Sri Lanka had the lowest wages in the Asia-Oceania region where Japanese companies operate, a survey by the Japan External Trade Organization has found.
Low wages were the advantage listed by most Japanese companies (60 per cent) in the investment environment of the country.
The monthly basic salary (average) in Sri Lanka was the lowest in Asia Oceania for Manufacturing managers, non-manufacturing managers, manufacturing engineers, non-manufacturing staff and manufacturing workers, the categories surveyed.
The survey was conducted in August to September 2023, when most companies reported that operating conditions were starting to improve.
More than 53 per cent of the firms reported fewer linguistic/communications problems, and 30 per cent of the firms reported a good living environment for Japanese expatriates.
Ease of recruiting staff was reported by 26.7 per cent, and 32.3 per cent said they faced challenges with human resources, which was also the lowest percentage in the Asia-Oceania region.
Sri Lanka has seen an exodus of skilled and unskilled workers after the latest currency collapse.
Sri Lanka’s rupee collapsed to 330 to the US dollar in 2022, after extreme macro-economic policy involving rate cuts on top of tax cuts, and the country defaulted on its external debt.
Since the end of a 30-year war, Sri Lanka was hit by quick-fire currency crises in 2012, 2015/16, and 2018 on rate cuts enforced by inflationary open market operations including under ‘flexible inflation targeting’ which led to a build-up of foreign debt.
Due to successive flawed monetary regimes with anchor conflicts, Sri Lanka has both exchange and trade controls.
Since the collapse of the Bretton Woods in 1971 Sri Lanka’s rupee had fallen from 5.9 to 330 to the US dollar, while the Japanese yen appreciated from 358 to 141 to the US dollar.
Especially after the 1970s and 1980s as the yen appreciated Japanese firms began to invest heavily outside the country including in the US.
Source ; Economynext