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EFC Submissions to the European Union in support of GSP + PDF Print E-mail
Wednesday, 03 May 2017 12:48
Ms Anne-Marie Mineur, MEP
Ms Lola Sanchez Caldentey, MEP
European Union in Sri Lanka
389 Bauddhaloka Mawatha
Colombo 7

Your Excellencies and Members of the Delegation,

We write with reference to your communiqué dated 21st April 2017.

On behalf of the Employers’ Federation of Ceylon (EFC), we wish to thank you for meeting us during your short stay in Colombo in the second week of this month. We thought of also placing on record our appreciation to our Trade Union colleagues who facilitated your meeting with us.

As explained to you, the EFC is fully supportive of the Government’s initiative of becoming a beneficiary of the EUs Generalized Scheme of Preferences (GSP+), considering the benefits that would accrue to our country as well as the members of the business community whom we represent. As the sole Employers Organization (and the only Employer Trade Union) in this country, we have assisted in building a ‘mature industrial relations’ culture since the formation of the EFC in 1929. As the Employer constituent for Sri Lanka in the International Labour Organization, we have continued to propagate ‘tripartite values’ and ideals amongst our membership. Nationally, we are considered as a catalyst for ‘best employment practices’ and influence countless others. Our Affiliations with National Trade Chambers and partnerships with Regional Employer Business Member Organizations (REBMOs) have enabled us achieve the twin objectives of strengthening capacity and extending our outreach, as the National EO. 

As explained to you, the EFC was consulted by the government of the United States during a similar consultative process that took place prior to the revival of the US GSP+ in recognition of our status (2009). The representations that we made to the US Congress became a key aspect that was considered by the US government in arriving at their favourable conclusions. Following up, we also partnered with the ILO to carry out a series of interventions to “Promote Fundamental Principles and Rights at work in Sri Lanka” with focus on the Free Trade Zones. These projects were also considered to be successful by the donors and the implementing party which is the ILO. It also led to the formation of unions in a number of companies within the free trade zones. Many of the issues that you have cited in paragraph 2 were also addressed. Whilst respecting the views expressed by you on these issues, it appears to us that you may have not been adequately briefed about the progress made in addressing worker rights issues. In fact, we would have preferred if the EFC was given an earlier opportunity to make representations on this issue in our capacity as the National Employer Organization during the process of consultation. 

Though representing the interests of employers, we have always acted in the interest of our Nation by acknowledging areas that need to be addressed in nurturing workplace relations and protecting workers’ rights.  We have never failed to compromise in addressing issues concerning workers, as our trade union colleagues also acknowledged during the course of our meeting at the EFC. As mentioned to you we are hopeful that our trade union colleagues will accept our invitation to address employers in the regions, as many of them have never even heard of these organizations or have very negative impressions about them.

We also thought of addressing a few specific points where we differ with your views, as set out below;

a. In as much as point (e) in paragraph 2 had made specific reference to the absence of a mechanism to deal with what unions consider to be unfair labour practices and/or anti-union discrimination issues, it must be placed on record that Act No.56 of 1999 – which is an amendment to the Industrial Disputes Act – specifically provides for the prosecution of employers who are deemed to engage in “bad employment practices”. What is lacking however is the methodology as to how the authorities should deal with ‘bad employment practices’ committed by unions. For instance, incidents of ‘sabotage’ or the ‘causing of willful injury to persons’ or ‘damage to property’ etc.

b. Similarly, we expect a balanced and bona fides approach to be followed and that you would address the issue of union rivalry in a manner that would give confidence to employers to deal with unions respecting each-others’ interests. Though the unions have constantly called for more legislation to be enacted – even enabling them to file action, our experience has been that such strategy is counter-productive. Apart from giving employers an opportunity to make counter claims against unions, the adversarial approach will greatly hinder those of us who are promoting ‘social dialogue’, including ‘employee engagement’. 

c. The issue of union rivalry and the failure on the part of some unions to honour collective agreements that have been entered into with employers, have not only led to costly disruptions to operations, but also dealt a blow to the confidence employers have in such important wage fixing mechanism. Such developments have led to serious doubts being cast on the bona fides of unions. As you are aware, in this country it is mandatory for employers to bargain with unions which have adequate representation, although Convention 98 has clearly identified collective bargaining to be a voluntary process that takes place between employers and employees in setting wages. The constant call by unions for the government to intervene in setting private sector wages (other than minimum wages) - such as the implementation of the Budgetary Relief for Workers Act No 4 of 2016 - has compounded these problems. 

d. We take it that you will also ensure that the processes related to customary practices in the private sector in Sri Lanka will be a basis of sharing gains by the ‘beneficiary companies’ with their employees. Whilst being mindful that not all employers in any one industry will benefit from the EU GSP +, ‘ad hoc’ interventions that will undermine wage setting mechanism such as collective bargaining and performance based systems practices in the private sector – as in the case with Act No 4 of 2016 - should be avoided at all cost. Apart from being detrimental to the competitiveness of enterprises, such measure will variably be inconsistent with the provisions of ILO’s core conventions 98 on Collective Bargaining and 100 on Equal remuneration. The latter makes it mandatory for State parties “to promote objective appraisal of jobs on the basis of the work to be performed”. As you are aware, Article 3 of the convention also stipulates “Differential rates between workers which correspond, without regard to sex, to differences, as determined by such objective appraisal, in the work to be performed shall not be considered as being contrary to the principle of equal remuneration for men and women workers for work of equal value”, which is a clear reference to performance based remuneration being considered as an important part of wage setting mechanism similar to those related to ‘rights based approaches’.

Stated above are some matters of immediate concern to employers – though not exhaustive, that also need to be addressed by the relevant authorities in the EU whilst looking at ways of improving worker rights in a more ‘holistic manner’. I am certain that you would agree that addressing ‘interests of parties’ is a far more rational basis for conciliation, as well as building relationships, than other approaches especially during darker times when conflict looms. 

On the other hand, we were very much encouraged by the fact that your delegation was also willing to look at some of the initiatives that the EFC and the employers in this country have taken to improve workplace relations and working environments in the recent past, including the draft Workplace Relations Act. The policy draft which was tabled at the National Labour Advisory Council was unfortunately rejected by some unions without paying much attention to the benefits that would have accrued to the workers through strengthening of their rights, particularly having regard to the processes that were proposed for implementation to improve workplace relations. As such, we would be extremely grateful to the EU if it could also consider the provisions of the above draft Act also as an important matter that should be discussed, along with any proposal to assert labour rights in Sri Lanka that you have specifically recommended in paragraph 3 of your letter. 

It is noteworthy to mention that the EFC has also formulated its own brand - ‘Compliance Plus’– to promote higher levels of workplace compliance. It requires employers to be compliant of international labor standards other than municipal laws. Compliance levels are monitored by an international firm with seventy percent (70%) of the assessment being made based on feedback of employees. There has been a lot of interest shown by employers for accreditation. This patented brand is supported by our international affiliate – the International Organization of Employers (IOE), and was developed with technical assistance from the ILO. 

We also welcome your suggestion to form a committee to evaluate the progress of some of the measures proposed for implementation by the government, but trust it includes employer representatives from the EFC and the ILO.

As the undersigned explained to you, the EFC - in its capacity as a National stakeholder - will continue to support the government in its efforts to implement the highest standards of ‘human rights’ in addition to ‘rights related to the world of work’, with the latter coming within the purview of our mandate. We consider it an inherent responsibility and will support all efforts of the State in this direction, considering the importance of such National endeavour. The setting up of an Employers Disability Network as well as a specialized IT Training Centre – which has been responsible for training and employment placement of hundreds of persons with disabilities over the years – reflects our commitment towards promoting ‘inclusive workplaces’. Our policies on gender for instance– i.e. zero tolerance of violence against women, discrimination of all forms including employees with HIV, Sexual harassment and abuse at the workplace, have not only created awareness but have been pivotal in convincing all stakeholders to act positively. Similarly the initiative to provide youth with opportunities in the private sector Employers National Network of Youth Initiatives (vide – which is based on the Global Apprenticeship Network (GAN) model – specifically targets State University Students from disadvantaged regions / families.

In conclusion, we also wish to draw your attention to the fact that Sri Lanka, which has ratified 44 ILO conventions including the 8 core conventions, is credited with one of the highest rates of implementing the world of work values into municipal legislation. The EFC, whose members employ approximately one eighth of the work force in this country, has also been credited with efforts to promote National initiatives in improving employment conditions as well as values such as freedom of association and collective bargaining. Furthermore, considering the vast improvements that have been made in Sri Lanka with regard to labour rights and although there may be issues that may have to be addressed, we believe that such matters should not hinder Sri Lanka’s renewed entry as a beneficiary of the GSP+ system offered by the EU.

In the circumstances, we shall be grateful if you could re-consider your position as set out in paragraph 5 and extend your fullest support and co-operation to the government of Sri Lanka when the resolution on this matter is tabled before the plenary assembly of the European Parliament and thereafter. Whilst respecting your integrity, views expressed and irrespective of whichever stand you may wish to take based on your values, we at EFC are hopeful that you will take the liberty of consulting us in the future should you require further clarification or information in relation to any of the matters that were discussed or, for that matter, any information that we could assist you with. 

Extending our highest consideration to your Excellencies. 

Thanking You.

Yours faithfully,

W M K L Weerasinghe
Director General

Copies to : (1) Hon. Prime Minister
    (2) Hon. W D J Seneviratne, Minister of Labour & Trade Union Relations
    (3) Hon. Malik Samarawickrama, Minister of Development Strategies & International Trade
      (4) Hon. Kabir Hashim, Minister of Public Enterprise Development
    (5) H.E. Tung-Lai Margue, Head of Mission, European Union in Sri Lanka
    (6) Ms Simrin Singh, Country Director, ILO Colombo Office
  (7) Chairman, Board of Investment
  (8) Chairman, EFC 

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Last Updated on Wednesday, 02 August 2017 14:46