Sri Lanka will continue to lose investors, the skilled labour force and will not be able to cope with new global challenges more severe than the global pandemic if archaic labour laws are not reformed, said a senior official of the Employers’ Federation of Ceylon (EFC) on the sidelines of the launch of the survey on the impact of Covid-19 on employers at the EFC last week.
“Reforming the decades-old legislation on labour is crucial to boost the protection and productivity of the workforce through gainful engagement of workers in the economy,” EFC Director General and CEO Kanishka Weerasinghe said.
The need make the labour statutes relevant has been stressed at many a forum but to no avail.
“We are ready to engage with the policymakers to carry out labour reforms which is imperative given the changing global situation that has emerged with the present crisis,” he said. The EFC is currently carrying out a labour demand survey which will comprise the SME sector and women in the labour force.
The EFC survey on the impact of Covid-19 on employers shows that one-third of the responding companies were forced to completely suspend operations while over half were faced with serious cash flow problems in meeting day-to-day expenses. The cash-flow of about 18 percent of the companies was sufficient only for one month while another 39 percent said that they could only survive for about three months.
The report notes that the worst hit were SME businesses and business entities serving domestic and foreign markets. The highest economic loss in terms of revenue, foreign exchange earnings and investment was recorded by the hospitality and food services sector.
Exporters employing over 250 people lost all their earnings. Since large scale entities account for nearly 95 percent of the export earnings, the impact on the balance of trade will be devastating, the report stated. It also revealed that subjective estimates of job losses by responding companies averaged at seven percent and nine percent for executive and non-executive staff.
The highest job losses among the non executive staff were reported in the finance and insurance, and manufacturing (15%) sub-sectors followed by hospitality and food services (11%), agriculture (6%) and wholesale and retail trade (5%). Highest job losses in the executive staff were reported in manufacturing (10%), finance and insurance (8.3%) and information and communication (7.5%).
The report notes that all responding companies identified workforce protection to be the most important coping strategy at organisational level while work from home was the second most important measure particularly in sub-sectors dominated by office-type occupations in the service sectors.
Income support for low-income workers was ranked the third most important policy measure. Although work from home and promoting digitisation were popular options for smaller companies in the formal sector, they were less feasible for companies employing mostly operational and manual workers. The EFC survey presented the impact of the global crisis in percentage form and the organisation hopes to continue the survey as the country is not yet completely out of the wood.
However, according to another labour survey around 14,000 workers had lost their jobs due to the crisis.
The EFC survey has taken into account the firms in the formal sector while estimates reveal that loss of employment in the informal sector is alarming. Among the affected, women count the most in the informal sector among those who have been forced to live with no income.
Work from home, flexi working hours, less government intervention on salary and other payments, implementing the tripartite wage scheme at national level, compromising leave entitlements due to the lockdown period, reduction of interest rates, extension of debt moratoria, tax relief and investment concessions, relief on tariffs for exporters and importers of raw materials and products and removal of cess and other para-tariffs on importation of critical inputs to production are some of the major policy interventions sought from the Government.
The EFC survey was conducted from April 15 to May 12 as a web-based structured questionnaire administered via email. The sample consisted of 100 companies drawn from the EFC’s membership of 685.