"Bangladesh Employers' Federation is not against increased wages for the workers of the SOEs but feels strongly that 104.46 percent increase without any linkage to productivity will aggravate the financial problems of the SOEs more acutely," said Syed Manzur Elahi, president of the federation in a statement yesterday.

He said total wages for unskilled workers have been raised by 104.46 percent from Tk 2597 to Tk 5310. For skilled workers it has been raised by 99.57 percent from Tk 3700 to Tk 7384.

As the government took the decision, the federation suggested implementation of the proposed wages in three to four phases so that the increase does not become abrupt.

"Development experience of the last few decades indicates that wages delinked from productivity, whether in the public or private sector, cuts across the viability of the enterprise and sooner or later, the enterprise ceases to be cost effective and [becomes] unable to compete in the market," Elahi observed.

He noted that their representatives in the wages and productivity commission 2005 had submitted notes of dissent saying that wage increase ignoring the capacity of the state-owned enterprises to pay and also the productivity of the labour force in SOEs would aggravate the financial plight of the enterprises and their higher cost would force most of them to borrow more heavily from the banking sector.

He pointed out that accumulated losses of SOEs have become an issue of national concern as it amounts to imposing higher indirect taxation on the poor people of the country. Inefficient operation of SOEs has led to a massive wastage of public resources, conservatively estimated at 4.9 per cent of GDP annually since 1991.