Sri Lankan Labour Market Outlook 2011:

Scramble on for skilled talent

Cornucopia Lanka an Indian based HR consultancy firm in their Sri Lanka compensation outlook report says that a GDP growth of 6.5 percent is expected in 2011 followed by 6.3 percent 2012. That would help to broaden the consumption base and help employment level rise.

The upbeat consumer sentiments bolstered by post conflict investor confidence and rebuilding momentum could create the next scramble for skilled talent in 2011 and beyond.

Moving forward, if the government is able to put a lid on commodity inflation, 2011 could be a year of significantly improved business opportunity.

The Financial Services Sector, the BPOs and the IT sector will continue to grow and compete for top talent resulting in salaries rising for middle management executives.

Executive compensation has generally remained stable in 2010. However, there has been a spurt in salaries at the top for functional specialists in areas like risk management, waste management, supply chain and compliance.

To find the right people companies are paying top compensation to lure the best and the brightest. Wage inflation in 2011, is expected to be around 08 percent to 11 percent.

The greatest challenge for business will be in attracting and retaining experienced staff capable of delivering the revenue growth potential.

As discussed the critical challenges are likely to be felt in the banking, services and the IT sectors.

In terms of compensation levels the Financial Services, the Garment Sector, IT Services and the Telecoms continue to lead in terms of attractive packages.

At all management levels, the search is on for young and creative talent. The demand continues to outstrip supply.

If the country overall outlook improves we may well see the welcome inflow of Sri Lankans returnees to fill top roles. What would be unfortunate would be if we need to turn to foreign expatriates to supply the need when we do have a large supply of our own nationals who could help out and also be comfortable with good terms in a stable environment.

The traditional manufacturing sector continues to lag in terms of the level of compensation provided to management, compared to other sectors.

On the benefits side most companies provide the basic mandatory EPF 12 percent, ETF 3 percent and leave, benefits like Medical (OPD and hospitalization), holiday leave, Life and Accident Insurance and

Perks such as motor vehicles (companies are moving away from company owned vehicles), land and mobile phones, professional subscription, exam reimbursement and Club Membership are now quite common across all management staff.

Housing benefits and loans are mostly limited to the financial services sector and most often to corporate management.

Long term incentives like share options, phantom options and differed bonuses schemes and also performance based short-term variable incentives (bonuses) once limited to the MNCs and some of the big blue chip companies are now becoming very popular among many of the high performing companies and start ups. Pension benefits are increasingly becoming rare.

According to HR Cornucopia CEO Dinesh Weerakkody, there is today a conscious effort and commitment to align executive compensation to the success of the company and as a result companies are setting around 50 percent of total target pay as variable compensation (risk pay) to improve overall market positioning across levels for the company and to make up for expectations in relation to compensation.

In addition, some companies have linked a further 20% of the variable rewards directly to customer satisfaction, and more importantly to creative development and operational excellence initiatives.

In conclusion Cornucopia says that companies in 2011 would have to be more focused on building proper management infrastructures and frameworks and to develop creative compensation structures for employees.

Therefore because of the increasing mobility of the Sri Lankan workforce, in addition to creative compensation structures, there is also the need to develop better people management strategies to nurture, develop and retain the existing skilled talent and improve productivity.

The need for processes that are transparent and show a 'win-win' desire on the part of management are equally necessary to achieve good results.