Labour laws, a constraint on employment generation- EFC survey

The world economic forum, which released the Global Competitive Report states that Sri Lanka has made significant strides in moving up 10 places in the rankings, from 62nd to 52nd place. But it is disappointing to note that, amidst this positive indication there has been a remarkable drop in the rankings in relation to labour market efficiency this year.

Sri Lanka has dropped 13 places in the rankings to 117 as opposed to 104 in the previous report. This has been the most noteworthy decline in the competitiveness index in comparison with other indices," said Director General of the Employer's Federation of Ceylon (EFC), Ravi Peiris.

Ravi Peiris

To sustain the economic growth investments are needed but unfortunately the existing labour laws are a constraint to employment generation. The labour regulatory system in Sri Lanka needs an overhaul.

EFC is not proposing a hire and fire framework but it should be fair by the employer as well as the employee. Also if the employer and employees are willing to make amendments it should be permitted.

EFC with the assistance of the international labour organisation conducted a survey among the EFC membership on the impact of labour laws on employment generation in Sri Lanka. 91 percent of those who responded to the survey noted that labour laws are a constraint on employment generation in Sri Lanka.

Ninety four percent in the manufacturing sector respondents and 97 percent from the service sector respondents and 96 percent from the plantation sector respondents have indicated that the Sri

Lanka's labour laws have a negative impact on employment generation.

"Almost half of the respondents ranked Termination Of Employment of Workmen Act No 45 of 1971 as having the worst impact of all the existing labour laws as the provisions of the act directly impinge on the employers ability to restructure manning levels quickly to suit sudden business needs. Seventy five percent of the respondents who ranked this law as having the worst impact on employment generation were from the large scale enterprises employing more than 150."

The highest number of respondents who indicated that the Industrial Disputes Act had the worst impact on employment generation were from the manufacturing sector. The EFC recently proposed that the Industrial Disputes (Amendment) Act No 56 of 1999 which only stipulates unfair labour practices on the part of employers and is discriminatory of employers should be repealed and be replaced by a framework that would encourage the strengthening of workplace relations. The proposed draft legislation has already been submitted to the Government.

EFC has also made submissions on the basis that the relief of reinstatement of service given by labour tribunals is not at all

conducive to good industrial relations, as an employment relationship is a contract of personal service which has an element of understanding and mutual cooperation that is needed between the employer and employee. For whatever reasons if it is broken it cannot be forced on parties. The remedy should be compensation for loss of employment.