Dual labour challenges

Wednesday, 22 December 2010 00:01 - - {{hitsCtrl.values.hits}}

LABOUR troubles are part and parcel of the new year and 2011 is heralded with a two-pronged challenge. On the one hand, the trade unions want the employees of export processing zones to be given a 30% salary increase, while on the other contentions are arising from the implementing procedures of the pension scheme that was proposed by the Budget.

Both matters have been referred to the National Labour Advisory Council (NLAC), which will deliberate the issues under the Labour Ministry. The question now is whether the 450,000 odd employees of export processing zones can be given the 30% increase that the unions want. The Board of Investment (BOI) has already held several discussions with the manufacturers and unions regarding the hike, resulting in the compromise that only Rs. 500 can be given. So the issue stands at a stalemate.

Workers are struggling under the heavy burden of the cost of living and therefore need assistance through increased salaries. Many of the workers in the free trade zones work for a minimum wage, particularly in the apparel industry, and as such the union demands seem justified to a certain extent.

However, they are asking for a 30% increase across the board, including BOI companies outside the zones, as they believe that it would be unfair to give a salary increase only to workers within the export processing zones. Perhaps it would be justifiable to give a salary increase to those that really need it rather than executives and top management that already receive hefty salaries – an idealistic idea, but one that would gain worker approval.

Negotiations have taken place several times over the years for these annual salary increases, but this time there is a special significance as the country gears up to attract more investment through foreign channels. This means that the salary scale agreed on will give a strong message to external parties of the opportunities available in Sri Lanka.

The other point is that as vital as the pension scheme is for an ageing population, the mechanism for its implementation needs to be ironed out. For people that need it, the 2% savings each month might be inadequate and employers might baulk at having to take on the extra responsibility as well. The sustainability of the programme is very important since its dividends will be sampled by the people decades into the future. Their dependency on the pension means that the investments must be made in a sound manner with accrued returns over a long period of time.

Employees who are obviously interested in cutting the best deal possible must also remember that short-term salary increases at the cost of the country’s reputation for ease of doing business is not a sound strategy. While many bemoan the fact that a salary increase was not part of the Budget, the fact that it would have sapped public monies without providing returns on investment has to be considered too.

Sri Lanka needs capital investment to spur long-term growth and its human resource capital has a big part to play in creating a healthy future. As citizens there is a role that each person has to play in the development drive and honing skills, ideas and motivation is important in this journey.