The Employers' Federation of Ceylon

Home Labour Law Reforms WHAT IS THE WAY FORWARD?
Thursday, 19 February 2009 00:00


Employers in Sri Lanka view the current labour regulatory framework as an impediment to business in a highly competitive global market. Undoubtedly, such a regulatory framework also “scares away” many potential investors from setting up business in Sri Lanka. Successful governments, whilst openly proclaiming its policy for a free market economy and also recognizing the need for labour market flexibility, have not yet been able to take the “plunge”. Trade Unions have been extremely defensive and protective of existing legislation.

We need to change our mindset. It is of paramount importance for us to accept the need for a social partnership, and ask ourselves ‘what are the changes necessary for sustainable development and economic stability?’ There must be a genuine appreciation on the part of the government, unions and employers that changes need to be made to our regulatory framework to achieve economic development, which is a pre-requisite for stability and employment creation.

Charles Handy, in his book entitled “The Empty Raincoat” states: “If we are to cope with the turbulence of life today, we must start by finding a way to organize it in our minds. Until we do that we feel impotent, victims of events beyond our control or even our capacity to understand”.

We need to take stock of the current situation and genuinely ask ourselves the questions

a) Is this the regulatory framework required to sustain employment and create more opportunities for employment?

b) Does this framework model secure employment?

Our current labour laws are essentially what existed prior to 1997 when our industry was heavily protected through stringent import substitution methods. The free market economy introduced after 1977 necessarily requires a national economy driven by massive private sector investment. It is paradoxical for such laws to remain in the statute books and for us to also expect investment and employment generation.

What is unfortunate is that the rigidities in law entice some employers to find devices to circumvent the laws. As John Rawls states (A Theory of Justice): “However attractive a conception of justice might be on their grounds, it is seriously defective if principles of moral psychology are such that it fails to engender in human beings the requisite desire to act upon it”. Some of our labour laws, unfortunately, encourage evasion rather than compliance. The large informal sector which operates outside the rule of inspectors testifies to this fact.

What we need to realize is that labour laws is not only one element of an industrial relations system and not necessarily the most important one. It cannot be evaluated independent of the labour relations system. What we need, in place of the highly legislative and inflexible labour laws and relations systems is one which provides a basic legal framework of labour protection, with room for flexibility in regard to contractual arrangements, work force size, working time and functions. Balancing work protection with flexibility and aiming for higher productivity should be a key objective. There needs to be a shift in labour relations from traditional concepts to a greater emphasis on developing and managing people, resulting in mutual gains.

A long time is past since the aftermath of the industrial revolution which resulted in the State intervening with legislation to “protect” the employee. Employment creation and job security can no longer be “protected” by an inflexible legal regulatory framework. Laws relating to terms and conditions of employment, collective bargaining and trade union rights cannot, per se “protect” employment. Protection depends to a large extent on whether the employer is in a position to carry on his business and continue to provide employment. The perception that employment can only be “protected” and “secured” by a regulatory framework must change. We need to look at the challenges and threats to employment creation and sustenance. Unless we address these issues positively, with a national focus, employment, in general will not have any “protection”. We need to be proactive and move towards mechanisms that would give us positive protection as opposed to ‘superficial’ protection.

The Ten Year Horizon Development Framework (Mahinda Chintana) in setting out the employment policy in its chapter entitled “Towards a flexible and a globally employable work force” spell out 4 policy directives which are clearly consistent with moving towards attaining this goal. The focus areas to these policy directives are employment generation, skills development and labour productivity, flexible labour laws and regulations, and strengthening employer-employee relations. Therefore, we have a clear defined policy in place in relation to employment. What needs to be done is to translate these policies into positive action through bringing about the necessary changes in the legal framework.

A clear example that we can refer to is with regard to the concept of productivity. Successive governments have openly acknowledged and accepted the need for higher productivity. Governments formulated national productivity policies, productivity task force and separate institutions to enhance productivity. All these initiatives are commendable. However, it is equally important that this message is translated into positive action and not merely limited to what is written down on policy statements and documents. We need to introduce the productivity culture through adequate legal reforms. We need to recognize performance based pay, productivity linked wages and agree on a wider meaning to the definition of “wage” which will acknowledge all opportunities available to an employee to enhance his earning capacity.

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Last Updated on Tuesday, 19 October 2010 13:44

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