Abstract:
The main purpose of this paper is to analyze the impact of trade
liberalization on wage inequality in Sri Lanka. For this purpose, both micro
and macro level labour income and wage data were used. After explaining
the special features of the economy, attempts were made to examine wage
trends and causes of inequalities in terms of ownership of firms, gender,
occupation, skill levels and sector of production. Mean income of the male
legislators, senior officials and managers was two times higher than the
national average income and females in the same categories. Generally,
real wage increases in exporting sector in comparison to other sectors and
number of government employees decline with trade liberalization
activities. Sri Lanka has shown contrary situation during the past 30 years.
On the other hand, longitudinal analysis on sectoral wage inequalities
indicated an increasing wage gap among the income earners in different
economic activities, and also by gender, and skill levels. Male-female wage
gap has been widening in many occupational categories that were associated with tea, rubber, and coconut producing sectors. However, skill
level has been recognized as an important factor in determining wage gap in
construction sector. Wage behavior has been favorable for strong labour
union members, politically influential groups and a limited number of
professionals in some fields or industries. Finally, high inflation rate led to
decline real wages and that has been acted as another major (push) factor
contributing for massive increase of Sri Lankan migrant workers in other
countries, regardless of gender, sector, occupation, skill level or
professional category of employee in Sri Lanka.
