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Sunday, 10 March 2013

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Labour shortage hits agriculture and industrial sectors

"In proportion as the bourgeoisie, i.e. capital, is developed, in the same proportion is the proletariat, the modern working class, developed - a class of labourers, who live only so long as they find work, and who find work only so long as their labour increases capital. These labourers, who must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market," - Communist Manifesto.

Sarath Peramuna (50) in Kegalle, who had been a farm labourer for over 20 years, is now working as a helper in the construction industry.

He has abandoned working in paddy fields for the past four years. Over 10 hectares of paddy in his village have been abandoned for the second consecutive year, mainly due to the labour shortage. Almost all farm labourers in the village have migrated to the construction sector.

The reasons for abandoning farm work, according to Peramuna are higher wages and comparatively less demanding work in the construction sector. "In paddy fields we have to work continuously for six or seven hours in the sun or rain and the wage is only Rs. 700 per day.

In the construction sector, the wage is Rs. 1,000 and work is also easy," he said.

The agricultural sector which always suffers due to market failure cannot absorb any wage increase. Even with the Government's fertiliser subsidies, paddy farmers suffer losses and every season the market price of paddy falls below the cost of production despite promises the government in power makes.

Vegetable and other farm products too suffer frequent fluctuations in price and adverse weather conditions.

As a whole, the agricultural sector does not have space to adjust cost, especially the wage cost, to match the demand in the labour market.

The Ministry of Agriculture recently decided to recruit Indian labourers for paddy harvesting in the North and the East.

However, considering the security issues the decision was later called off. This incident spotlighted the gravity of the issue. Economic analysts said that the labour shortage is a serious challenge that Sri Lanka faces in development.

Plantation sector

Tea plantations are another sector that is experiencing a severe labour shortage. According to the Director of the Tea Research Institute (TRI), Dr. Sarath Abeysinghe labour availability in the tea sector has declined by 50 percent from the 1980s. Large plantation companies and medium scale tea growers face issues.

There is a shortage especially of tea pluckers. The industry needs tea pluckers on a daily basis, he said.

There are multiple reasons, economic, social and demographic for this issue. Although the tea industry is centuries-old, the working culture in the industry has not changed.

Most of the manual work cannot be changed in this industry. We have been using the same technology for centuries. Workers are involved in manual work from 7.30 am to 5.30 pm.

The work is also tough and they have to work in the sun or rain, in chilly weather and walk long distances on hilly terrain.

With all these hardships a worker gets a daily wage of Rs. 570, inclusive of EPF and ETF and this is just half the wage of a construction worker.

Therefore, the sector is no longer attractive to the younger generation and new strategies have to be introduced to attract them. In the tea industry too, there is no space for a huge wage increase and the cost of production is already high compared to our competitors in other countries.

Dr. D. Lakshman of the Rubber Research Institute (RRI) said that the rubber sector was affected by the labour shortage.

This sector needs regular labourers, especially tappers. Today, most of the plantation companies and smallholders face a crisis.

"Some of the tappers demand half the harvest as wages. However, the extent they can tap a day is limited and by valuing what they can earn a day by this method, we can figure out that the wage they demand is around Rs. 1,000 per day. The low wage of Rs. 570 per day is the main reason for the labour shortage," he said.

Trade union sources confirmed that there is a severe labour shortage in the manufacturing sector. Joint Secretary of the Free Trade Zone and General Service Employees Union, Anton Marcus said that according to the Deputy Minister of Economic Development, Lakshman Yapa Abeywardena there are 80,000 labour vacancies at the Katunayake Free Trade Zone (FTZ), the first FTZ in the country and around 40,000 vacancies at the Biyagama FTZ.

Industrial sector

Free trade zones were set up in Sri Lanka in the late 1970s to tap the abundant labour in Sri Lanka for low-end manufacturing industries such as apparel.

The Free Trade Zones were designed to provide investors the freedom to exploit labourers. Even though according to the BOI law, workers have the right to form trade unions, in reality the workers in the EPZs have no bargaining power. For instance, even today some companies do not permit employees to form trade unions in factories.

Initially, the unemployed rural youth flowed into FTZs in the Colombo suburbs. This labour outflow from rural areas created a labour shortage in the agriculture sector. Initially, most of the opportunities were for female workers. The wage they received was very low and the workers had to spend money for lodging and meals and to cover all these expenses and to save some money they had to work long hours.

The working conditions in these manufacturing industries were not attractive in any form; the wages, other facilities or the cost they had to incur.

Therefore, the attrition rate was high and shortage of labour in the industrial sector was felt even in the late 1980s and early 1990s. The transit of apparel industries to rural areas commenced with this crisis and today most of the leading apparel exporters manufacture in rural areas.

While the cost-of-living is increasing by leaps and bounds, without giving bargaining power to workers, extremely low wages could be maintained in the FTZs. According to Marcus, until this year the minimum basic monthly salary of a factory worker in the FTZs under the BOI was only Rs. 7,900. This year it was increased to Rs. 9,500 per month.

It is true that workers earn an extra income by working overtime. But this wage rate is low compared to the construction sector, where a helper earns over Rs. 1,000 for an eight-hour working day.

Exploitation is the norm of capitalism and all incentives have been designed to get the maximum from the worker and give nothing back.

Macus said that workers are not entitled to the attendance bonus of around Rs. 1,000-1,500 per month if they are absent even for one day.

Production targets designed unilaterally by the employers or managers is another mechanism and in some factories workers take a 10-minute lunch break to cover their targets though they are entitled to a one-hour lunch break by BOI law.

Some factories have limited the water consumed by workers to reduce the number of times they use the toilet. The working environment of most of the factories have improved over time, for the one purpose, to get more from the workers.

However, nobody considers the social cost of these working conditions. According to a study conducted at the Katunayake FTZ, 66 percent of the employees are suffering from anaemia, he said.

The repercussion is the decline in labour supply. At the early stages, workers of the FTZ, work five-six years and go back to their village and send a sister or friend to work.

Today, they leave and do not send relatives or friends, because the conditions are bad on the one hand and on the other there are better opportunities in the market, he said.

Solutions

Economic analysts say that to face the crisis, changes are essential in these industries to make them more attractive for labourers. Chief economist of the Central Bank, S. Gunaratne said that wages and other facilities should be increased. Some big companies have understood this and they have overcome the issue to some extent. On the other hand some big apparel manufacturers have shifted their factories to Bangladesh, she said.

Wages should be increased in keeping with the changes in the economy and today the per capita GDP has increased and poverty has declined. Therefore, people are better off and their spending pattern has changed. People use mobile phones and various other equipment and to purchase these they need money.

Labour migration overseas and the availability of better jobs in the services sector are other reasons. There is a structural change in the economy and the service sector makes the highest contribution to the economy.

However, 35 percent of the workforce still work in the agriculture sector. Technological improvement is another solution and increasing mechanisation in agriculture, especially in paddy harvesting, has become a solution to the issue up to some extent, she said. Dr. M.A. Wijeratne of the TRI said that attempts have been made to make the tea industry more attractive to the younger generation by introducing new technology and a better working culture.

A selective tea leaf harvester, light weight plucking basket and other tools have improved labour productivity and thereby increased the daily earnings of labourers. Some estates have introduced uniforms with all these tools and have changed the attitudes of the younger generation successfully.

Dr. Lakshman of the RRI said that the proposed monthly salary structure will be helpful in meeting the issue to some extent because job security is also a major concern of labourers. However, Dr. Wijeratne said that this will not be helpful in addressing the issues in the tea sector.

In the industrial sector there are various attempts to address the issue by individual companies and industry associations. Most of them are promotional programs such as awareness programs, to raise the social image of workers. Marcus said that the Joint Apparel Association Forum (JAAF) introduced films and songs about apparel workers to attract more labourers but had not addressed the real issues - paying reasonable wages to workers and, therefore, these campaigns failed.

Those who advocate this so-called industrial peace in the FTZ would have thought that without trade unions they could ensure low cost labour forever. They may have ignored the basic principals of the capitalist economy, market mechanism and labour market too functions accordingly.

Or else, they may have known that the season of low wage labour is limited to a decade or two and industries have to shift to other regions in the globe once cheap labour is depleted.

This happened in the neo liberal development era.

These low-end labour intensive industries first shift from developed countries to East Asia, then from East Asia to South Asia, China, Vietnam and Latin America.

Now industrialists sense low cost labour in the African continent with peace, improving human development index and democracy.

 

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