Sunday, June 16, 2013

The best things in life aren't free, the rising cost of living in Sri Lanka

My favorite things in life don't cost any money. It's really clear that the most precious resource we all have is time.
~ Steve Jobs 
There is relative truth in Jobs' quote, however the human predicament means we can't live on air alone and though time is precious, it doesn't provide sustenance for us to survive.

Sri Lanka has much to offer and that's why I continue to live here. However, it is evident that the cost of living in Sri Lanka, as well as globally, is on the rise.


I've lived in some of the most expensive cities in the world and the experience has made me examine what I've been really paying for. Usually, it amounts to expensive rent or mortgage payments, utility bills, transport costs, living expenses and exorbitant entertainment costs. You rationalize it all because of the salary or wages you're earning and the lifestyle you lead. At least that's what I did for years. However, if you get the opportunity to go and live somewhere else for awhile, it slowly starts to dawn on you that there are other options,. And, options that can improve your overall quality of life. And it may have something to do with the cost of living, but also the pace of life, proximity to nature, different cultures, experiences and other qualitative factors. In my case this is true with Sri Lanka.

So, the cost of living is not the full equation in assessing quality of life, only part of the equation. Bear this in mind as you read on.

Courtesy of Daily Mirror editorial

Anyway, I've recognized how challenging it has become over the past few years. During the period of war, there was an acknowledgement the country wouldn't necessarily prosper given the military spend and impact of the war on development, tourism and trade. Since the end of the war there has been some growth and movement, but it hasn't been as expected for multiple reasons. Some of which includes inertia, political landscape, corruption, government inefficiency, post war-related factors, currency pressures, skills gap, and negative global factors.

In talking with locals in my community, as well as on my travels around the island, people are really feeling the pinch across the board, particularly with significant increases in electricity costs, fuel, other transport costs and grocery items.

It got me thinking about how much the average person earns and spends in Sri Lanka and how that compares on a global scale.

Cost of Living Comparison

In order to compare Colombo to other cities around the world in terms of cost of living, I accessed the large database at numbeo.com that calculates and provides cost of living comparisons (and other useful data) by city. Note - it works on user-contributed data about cities and countries worldwide.

The indexes set out below are from the numbeo website. They are all relative to New York City, so each index for New York City will show 100(%) in the table below. If another city has, for example, rent index of 120, it means rents in average in that city are 20% more expensive than in New York City. Further information on methodology, assumptions and data can be found on their website. There may be discrepancies with the data collection or methodology, however, my reference to the data is primarily to provide a guideline only for discussion purposes.


The data in the above table indicates that Colombo ranks fairly low (i.e. less expensive) relative to New York City, in comparison to most cities, across all the cost of living indices. This is what you would expect. When you drill further into, for example, the basket of goods and services you will find living expenses to be cheaper than in developed countries. However, local purchasing power is also much weaker, given the lower average earnings in Sri Lanka.

I looked at cost of living in Colombo relative to Melbourne, given that Melbourne has the second largest sri lankan population outside of Sri Lanka. Based on numbeo.com's database, you would need 2.75 times the amount in Colombo to maintain the same standard of living in Melbourne.

Although this provides an interesting picture (and you can favorably analyse Colombo against other cities) it doesn't provide the snapshot to support why people are finding it tough in Sri Lanka.

Let me reiterate what I said earlier, if we were to examine quality of life, we would take into account other factors as well. However, for this discussion it is limited to cost of living.

Minimum Wages and the National Poverty Line

Another way of looking at things is to examine the minimum wages and national poverty line. Sri Lanka has a government-mandated minimum monthly wage across the private and government sector where workers are covered by wage boards. Minimum monthly wages can vary by sector, skill level and years of employment. Further information can be obtained from the Department of Labour.

Sri Lanka's average minimum monthly wage rate is around Rs 6,900 across 43 trades in the private sector. It could be slightly higher with extra allowances. This average minimum monthly wage rate is higher for the government sector at around Rs 11,700.

Depending on the sector, there are other additional payments that can be made to employees, such as bonuses and allowances.

That said, Sri Lanka's minimum monthly wage rate is on the low end of the spectrum, and is one of seven countries where the rate is still below US$100/month.

Additionally, average wages and salaries in professional areas are low across the board, compared with that paid in developed countries.

Also relevant is the national poverty line, which is the minimum monthly expenditure per person to fulfill basic needs. According to recent data published by the Department of Census & Statistics, the official poverty line at a national level for May 2013 is Rs 3,725. The data indicates steady increases over time.

Access to healthcare and standard education is currently offered free by the government. If this were to change it would have a significant impact on the majority of the general population. Other factors such as local culture also have a significant influence, including strong family financial support.

As it stands, with inflationary pressures you can see why the average person is finding it tough in the current economic climate in Sri Lanka.

It's even as simple as noticing the increasing number of beggars (and other people experiencing difficulty) asking for money or food; or seeing people penny-pinching at the supermarket while weighing up their fruit and vegetables; or carefully filling up their tanks at the service stations; or increases in the number of protests at wages, higher public transport costs electricity tariff increases and government decisions on a wide-range of issues.

It's a good time to think about conserving energy at home, recycling, growing your own fruit and vegetables, and finding new and cheaper means of transport and entertainment!


4 comments:

Anonymous said...

How much salary would a hotel chief animator/manager get in a month 5* hotel kalutara

Eva Stone said...

Anonymous, I don't have the answer for you. Check with one of Sri Lankan recruitment firms or hospitality board for the salary scales. Best, Eva

Ankita Kolamkar said...

Dear Eva

I have an interview coming up next week in the Construction Sector for a project based in Colombo. From your experience, would LKR 60-65k be sufficient to cover living expenses including rent, food, public transport costs etc. for a single woman resident? Your advice/suggestions shall be very helpful :)

Regards,

Ankita

Eva Stone said...

Hi Ankita, Thanks for your question. It's difficult to answer without knowing your exact lifestyle requirements and spending habits. If you email me directly eatingkotthu@gmail.com I can probably give you some information.
Best wishes,
Eva

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