How the EFC positively shapes employer-employee relations

Well over 70 years in existence, the Employers’ Federation of Ceylon (EFC) has been playing a lead role in improving local employer-employee relations and in initiating collective bargaining which has proved beneficial to both parties. In this interview EFC Director- General Ravi Peiris sheds light on these and many more areas of concern for the EFC which have helped shape its profile as a significant positive influence in Sri Lanka’s business world.

Q: What’s your mandate as the President of the Employers’ Federation of Ceylon and what are the functions of the EFC?

A: The Employers’ Federation of Ceylon was set up in 1929 and today it is the only employers’ organisation which provides services on labour law and industrial relations. The nature of the organisation is that it is a trade union. It is the only trade union of employers.

We have a membership of over 500 employers; not necessarily companies. Any employer can join us. Predominantly we have private sector employers but we have government sector employers as well. In fact all the State banks are in the EFC.

So, for a period of over 70 years we have been basically looking after the interests of the employers, while at the same time we have had good relations with trade unions. We have promoted collective bargaining and promoted harmonious industrial relations.

In fact the first collective agreement was signed in 1929 between the EFC and the union of A. E. Goonesinghe. Ever since then we have been promoting collective bargaining. Around 99 per cent of the collective agreements have been initiated through the EFC.

Apart from that, if you look at our services to the members, they relate to advice on employment related matters in terms of the law and also lobbying for reforms; policy reforms, changes in law etc.

In terms of the services we provide, it’s advisory services, representation in the Labour Courts and the Labour Department, negotiations etc. We have a team of lawyers, who are full time employed and service our members in terms of representing them in the Labour Courts, the Labour Department, giving day-to-day advice, drafting etc. That is, all industry related matters.

Q: Do you also include all the top corporates?

A: Yes. Most of the top corporates are in our membership, that is, the blue chips.

Q: What are the principal problems the EFC faces and resolves?

A: From an employer’s point of view, I would like to refer to the ‘10 year Horizon Development Framework’ of this Government. There is a chapter in it on employment and there are four policy directives identified in that chapter. I am fully for them. That is exactly what we want.

What are these policy directives? First, employment generation, then skills development and labour productivity, flexible labour laws, and strengthening employer-employee relations. These are very important in today’s context.

Take employment generation. For growth there has to be employment generation but not just employment generation but productive employment has to be generated. How do you do it? One has to have the investment. To have investment you ought to have a conducive business environment in the country. That is one issue.

Then, skills development and labour productivity and flexible labour laws. I would like to take both together.

Our labour market is heavily regulated. We have these laws which we have got from the British and we have been basically following them, whereas the British have given them up and have had reforms. We are very reluctant to change laws. Our perception is that when we have an issue it could be sorted out by having regulation or enacting some law.

Our workers also feel that they get security of employment through regulation. A lot of workers feel that they could be protected only through the law. This is the paradox of the security of employment.

Actually you don’t have employment security by having laws. In fact the more laws, the more regulation you have, and greater will be the reluctance on the part of people to offer employment.

So, what we have to think of is skills development and labour productivity.

We have to think of enhancing the skills of our people, training and development. This is the reason why the second policy directive is important.

Talking of labour productivity I would like to focus on this recent issue where unions were demanding wage increases in the private sector. The private sector wage enhancement mechanism is designed on the capacity of the employer and market forces. In today’s context our labour productivity is very, very low.

If you are looking at the manufacturing industry in particular, you would see that many of the employers have to give something more than the wage, through incentives and other schemes, to enhance their earning capacity as well as productivity. A good example is the attendance incentive.

What is an attendance incentive? You are giving something more than the wage to come to work. In other countries, if you don’t come to work, you will be told not to come to work; that your employment is gone.

So apart from the wage the local worker is given so many other incentives, merely to ensure that he comes to work and gives a level of productivity which is required for the company to remain competitive.

Today we are competing in the international business environment where productivity is the key issue. So you have to look at private sector wages in a wider perspective. Give the definition of wage a wider connotation. The earning capacity a worker has per month should be regarded as the wage, not the guaranteed wage.

Strengthening employer-employee relations is something EHC has been promoting over the last 70 odd years. We have helped resolve so many industrial disputes here in our office.

We have been telling our employers to create a sense of understanding with workers.

We have always upheld the dictates of freedom of association and collective bargaining. Any member who joins EHC is advised to follow the law and I am very proud to say that our members always regard and give due recognition to the law and also comply with the laws.