ranawaka’s Gannoruwa proposal, he emphasised that vertical development is no longer optional for Sri Lanka.
“We are a small island with a growing population and shrinking safe land,” he warned.
“If we continue to spread out instead of building up, disasters will become more frequent and more deadly. Vertical housing, when done properly, is environmentally sound, economically efficient and socially just.”
The veteran botanist also highlighted the often-ignored link between disaster vulnerability and the destruction of green buffers.
“Every time we clear a lowland, a wetland or a forest patch for construction, we remove nature’s shock absorbers,” he said.
“The Royal Botanic Gardens has survived floods for over a century precisely because surrounding landscapes once absorbed excess water. Urban planning must learn from such ecological wisdom.”
Professor Wijesundara believes that universities, as centres of knowledge, should lead by example.
“If an institution like Peradeniya cannot demonstrate sustainable planning, how can we expect cities to do so?” he asked. “This is an opportunity to show that development and conservation are not enemies, but partners.”
As climate-induced disasters intensify across the country, voices like his—and proposals such as those articulated by Patali Champika Ranawaka—underscore a simple but urgent truth: Sri Lanka’s future safety depends not only on disaster response, but on how and where we build today.
The challenge now lies with policymakers and planners to move beyond television studio discussions and academic warnings, and translate these ideas into concrete, people-centred action.
By Ifham Nizam ✍️
Features
Superstition – Major barrier to learning and social advancement
At the initial stage of my six-year involvement in uplifting society through skill-based initiatives, particularly by promoting handicraft work and teaching students to think creatively and independently, my efforts were partially jeopardized by deep-rooted superstition and resistance to rational learning.
Superstitions exerted a deeply adverse impact by encouraging unquestioned belief, fear, and blind conformity instead of reasoning and evidence-based understanding. In society, superstition often sustains harmful practices, social discrimination, exploitation by self-styled godmen, and resistance to scientific or social reforms, thereby weakening rational decision-making and slowing progress. When such beliefs penetrate the educational environment, students gradually lose the habit of asking “why” and “how,” accepting explanations based on fate, omens, or divine intervention rather than observation and logic.
Initially, learners became hesitant to challenge me despite my wrong interpretation of any law, less capable of evaluating information critically, and more vulnerable to misinformation and pseudoscience. As a result, genuine efforts towards social upliftment were obstructed, and the transformative power of education, which could empower individuals economically and intellectually, was weakened by fear-driven beliefs that stood in direct opposition to progress and rational thought. In many communities, illnesses are still attributed to evil spirits or curses rather than treated as medical conditions. I have witnessed educated people postponing important decisions, marriages, journeys, even hospital admissions, because an astrologer predicted an “inauspicious” time, showing how fear governs rational minds.
While teaching students science and mathematics, I have clearly observed how superstition acts as a hidden barrier to learning, critical thinking, and intellectual confidence. Many students come to the classroom already conditioned to believe that success or failure depends on luck, planetary positions, or divine favour rather than effort, practice, and understanding, which directly contradicts the scientific spirit. I have seen students hesitate to perform experiments or solve numerical problems on certain “inauspicious” days.
In mathematics, some students label themselves as “weak by birth”, which creates fear and anxiety even before attempting a problem, turning a subject of logic into a source of emotional stress. In science classes, explanations based on natural laws sometimes clash with supernatural beliefs, and students struggle to accept evidence because it challenges what they were taught at home or in society. This conflict confuses young minds and prevents them from fully trusting experimentation, data, and proof.
Worse still, superstition nurtures dependency; students wait for miracles instead of practising problem-solving, revision, and conceptual clarity. Over time, this mindset damages curiosity, reduces confidence, and limits innovation, making science and mathematics appear difficult, frightening, or irrelevant. Many science teachers themselves do not sufficiently emphasise the need to question or ignore such irrational beliefs and often remain limited to textbook facts and exam-oriented learning, leaving little space to challenge superstition directly. When teachers avoid discussing superstition, they unintentionally reinforce the idea that scientific reasoning and superstitious beliefs can coexist.
To overcome superstition and effectively impose critical thinking among students, I have inculcated the process to create a classroom culture where questioning was encouraged and fear of being “wrong” was removed. Students were taught how to think, not what to think, by consistently using the scientific method—observation, hypothesis, experimentation, evidence, and conclusion—in both science and mathematics lessons. I have deliberately challenged superstitious beliefs through simple demonstrations and hands-on experiments that allow students to see cause-and-effect relationships for themselves, helping them replace belief with proof.
Many so-called “tantrik shows” that appear supernatural can be clearly explained and exposed through basic scientific principles, making them powerful tools to fight superstition among students. For example, acts where a tantrik places a hand or tongue briefly in fire without injury rely on short contact time, moisture on the skin, or low heat transfer from alcohol-based flames rather than divine power.
“Miracles” like ash or oil repeatedly appearing from hands or idols involve concealment or simple physical and chemical tricks. When these tricks are demonstrated openly in classrooms or science programmes and followed by clear scientific explanations, students quickly realise how easily perception can be deceived and why evidence, experimentation, and critical questioning are far more reliable than blind belief.
Linking concepts to daily life, such as explaining probability to counter ideas of luck, or biology to explain illness instead of supernatural causes, makes rational explanations relatable and convincing.
Another unique example that I faced in my life is presented here. About 10 years ago, when I entered my new house but did not organise traditional rituals that many consider essential for peace and prosperity as my relatives believed that without them prosperity would be blocked. Later on, I could not utilise the entire space of my newly purchased house for earning money, largely because I chose not to perform certain rituals.
While this decision may have limited my financial gains to some extent, I do not consider it a failure in the true sense. I feel deeply satisfied that my son and daughter have received proper education and are now well settled in their employment, which, to me, is a far greater achievement than any ritual-driven expectation of wealth. My belief has always been that a house should not merely be a source of income or superstition-bound anxiety, but a space with social purpose.
Instead of rituals, I strongly feel that the unused portion of my house should be devoted to running tutorials for poor and underprivileged students, where knowledge, critical thinking, and self-reliance can be nurtured. This conviction gives me inner peace and reinforces my faith that education and service to society are more meaningful measures of success than material profit alone.
Though I have succeeded to some extent, this success has not been complete due to the persistent influence of superstition.
by Dr Debapriya Mukherjee
Former Senior Scientist
Central Pollution Control Board, India ✍️
Features
Race hate and the need to re-visit the ‘Clash of Civilizations’
Australian Prime Minister Anthony Albanese has done very well to speak-up against and outlaw race hate in the immediate aftermath of the recent cold-blooded gunning down of several civilians on Australia’s Bondi Beach. The perpetrators of the violence are believed to be ardent practitioners of religious and race hate and it is commendable that the Australian authorities have lost no time in clearly and unambiguously stating their opposition to the dastardly crimes in question.
The Australian Prime Minister is on record as stating in this connection: ‘ New laws will target those who spread hate, division and radicalization. The Home Affairs Minister will also be given new powers to cancel or refuse visas for those who spread hate and a new taskforce will be set up to ensure the education system prevents, tackles and properly responds to antisemitism.’
It is this promptness and single-mindedness to defeat race hate and other forms of identity-based animosities that are expected of democratic governments in particular world wide. For example, is Sri Lanka’s NPP government willing to follow the Australian example? To put the record straight, no past governments of Sri Lanka initiated concrete measures to stamp out the evil of race hate as well but the present Sri Lankan government which has pledged to end ethnic animosities needs to think and act vastly differently. Democratic and progressive opinion in Sri Lanka is waiting expectantly for the NPP government’ s positive response; ideally based on the Australian precedent to end race hate.
Meanwhile, it is apt to remember that inasmuch as those forces of terrorism that target white communities world wide need to be put down their counterpart forces among extremist whites need to be defeated as well. There could be no double standards on this divisive question of quashing race and religious hate, among democratic governments.
The question is invariably bound up with the matter of expeditiously and swiftly advancing democratic development in divided societies. To the extent to which a body politic is genuinely democratized, to the same degree would identity based animosities be effectively managed and even resolved once and for all. To the extent to which a society is deprived of democratic governance, correctly understood, to the same extent would it experience unmanageable identity-bred violence.
This has been Sri Lanka’s situation and generally it could be stated that it is to the degree to which Sri Lankan citizens are genuinely constitutionally empowered that the issue of race hate in their midst would prove manageable. Accordingly, democratic development is the pressing need.
While the dramatic blood-letting on Bondi Beach ought to have driven home to observers and commentators of world politics that the international community is yet to make any concrete progress in the direction of laying the basis for an end to identity-based extremism, the event should also impress on all concerned quarters that continued failure to address the matters at hand could prove fatal. The fact of the matter is that identity-based extremism is very much alive and well and that it could strike devastatingly at a time and place of its choosing.
It is yet premature for the commentator to agree with US political scientist Samuel P. Huntingdon that a ‘Clash of Civilizations’ is upon the world but events such as the Bondi Beach terror and the continuing abduction of scores of school girls by IS-related outfits, for instance, in Northern Africa are concrete evidence of the continuing pervasive presence of identity-based extremism in the global South.
As a matter of great interest it needs mentioning that the crumbling of the Cold War in the West in the early nineties of the last century and the explosive emergence of identity-based violence world wide around that time essentially impelled Huntingdon to propound the hypothesis that the world was seeing the emergence of a ‘Clash of Civilizations’. Basically, the latter phrase implied that the Cold War was replaced by a West versus militant religious fundamentalism division or polarity world wide. Instead of the USSR and its satellites, the West, led by the US, had to now do battle with religion and race-based militant extremism, particularly ‘Islamic fundamentalist violence’ .
Things, of course, came to a head in this regard when the 9/11 calamity centred in New York occurred. The event seemed to be startling proof that the world was indeed faced with a ‘Clash of Civilizations’ that was not easily resolvable. It was a case of ‘Islamic militant fundamentalism’ facing the great bulwark, so to speak, of ‘ Western Civilization’ epitomized by the US and leaving it almost helpless.
However, it was too early to write off the US’ capability to respond, although it did not do so by the best means. Instead, it replied with military interventions, for example, in Iraq and Afghanistan, which moves have only earned for the religious fundamentalists more and more recruits.
Yet, it is too early to speak in terms of a ‘Clash of Civilizations’. Such a phenomenon could be spoken of if only the entirety of the Islamic world took up arms against the West. Clearly, this is not so because the majority of the adherents of Islam are peaceably inclined and want to coexist harmoniously with the rest of the world.
However, it is not too late for the US to stop religious fundamentalism in its tracks. It, for instance, could implement concrete measures to end the blood-letting in the Middle East. Of the first importance is to end the suffering of the Palestinians by keeping a tight leash on the Israeli Right and by making good its boast of rebuilding the Gaza swiftly.
Besides, the US needs to make it a priority aim to foster democratic development worldwide in collaboration with the rest of the West. Military expenditure and the arms race should be considered of secondary importance and the process of distributing development assistance in the South brought to the forefront of its global development agenda, if there is one.
If the fire-breathing religious demagogue’s influence is to be blunted worldwide, then, it is development, understood to mean equitable growth, that needs to be fostered and consolidated by the democratic world. In other words, the priority ought to be the empowerment of individuals and communities. Nothing short of the latter measures would help in ushering a more peaceful world.
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