Opa At Your Service

Demography and economy

Neil Bogahalande

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. First part of this article was published last Thursday (January 27)

Nationalists often cite Japan as an example for ‘monoculture’, but they too will have serious issues to face unless they start to accept immigration. A study by the UN population division released in 2000 found that Japan would need to raise the retirement age to 77 or admit 10 million immigrants annually between 2000 and 2050 in order to maintain its worker to retiree ratio.

Office for National Statistics projected the pensioners would outnumber the children under 16 for the first time in British history in 2007. They also predict this situation to aggravate in spite of the increased retirement age.

Above phenomenal changes will create certain niche market opportunities such as demand for low calory diet food, growth of healthcare industry, insurance, retirement flats, nursing homes, pharmaceuticals, etc.

Global automobile giants in high end sports cars like Ferrari are also making subtle design changes and alterations such as enlarging the seat, altering the door height to make it easier for those with stiffer limbs to enter the vehicle etc. to make it convenient for potential older buyers.

Changes in family structure also have a greater impact on business environment. There has been significant growth in the proportion of single parent families. In UK, this population has raised from 8 percent in 1971 to 27 percent in 2002. In most of these cases, it is the mother who is the lone parent, whether from divorce, widowhood or simply never having married. As a growing segment of consumer markets, the lone parent has different needs for goods and services than larger families. Apartments rather than houses may be more suitable for security, convenience and affordability thus creating business opportunities for apartments, condominiums whilst reducing the need for houses.

In Sub-Saharan Africa the context is different, but these demographics too have a direct bearing on the business environment. Nearly one fourth of all deaths are due to HIV/AIDS, a rate which is overwhelmingly in excess of the corresponding rate all other developing regions. This has potentially large effect on these economies, given the fact the deaths from AIDS concentrated among prime age workers, and insofar as the rise in orphans and decline in prospective longevity may reduce in human capital.

Cross-country heterogeneity is among the most salient features of the demographic profile. For example, virtually all of the increase projected in the world population by 2050 will occur among today’s low- and middle-income countries. By contrast, population aging will be most rapid in Western Europe, the United States and in particular in Japan, where 42 percent of the population is projected to be aged 60 or over by 2050, with 16 percent aged 80 plus.

Japan has recently become the first country in history with an average age over 40 years. Japan is also projected to have nearly one million centenarians (1 percent of the population) by 2050.

Impact of demographic dimensions

Population growth rate in Sri Lanka has declined by 52 percent during the period of 1971-2001. Old age group (over 55 years) has increased by 2.8 percent during the same period. However it is important to note that young age group (between 18-55 years) has increased from 58 percent to 67 percent (24 percent) during the above period which is significant compared to developed economies. This increase of active labour force in Sri Lanka will be beneficial to the business environment.

Furthermore the percentage of female participation in the active labour forces has increased by over 100 percent during last 50 years which is vital for economic development of the country.

It is also clear, both theatrically and empirically, that there is nothing automatic about link from demographic change to economic growth due to numerous other variables.

Possible trends

Developed economies will be compelled to come out with innovative plans to maintain the active working population to dependents ratio in order to sustain the economic stability

* Changes to pension and medical plans are inevitable to cater to the high percentage of pensioners and longevity

* Businesses which are already catering to elderly will accelerate and improve products and services to be more attractive to its customers, whilst many a new entrant is bound to follow suit

* There is a strong possibility of developed economies increasing the retirement age whilst placing structured systems to shift jobs from more physically strenuous to less physical exertion due to high usage of experience of elderly employees

* Immigration laws of developed economies will either be relaxed or less stringent to maintain required level of immigrants

* It will not be viable for developed economies to be involved in labour intensive business operations and such businesses will be shifted to developing economies

*Illegal immigrant population will increase due to probable ‘turning a blind eye’ attitude of developed economies

* As a result of more opportunities being created for developing economies by ways of more remittances through legal/illegal immigrants and also more labour intensive job opportunities will improve the economic environment of the developing economies.

Business advantages

Because of their geographic concentration, immigrants stimulate white collar employment opportunities in both public and private sectors. Virtually all such jobs go to native-born and established foreign-born workers.

Therefore net positive employment of migration in US has resulted in pushing up the native groups from manufacturing and lower skilled services to white collar jobs, entry level management occupations and Government jobs.

* Immigrants also increase demand for locally produced goods and services.

* Immigrant owned businesses are typically small, employ few persons and produce for ethnic consumers more than for wider market thus creating employment opportunities to family members or others from same immigrant or ethnic community. Such enterprises creates prodigiously to up and down stream job markets and contribute substantially to an areas overall economic vitality.

* US ‘meatpackers’ for fast food industry predominantly consists of Mexican illegal immigrants. In the article titled ‘Fast food and Immigration’ by Michael Blowhard on March 29, 2006 explains the heavy dependency of US fast food industry on legal and illegal immigrants as the workforce.

This industry has a 400 percent labour turnover (average employment period of 3 months), and the encouragement extended by meatpacking companies by ways of running advertisements on Mexican radio offering employment in USA and also operating a bus service that shuttles people between small Mexican towns to meatpacking locations in the US explains the importance of this immigrant workforce.

* Richard Delgado in his article ‘Crackdown on illegal immigration boosts food prices’ attributes the non availability of labour (mainly illegal immigrants) for labour intensive agriculture products at critical stages as a ‘crucial factor for increased food prices’ in addition to weather patterns and cost of fuel.

He goes on to explain the excellent service provided by especially the illegal immigrants from Mexico and other parts of Latin America to keep the food prices low.

* Report by Kate Barker’s ‘Government denies immigration causes housing shortage’ explains migration as one of the factors for shortage for housing in UK amidst other factors. Demand created in UK by immigrants on housing will impact the British construction industry which will have a bearing on the business environment.

Impact of migration

Whilst the immigrants (Legal-illegal) immigrants create a positive impact to the business environment of the host country, it also positively impacts the business environment of the home country of immigrants due to the inflow of remittances. Mexico is one such example. Number of illegal immigrant Mexicans has increased tenfold in US over three decades from fewer than 800,000 in 1970 to 8 million in 2000. In 2005 the number has increased to 10.8 million which is a spike of over 35 percent in half a decade.

Money remitted by Mexicans, undoubtedly have had a positive impact to the Mexican business environment.

This is even more prominent in EI Salvador and Jordan. More than 10 percent and 20 percent respectively of GDP in EI Salvador and Jordan consist of remittances by migrant workers thus creating a huge positive impact to the business environment of EI Salvador and Jordan.

Thus, it is evident above phenomenal demographic changes will undoubtedly create new challenges and opportunities to all business professionals.

These opportunities and challenges will have to be viewed and addressed using innovative strategies rather than making incremental changes to the traditional management system.

[Questions and Answers]

Renewal of NIC

Question: I wish to bring to your notice that I applied for a renewal of my NIC No 341312175V through the Pamankada West GS on July 28, 2010 Ref No CC304308. I visited the GS several times and he informed me that he has not still received the renewed NIC. I would request you to look into the matter and help me to get my NIC soon. I have very poor eyesight and cannot move without any body’s help.

Sinnathambi Saundranayagam - Colombo

Answer: We have good news for you that your new NIC No 341212175V has been dispatched by Registration of Persons Department at Jawatta Road, Colombo to the Divisional Secretary, Thimbirigasyaya on January 7, 2011. You may now request your GS to collect it for you, if he has not already collected it. We did not inquire about the reason for the delay of six months as it anyway takes between three to six months usually. Anyhow we advise the public to start following up after three months.

Compensation for political victimization

Question: I am a Retired Government Officer, age 73 internally displaced. I was politically victimized in 1977 General Election. On 04.12.2008 I was summoned for an interview by the Secretary Political Victimization Committee, Public Administration Ministry under interview serial No 182. At the interview necessary particulars were collected from me and told that the reply would be sent but up to now nothing heard. A registered letter No 7764 of 30.04.2010 was sent to the personal address of Public Administration Minister D W John Seneviratne.

‘Legal Aid is a Human Right’

Please help me to get some relief. Your kind reply would be greatly appreciated.

- T Arulpiragasam -Batticaloa

Answer: We understand that Committees like the one you have indicated are appointed from time to time and sometimes their recommendations get delayed in implementation.

We did not have sufficient information to be provided to the officer whom we contacted. You have been requested to call over at Public Administration and Home Affairs Ministry.

However it may not be practised for you to come all the way. Therefore we suggest that you write a registered letter to the officer mentioned below providing full details. He agreed to look into your matter.

The officer to whom you should write to is D Dodallage - Additional Secretary, Public Administration and Home Affairs Ministry, Independence Square, Colombo 7. As there are several Add. Secretaries you have been requested to address your letter by name as given above.

EPF Claim and NIC Issue

Question: I was working at Abdulla Industries and paper bags manufactory, Maha Vidyalaya Mawatha, Colombo 13. I was contributing to Employee’s Provident Fund and my membership number was 6770/A/43 and my employer’s number was A/6770.

Although I contributed to the fund No. “A”, “B” and “H” cards were filled and signed. When I recently went to my former company to get the “B” Card I found that the Company has changed its name and they were not in a position to complete my “A”, “B” and “H” cards as they do not have any records of the previous company.

I am a Senior citizen and having a Senior citizen card. I am unable to get the National Identity Card as my birth has not been registered and the Registrar has confirmed this fact.

I shall be most thankful if you would please advise me on the following

1 How to get my National Identity Card

2 How to claim my EPF Benefits

Your assistance and advices would be greatly appreciate

Valli Suppiah - Colombo 15

Answer: As regards your EPF, we suggest that you visit the Colombo North Division of the Labour Office situated on the 4th Floor of the Labour Secretariat at Kirula Road, Narahenpita. There if you explain your position to the officer in charge, they will sign the “B” card for you, as well as advice you regarding the other documents.

As regards your National Identity card you can present the confirmation document received from the Registrar of Birth, along with your senior citizen card, you must produce the birth certificate of your eldest child and an affidavit stating your date of birth signed by a Justice of Peace.

If you have a horoscope written in your name, that too will be accepted. Such alternatives for a birth certificate is acceptable only in the case of those certificates who are more that 50 years of age.

Non payment of dues

Question: Having paid Rs 7,500 to NILET (National Institute of Language Education Training), 40 Buthgamuwa Road, Rajagiriya, I got a residential training at its Agalawatta Training Centre to teach Tamil as a second language to Government servants.

Subsequently, I trained two groups of employees at the Teaching Hospital Kalubowila (THK) as of May 17, 2010 to July 30, 2010. I had to give up teaching due to undue delay in making payments.

All the relevant documents regarding the payments were sent to NILET by the THK coordinator under registered cover.

But I am yet to receive my payments.

In fact I extend my co-operation to implement the Government policy of language teaching and this is a clear case of sabotage.

What should I do to recover my payments?

G Mahindarajah - Madapatha

Answer: We contacted NILET and found that they are not aware of any person by the given name of G Mahindarajah. However, they informed us that one G M R Karunasekera of the same address as that of yours had carried out training of the employees at the Kalubowila Teaching Hospital. If the correct name had been provided to us by you we would have found it easier to help you.

NILET informed us that about two weeks ago they had sent by Registered post, a Bank of Ceylon cheque No. 67772 for Rs 16,000 to Karunasekera. This was for May and June 2010. Another Rs 10,000 for July 2010 being processed and will be dispatched in about two weeks. We trust that Karunasekera and Mahindarajah are one and the same person.

Pension arrears for orphan

Question: I have a problem with the Pensions Department regarding the non payment of some arrears and would be grateful for your intervention. The facts are as follows. Pension File No. 82/19638. Pension No. 66352.

a) When my father-in-law Alfred Aluwihare, who was a pensioner died in February 1990, his wife Sumana Delwela Aluwihare, received the W and O. Pension till she expired on June 6, 2006.

b) She had a daughter Miss Swarnamalee Aluwihare who was born handicapped from birth when she was born in 1938.

c) Soon after S D Aluwihare, expired her other daughter Srimathi Bimba Dhanapala became the guardian of her sister Swarnamalee Aluwihare and she applied to the Matale Divisional Secretary for the Handicapped Orphans Pension for Miss S Aluwihare.

d) A preliminary Medical Examination was conducted by the DMO Matale on a request of Divisional Secretary, Matale, who confirmed that she was a cripple.

e) Thereafter, the file was going up and down and delayed unduly. The final Medical examination by a Special Medical Board was held on September 2008 at the General Hospital, Kandy. And at long last the Handicapped Orphans Pension was paid into the Joint Account of Miss S Aluwihare and her Guardian sister Mrs S B Dhanapala from November 2009 by the Divisional Secretary, Kandy.

f) This pension was paid in November 2009 with arrears only from October 2008. However, the arrears from July 2006 to September 2008 were not paid.

i) Mrs S B Dhanapala has sent several letters and the last one was dated June 12, 2010 to DG of Pensions Department to pay the arrears from July 2006 to October 2008 but there was no response.

g) Mrs Dhanapala’s lawyer Maheesha Seneviratne then sent a letter dated November 25, 2010 requesting payment of the arrears but to no avail, (Copy is attached)

h) Miss Aluwihare expired on December 2010 and the Kandy DS was immediately informed to stop payment of the pension.

I shall be grateful if you can obtain the relief sought

Dr S B Dhanapala - Kandy

Answer: We checked up with the Pensions Department and were made to understand that it is not the policy or practice to pay arrears of pension benefit to orphans. Sumana Delwela Aluwihare should have brought to the notice of the Pension Department about the handicapped status of Miss Swarnamalee Aluwihare and taken her before the Medical Board for examination. In which case from the time of the demise of S D Aluwihare, S Aluwihare would have received the orphans pension. Due to this failure the Pension Department will pay the orphans pension or arrears only from the date of the Medical Examination and approval.

Thus they have paid the arrears from October consequent to the Special Medical Board approval in September. If you require any further clarification you may contact the Director Pensions Department on Tel. 0112432008.

Cheated by a Contractor

Question: I gave a carpenter on contract all the carpentry and spray painting of all the wooden items.

As usual an advance was given to commence construction. At the beginning he was very much involved in the physical aspect of the work along with another carpenter in his payroll. As time went by, only the other carpenter was at work and the contractor visits only and sometime later due to a conflict with the contractor, he also stopped coming to work. For sometime there was no activity and after a few days, the contractor came to work and that too not everyday.

The total estimate was for over Rs 900,000. Every now and then he comes for money and I also used to part with a lakh or two depending on the purchases. He also purchased my motor cycle for Rs 60,000 to be set off against the total due to him. He also purchased some tools for which I advanced monies to him to be set off against the capital. He was more out of work than doing any work at home. I stopped his work and find that I have overpaid him as much as close to Rs 200,000. I have now employed a carpenter and a spray painter to attend to the balance of the work. I spoke to the earlier contractor and told him about the overpaid amount to which he agreed.

I told him to give my bike back to me and also to settle the balance. He refuses to hand over the bike to me which is now registered under his name and says that he will pay back little by little to me.

What is the course of action that I can take against him? Please give me a reply as soon as possible.

H Farook Ibrahim - Dehiwela

Answer: You had trusted your contractor too much. These days one has to be very careful in financial dealings and not transact business based on trust. Of course trust there must be but with the right persons or where there can be some hold. Receipts must also be obtained for all payments including advances. Basically you must know your partner in business well enough. On the other hand one has to take the risk as what you have done.

You cannot get your motorcycle back as it has already been transferred to the contractor’s name. The only choice left is for you to report this matter of cheating to the Police-Fraud Bureau Section. Here again the Police may request you to provide receipts of your advances or financial transaction.

Although the police cannot prosecute the contractor without any proof, they may assist you to summon the contractor and get him to agree to some terms of settlement. This too will be possible only if the contractor confirms to the police that he owes you the amount claimed by you.

Non remittance of EPF/ETF

Question: I was employed in a company at Nugegoda from 19-04-2002 till 03-10-2003.

I got a photocopy of B Card but not the original. I never got any statements from the Central Bank regarding my EPF. So I wrote a letter to them and they replied on 22-11-2003 (ref:04/17/01/011) that there was no money in my name. Then I wrote a registered letter to Labour Department HO on 16-12-2003 regarding this matter. As no reply was received I went to HO and spoke to them.

They said they don’t know anything about my letter and asked me to give a new letter. I wrote in my own handwriting and gave it to Labour Officer Sujith Pothuwila.

They later called me for an enquiry and the Inquiring Officer Garusinghe said that there are many complaints against that employer and I can get my EPF.

After sometime they didn’t show any interest and asked me “why did you leave, why don’t you go and work” I realised they won’t help me and after that I did not go there. My question is “why should they ask why the employee resigned.” Is it the purpose of Labour Department or to help the employee to get his dues? Why is the Central Bank is sending statements to employer instead of sending to the employee’s address? If the employee does not get statements, who is then responsible. In the monthly pay sheets the amount deducted and amount contributed by employer for EPF/ETF are clearly shown.

When a finance company closes down if the Central Bank can pay the depositors why can’t they pay the employees their EPF/ETF, if employer dies or company closed down or declared bankruptcy? If employer has no funds what can the Government do to pay dues (EPF/ETF/unpaid salaries/gratuity/damages) to employees?

If employee dies or becomes disabled how can he get his dues. Instead of asking the employee to go to the employer and get his signature/B Card/employment record etc why can’t the Labour Department summon him to Labour office to get documents signed. Is Labour Department helping the employee or employer? (My employer’s No. B25999, Member No. 69)

S Sripadmananban - Email

Answer: You have raised several issues. We tried to contact Mr Garusinghe in the Labour Department but he has retired. We spoke to the Assistant Commissioner for Colombo West Division, Mr Jayatilake who has promised to help you.

He was unable to trace the file of your employer No. B25999 whose name you have not provided. Can you go to the Labour Secretariat at Narahenpita on a Monday or Wednesday and meet the Assistant Commissioner Mr Jayatilake along with all documents available with you. The Central Bank sends the EPF statements to members (employees) through the employer as they do not want the statement to go into the wrong hands.

However, now they are requesting for the address of the employees so that they can send the statement directly in the future. The Central Bank EPF Section is willing to provide “PIN” numbers to members so that can check their balance, subscription etc by SMS or through a computer. The Government never paid and will never pay investors in Finance Companies or Banks out of Government funds. The same applies to EPF and ETF as well. All that the Government will do is to help the investors to get their money or part of it from and out of the finances available in these financial institutions or by disposing the assets through a Court procedure.