Over 180 countries adopt Global Jobs Pact
To recover from global crisis:
Director General, Employers' Federation of
Ceylon (EFC) was interviewed by Daily News Business on the job market
and the current employment situation in the country.
Here are his views:
Q: Do you have any official figures on job losses?
A. One important factor that we need to take into account is that it
is extremely difficult to give an accurate figure in relation to job
losses as it could arise in various forms. Sri Lanka having a large
informal economy which is almost 70 percent, will find it difficult to
make an accurate assessment with regard to job losses.Another important
factor is the 'hidden' loss, which may not be reflected in statistics.
That is the number of vacancies which occur due to resignations /
retirements, not being filled. This is also a loss to a potential job
candidate. However, there have been figures thrown in by various
The total number of employed persons in Sri Lanka is estimated at
about 7.7 million in the first quarter of 2009. When you compare the
employed population as per the first quarter of 2008 compared to 2009
(excluding the Northern province), there has been 96,000 job losses in
the Industries sector, whereas there has been employment generation of
203,000 in Agriculture and 21,000 in Services sectors.
The EFC also undertook a survey amongst the 540 employers within its
membership. 129 responded to this survey. During the period 2007/2008,
329 employees have accepted VRS packages, out of which 308 (almost 94
percent) belong to non executive categories.
On the other hand, during the period 2008/2009, there have been 614
employees who accepted VRS packages, out of which 352 (57.3 percent)
have been employees in the executive and management categories.
Altogether, 21 companies have offered VRS packages out of 129.
Q: Is it possible to design safety nets for the temporarily
unemployed? what have other countries done to take care of the people
who lose jobs in the short term?
A: A social security system such as a safety net is desirable.
However, we cannot introduce such a system, which will result in
burdening the employer again.
One of the fundamental flaws in our labour relations framework in Sri
Lanka is that it depicts a mismatch between the economic policies of a
developing country and the social policies of a developed country.
Unfortunately, the social policies of developed countries fall squarely
on employers and not the Government. The best example is Termination of
Employment of Workmens'Act of 1971, which grants one of the highest
retrenchment compensation packages in the world (Doing Business 2009
World Bank /IFC).
Therefore, we need to look at an unemployment benefit scheme in terms
of the prevailing social security schemes such as EPF and ETF. The ETF
is in a very strong position to fund an unemployment benefit scheme. The
monthly contribution of employers to the ETF is approximately Rs 700
million. The total fund consists approximately Rs 88 Billion.
There are countries which do have safety nets funded partly by the
Government. In some developed countries, a certain percentage of the
salary (depending on years of service) is paid over one to two years
once the unemployed person registers with the authority. What needs to
be taken into account in this regard is that the employee also
contributes monthly when he is working, towards this fund. During the
period in which he receives this payment he could be called up at any
time for an alternate job consistent with his ability and skill.
If the employee is found to be deliberately avoiding the job
opportunity, the payment can be withdrawn. Therefore, such a system
clearly shows that there needs to be a very effective monitoring system
in place as the possibility of abuse is great.
Q: Is it inevitable that companies need to shed excess staff at times
like this? Given the prevailing labour laws do the employers consider
this as an opportunity to retrench excess labour and get the right size
A: One of the main allegations that have been levelled against
employers by not only trade unions but also independent consultants and
certain organizations both locally and internationally, is that some
employers have made use of this opportunity and exploited the situation
to gain maximum advantage. I do not think it is a fair comment. Very
often it has been pointed out that the employers immediate reaction to
the crisis is to look at employee costs and reduce it by retrenching
workers. Although this may be true in certain situations one needs to
appreciate that in the Sri Lankan context, our industries which have
been most affected have been the export industries which have been
totally labour intensive and the impact of loss of orders directly
affects employment of workers.
Having said this, it is also important to say that some organizations
have carefully assessed the question whether the restructuring needs to
be done in relation to the people doing the work or the method of doing
the work. I am happy to record that in the survey conducted by the EFC,
out of 129 organizations, 57 have clearly stated that they will not
offer a VRS package to their employees during this year and a further 48
have mentioned that it is unlikely that they would do so during this
year. This amounts to approximately 91 percent. These organizations have
also mentioned various other restructuring methods such as job rotation,
job sharing, changed work arrangements (shifts), relocation of employees
to other Divisions/Companies within the group.
Q: The labour laws in Sri Lanka have not been changed much. You have
been proposing many changes. While a total turnaround may not be a
politically feasible option it is essential that we approach this on a
step by step basis and what are the first steps that we may be able to
A: Successive Governments in Sri Lanka have recognized the private
sector as being the engine of growth. Certainly and undoubtedly. The
private sector which has largely contributed to the resilience of our
economy during the worst periods.
Notwithstanding this contribution, the business sector has not been
given the required policy framework and the necessary changes needed in
terms of ensuring higher productivity and efficiency in employment. Now
that the war is over, we have a great opportunity.
The most important and imminent change that we need right now is to
ensure that what is set out in "paper" be translated into positive
action through the required reforms in our labour legislation. In this
regard, it is pertinent to refer to the National Productivity Policy and
the Ten Year Horizon Development Framework (Mahinda Chintana) of the
Government which clearly recognizes improvement enhancing productivity
as being the key to increase efficiency.
But it has not resulted in making any changes in the legal framework
in the areas such as holidays, wages, flexibility in work arrangements.
Another important change that we need to introduce is to limit the
access of the type of employee in obtaining relief in respect of
retrenchment/termination of service either under the TEWA or the
Industrial Disputes Act.
We have seen Chief Executive Officers and expats who in their own
countries would not have got any compensation, receiving millions of
rupees as compensation for loss of employment. This was certainly not
the intention of the legislature when it introduced these laws.
Q: In the new era we are hoping for many opportunities for the
private sector. Does our workforce possess the skills that may be
required in the short to medium term ?
A: Sri Lanka has enormous talent in its human capital which needs to
be effectively harnessed. It is my view, both in terms of building
bridges between communities and looking towards future opportunities in
IT and service sectors, that we need to promote teaching of the English
language with much more enthusiasm. We need to find proper teachers to
ensure that all students in Sri Lanka would have proper teaching of the
language in schools. Incentives need to be given to good English
teachers to be stationed out of Colombo in the rural areas.
Secondly, we must also penetrate into the knowledge economy which
will have quite a few opportunities on account of the recession. The BPO
industry is something we need to look at seriously. There could be many
opportunities in offshore service sector industries.
Q: Is there a good dialogue in place between employers and employees
on the crisis, its impact and the way forward?
A: At the International Labour Conference in Geneva recently, one of
the key issues that were discussed by the social partners was the manner
in which the social partners respond to the crisis.
The tripartite constituents of 182 countries deliberated this issue
and were successful in adopting a Global Jobs Pact which was regarded as
a framework to recover from the crisis.
The Global Jobs Pact underlines the need for private sector
development as a means to achieving economic and social progress. It
advocates open markets and eschews protectionism. The Pact also calls
for schemes to help companies to get through the crisis through
mechanisms such as work sharing and partial unemployment benefits. The
Pact specifically stipulates that we cannot adopt a "one size fits all"
response. Some of the key features of the Pact are as follows:
It recognizes the reality that enterprises are struggling to survive,
some are going out of business, others are laying off staff.
It notes the dangers of deflationary wages but nowhere calls for
wages to increase.
It specifically mentions that education and training remain the most
important means to improve employment prospects and are key to future
growth and productivity.
It reiterates the importance of dialogue in finding solutions.
We feel that this Global Pact provides employers with an
authoritative pro business policy announcement by the ILO and is
therefore a powerful advocacy tool for employers in their lobbying of
national governments. What needs to be emphasized is that our Sri Lankan
delegation which consisted of the representatives of the Government,
trade unions and employers have all subscribed to this Pact and our
trade union colleagues are also part of it.
It is important that we discuss mechanisms to overcome the effect of
the crisis depending on the requirements of the business.
Establishing mutual trust and confidence is very important as one of
the biggest fears among trade unions is that employers would make use of
the crisis and exploit it to get maximum advantage. Sharing relevant
information is important to ensure that everyone understands the
In making changes look at internal redeployment, retraining, change
of work patterns and work schedules. Consider terminations/lay offs as a
last resort. We need to adopt Socially Responsible Restructuring.
Need for private sector
The tripartite constituents
of 182 countries adopted the Global Jobs Pact, which was
considered to be a framework response to recover from the
global crisis, at the 98th International Labour Conference
held in Geneva last month.
The Global Jobs Pact
underlines the need for private sector development as a
means to achieving economic and social progress. It
advocates open markets and eschews protectionism. This gives
the social partners in Sri Lanka a solid foundation to
strengthen relations and establish mutual trust and
confidence between each other to face the challenges of the
At a time when Sri Lanka is
blessed with opportunities for development, it is important
that the social partners get together and act in a
responsible manner for the development of our country.