OPA AT YOUR SERVICE

Demography and economy

The following is a paper presented at the 23rd OPA Annual Sessions titled ‘Impact on demographic changes on business environment in developed and developing economies'.

The world is in the midst of a major demographic transition. Demographic change refers to the population changes due to births, deaths and migration. Demographic change will also directly affect employment, savings, investment and capital flows in global trade balances and asset price.

Improvement in health and related interventions such as decline in infant and child mortality, public health interventions related to water and sanitation, medical interventions such as vaccine and the use of antibiotics were the main reasons for the rise in life expectancy.

For the world as a whole, life expectancy more than doubled from around 30 years in 1900 to 65 years in 2000. (This is projected to rise to 81 by the end of the century.)

Movement which results in a permanent change of residence is referred to as migration.

Migration has an impact on social and economic indicators to both the sending and receiving countries. Skilled migrants fill gaps in the developed economies helping the economic growth of the adopted country whilst the refugees and illegal immigrants fulfilling the lower end employment needs. In the process they also create issues relating to employment, housing, healthcare and education to recipient country.

Changing lifestyles

Though the real statistics of illegal immigrants are not available, it is interesting to note 3 percent of world population resides in a country other than where they were born. This is more prominent in the developed countries due to the fact that every 10th being an immigrant.

Changing lifestyles, as a result of demographic change is reflecting in changing customer and employee demands.

This effects the entire business sector along the distribution chain i.e., Producers, retailers in their shops, commercial agents, wholesalers, importers and exporters.

As per English moral and political philosopher Thomas Hobbs “Until the early 18th century, global population size was relatively static and lives of vast majority of people were nasty, brutish and short.” Since then, the size and the structure of global population have undergone extraordinary changes.

World population has surpassed the 6 billion mark and projected to be 9 billion by mid-century. Past and projected additions to world population have been, and will increasingly be, distributed unevenly across the world. These disparities in turn will undoubtedly affect the business environment.

Most of the baby boon generation (1946-1964) will reach retirement in the next 10 years and by 2050 the population of elderly will increase rapidly throughout the developed countries specially US and Europe.

Looking ahead to 2050, nearly 42 percent of the population in developed countries are projected to be between the ages of 45-85 years. Only 31 percent of the population will be between the ages of 20-44. Due to the aging of the baby boomers and improving longevity, the number of people over 85 years age group will grow by 389 percent between 2000-2050 in US.

Demographic dimensions in developed nations

In developed nations, the percentage of older people (Over 60 years) will rise from about one-fifth of the population at present to a third by 2050. Moreover, longevity is rising remarkably.

Paying for pension and medical care for the elderly is a potential problem. France, Germany and Italy have had generous State pension arrangements, but are now seeking pension reforms to control spiraling public expenditure on pensions. It has been estimated that by 2050 pension payments could rise to as much as 17 percent of GDP in Germany (Retts, 2003).

This is against five percent – sixpercent of GDP of Britain. This means present day workers and the workforce in the future will have to set aside a greater proportion of their earnings into pensions than their parents had to pay. This intern will have a bearing on the disposable income of employees and thereby to the business environment.

Immigrations laws

It is estimated by 2025 nearly one third of the population of Europe will be pensioners. As a result of this many developed countries will be compelled to make alterations to their immigrations laws and retirement age related legislations in order to maintain active working population to dependent ratio. For example, in order for Germany to maintain the current proportion between working population and over 65s would require a massive average influx of around 3.5 million migrants per year.

Few years ago only one tenth of this, entered Germany as immigrants. Another alternative to maintain this ratio of working population to dependents is to increase the retirement age to 77.

To be continued

[Questions and Answers]

District Labour Office, Matara

Question: I worked as a Principal cum English Teacher at Jennath International School, Weligama from January 2005 to January 2007 a period of two years. I was assured a monthly salary of Rs 15,000 along with EPF-ETF benefits but the assurance given was not honoured even at the end of two years.

Left with no other alternative, I tendered my resignation.

I made representations to the DLO Matara. They took the side of the School Management thus denying me justice. Thereafter, I presented my case to the HRC, Matara. Inquiries were held by the HRC but the instructions given by the HRC to the DLO were not followed. On further representation, I was advised by the HRC to forward my case to the Bribery Commission.

The BC by their letter No: BC-602-09-B (6) dated 29.10.2009 referred my case to the Special Investigation Division of the Labour Department. for appropriate action.

In response to the above, the ACL of the Sp. Div. requested me by letter No: SD-P 345-2009 dated 25.11.09 to send him a copy of the complaint I made. I promptly acceded to his request and enclosed the relevant documents in proof of my case.

M I Mohamed Ansar - Matara

Answer: We discussed your matter with the Special Investigation Division of the Labour Department at the Head office in Colombo. As the officer handling your file was on leave, we had to wait until the return of this officer.

On contacting the officer concerned, the explanation given was that they did not act on your matter as they did not have sufficient information. However, we wonder why they could not call for the required details from you as they had already corresponded with you.

We were given to understand that you have recently called over in person to the Special Investigation Division. Since your visit, they seem to have commenced work on your case. An inquiry we understand has been fixed for February 2, 2011.

Question on Rent Act

Question:

*Is the Rent Act in force now? If so, for what age of houses, if it is for old houses then for how old it should be?

*Presently the tenant is allowed to stay after for one year thereafter without evicting the tenants the rent is increased, is it legal for old and new houses to do this exercise?

*The rent receipt is not given by the Landlord or by the person to whom the power of attorney is given. This sometimes runs into several millions of rupees for five years. Is there any Law to prosecute them in courts by the rent control Board as by the tenants?

*Cutting power and water supply by the electrical and water engineers on the instruction of the Landlord even when the rent is paid regularly. Thereby harassing the tenants to leave the house. Is it legal?

*The houses not rewired for more than 40 years. If reported, is there any possibility of the housing department to take any action? And rewire the house and surcharge from the landlord?

Abdullah Reebee -Wellawatte

Answer: Yes, the Rent Act is still very much in force, although due to several changes and amendments to the schedule it is no longer tenant oriented as it was in 1972 Act.

The Act passed in 1972 as a revision of the existing Rent Act made the tenants very powerful, thus discouraged people from building houses. Thereafter by numerous changes it has been watered down.

All houses built after January 1, 1980 are exempted from the Rent Act. Also even houses built before 1980, if it has been occupied by the owner at any stage after January 1, 1980, those houses too are exempt from Rent Act.

In your case apart from the above two facts, it also depends on the Terms and conditions of your tenancy. As regards non-issue of receipt for payment of rent, you can pay the rent through the Colombo Municipal Council, Rent Branch at No 79 Deans Road, Colombo 10. Given the details they will forward the rent to the Land Lord. As regards cutting power and water service as well as the requirement to rewire the house. You can complain to the Rent Board at No 86, Ananda Kumaraswamy Mawatha, Colombo 7. Trust we have been of service to you.