Trade Unions responsible for economic loss - Former CB Governor

Trade Unions (TUs) should not act like Mafia gangs to destroy the economy, former Governor of the Central Bank Dr. Neville Karunatillake said. In an interview with the Sunday Observer staffer Jayantha Sri Nissanka he said if the Sri Lankan economy suffered any setback in the second quarter of the year, Port and the Ceylon Petroleum Storage Terminal Ltd (CPSTL) strikers should be held responsible.

Following are excerpts of the interview:

Q: As the former Governor of the Central Bank, how do you analyse the economic impact after the Ceylon Petroleum Storage Terminal Ltd (CPSTL) and the Port workers wildcat strikes?

A: These wildcat strikes are disruptive actions that will seriously affect the economic development of the country. Already the country's economy is suffering as a result of the LTTE activities during the past two decades. It is very unfortunate that our Trade Unions are also contributing to it.

In this situation, accumulated losses resulting from the Port and CPSTL strikes affect the economy very seriously because with all these disruptive acts no development can take place. As a result, the growth rate will drop to some thing like 4 or 5 percent once again and the rate of investment will also decline very sharply. Strikers of the CPSTL and the Port should accept the responsibility in such an eventuality.

Q: Some people argue that Trade Unions have reached the status of 'mafia' due to their irresponsible wildcat strikes which have caused billions rupees of economic loss to the country. What is your view on the Trade Unions in Sri Lanka?

A: Obviously there is no argument about it. Port and CPSTL workers behaved like Mafia gangs causing heavy damage to the already wounded economy. Things became worse with the disruption cause by the CPSTL strike. I don't see any rationale behind this strike. Though they have called off the strike, queues for fuel continued for about four days. This has seriously affected the general public as well as the economy.

Q: Reports say that the Port strike loss was nearly Rs.3 billion and the CPSTL is about Rs.200 million. Do you think that Trade Unions in other countries also behave like our Union members to win their demands paralysing the essential services and causing heavy economic losses?

A: There is no precedent anywhere in the world not even in Nepal, Cambodia or any other country to compare Sri Lanka. The Sri Lankan situation is unique. TUs are going ahead with their action irrespective of the consequences. If the Government wanted, it would have used military personnel to arrest the situation.

However, despite difficulties, during President R. Premadasa's period recorded a good growth rate of over 6 %. The rate of investment despite the JVP insurrection he was able to launch major rehabilitation projects. He wanted results and introduced a definite development plan. That is how the 150 garment factories project was launched. Of that, 124 factories operated.

Q: Some say that the country's economic nerve centres are today controlled by blue collar workers. They even challenge decisions of the Executive President. Do you agree with this view?

A: Yes, there is some truth in this view and I totally agree with this statement. They are the cause of trouble to the economy. But this is a small group with Marxist ideas.

Q: Why have the TUs failed to realise the consequences of their actions?

A: I have my doubts whether they realise the consequences. They only think of winning their demands irrespective of the economic loss suffered by the State. This is a question of 'blind leading the blind'. They don't realise how the consumers feel. Consumers are the important factor in every context.

Q: How are the social responsibilities of TUs in other countries? Do they take the economy or people as hostages to win their demands?

A: I can't think of a country where TUs strike making unreasonable demands. There are countries like Lebanon, Iraq, Afghanistan and Nepal. But there is no precedent in the world to compare Sri Lanka and we are a unique case in this aspect.

Q: How should the Government react to wildcat strikes?

A: Some sort of drastic action should be taken against disruptive elements. That is a sine-qua-non procedure we have to follow. There are many ways of handling disruptive elements.

Q: Do you think that we need to introduce labour reforms to rescue the economy from the clutches of blue collar workers who always make unreasonable demands holding the economy and consumers to ransom?

A: Of course. The present labour laws are obsolete and mostly it covers only the employees' rights. These laws are not investor friendly. Since we have one sided labour laws protecting labourers, they are not scared.

These irresponsible trade Union men can continue to suddenly disrupt the administration of President Mahinda Rajapaksa even in the future unless he takes stern action. Labour laws should be modified as far as possible to prevent wildcat strikes that result in huge economic losses. Premeditated strikes should not be permitted.

Q: Trade Unions complain that they are forced to launch wildcat strikes due to the ignorant administration of some Ministers. Don't you think that we could have avoided most of the TU actions if there was a good communication and cordial relationship with workers?

A: The administration is partly responsible. There are two sides on any issue. The Government is not in a position to take stern decision in this context because the President was in the forefront of the Trade Unions. But now it is the duty of the TUs to assist him and stop disrupting his administration.

Q: What kind of reforms can we introduce to stop wildcat strikes?

A: Today Trade unions are supreme and they are dictating terms to the Government. I now doubt whether we could bring the labour under control overnight. In this scenario it is difficult to introduce effective reforms.

Q: What is the loss of the nine days Port strike and two days CPSTL strike?

A: Estimates of losses cannot be easily calculated at this moment. But it could run into billions of rupees. The CPC is already a loss making agency. Problems of the CPC have been aggravated partly by the administration and the management. I don't think it can be resolved easily.

Q: We are projecting a 6 to 8 percent GDP growth rate in the coming years. Will these Trade Union activities hamper our growth rate?

A: If it is so, Port and the CPSTL strikers should be blamed and they should realise that they have done a national crime. However, we achieved 8 percent GDP growth rate in the first quarter.

It is doubtful in the Second quarter whether we can achieve the projected growth as a result of the two wildcat strikes.

Q: Port and the CPC are two vital institutions. What are your proposals to improve them?

A: First, we must reduce the strength of the staff by 3000 to 4000. Unless that is done we can't think of any improvement. Political stooges were dumped during the past decade in these two vital institutions.

Exorbitant amounts of staff bills also contribute for heavy losses incurred by the CPC. If we are thinking of reforms, we have no choice but to go for a retrenchment. The present Ministers of the CPC and Port should realise this fact. Trouble-makers will continue to disrupt the smooth functioning of the two institutions. We need to clean these two places of such elements.