Wage Spiral

July 07, 2008 (LBO) - Sri Lanka's main opposition United National Party (UNP) is backing calls for new salary hikes for the island's already bloated state sector, continuing a tradition that has created a class of super citizens and high inflation in the country. The UNP and its trade union arm, the Jathika Sevaka Sangamaya (JSS), said it was joining a token strike called by the Marxist-Nationalist Janatha Vimukthi Peramuna (JVP) party. Economic policies based on unchecked state sector expansion and indiscriminate subsidies promoted and devised by the JVP in 2004 and extended in 2006, have now landed the country in the highest inflation in its history of close to 30 percent. The state salaries and pensions bill now eat up more than half the tax revenues of the government. But the UNP says more resources should be spent on... [read full story]