Labour imports must be managed professionally...
A group of professionals belonging to several agencies said in one voice recently that foreign worker policies must be carefully drafted, should not in any way be allowed to destabilize the local labour market.
The known facts about Sri Lanka’s labour market are skill mismatch, low female labour force participation – 36 percent, youth unemployment, demography and aging population and outdated labour policies.
To address our labour shortages and skill mismatch, we need to upskill our domestic labour pool, tap into our overseas Sri Lankan workers and diaspora and finally for shortterm gaps, look to foreign labour.
Based on the Immigration Department data It is estimated that around 40,000 foreigners, mainly from India, China and Bangladesh are working in different sectors. Some however put the figure as high as 200,000. Sri Lanka currently has no adequate institutional, legal, policy and operational framework for facilitating and regulating foreign worker movement in Sri Lanka. According to the Census and Statistics Department, there are nearly half a million vacancies in medium and large-scale private sector enterprises in 2017 (see chart).
The hardest to fill vacancies are found in the occupation categories of ‘sewing machine operators’ (46,576) ‘security guards’ (45,316) and ‘other manufacturing labours’ (31,277).
Large-scale labour shortages are in selected industries including tourism, construction and information and communication.
Moreover, industry level estimates show that the labour shortages are likely to increase over time in key sectors, largely driven by a skill mismatch and young people not interested in certain jobs.
Shortage is real
Sri Lanka is increasingly facing domestic labour shortages in key economic sectors and industries. While demographic, social attitudes, expansion of the economy and outward labour emigration largely contributes to the shortfall, lack of interest in certain types of jobs, competition, insufficient salaries and payments, lack of qualified people, poor terms and conditions of the job also play a significant role.
Shortages are today recorded in many projects with foreign direct investments as well as in Sri Lankan own companies. As the labour component is a key input to economic development, the consequences can be critical leading to a drop in productivity and direct output losses.
Acute labour shortages will affect economic growth and also investor confidence. Economic research in other countries suggests unemployment below 5 percent builds wage pressure as businesses struggle to find suitable candidates.
Labour shortages – and the resulting higher labour costs – make markets inefficient and are a disincentive for investment like what is now happening in many developed markets. Therefore, a clear policy is required to deal with the issue of labour shortages, both in the short and long terms.
In the short term, we need to increase the female labour participation level, training of existing workers to do new jobs, improvement of benefits to attract more workers, mechanization, improvement of HR management practices and lastly foreign workers as solutions through local certification and mutual recognition agreements.
Long term, however we need to invest to get our labour ready for the emerging new jobs. The government and the private sector will need to address this challenge jointly.
Options
Some industries in the country are adopting varying strategies to overcome the shortage. Some industries in the construction and tourism sector are now using foreign workers to fill vacancies. Notwithstanding economic consequences, labour import to any country is a sensitive issue as its impact will be felt across its social, cultural and economic fabrics with far-reaching consequences.
Some of key challenges of bringing foreign labour and skills include, loss of job opportunities to locals due to cheap labour being imported, skilled labour becoming unemployed, threats to social-cultural identity, health and order and national security. Unregulated labour immigration may also lead to illegal immigration, drug trafficking, overstaying, abuse of visa conditions, risk of human trafficking resulting in the loss of public confidence in the immigration system.
Therefore, as the panel of experts suggested last week, the government immediately needs to: a) establish a national mechanism to quantify and publish total foreign worker requirement per year, by sector and by occupation, b) establish a national mechanism to set and verify qualification/skills/experience of professionally qualified persons and persons with special skills c) establish eligibility guidelines for employers intending to hire foreign workers d) establish a work permit issuance mechanism and e) establish guidelines and robust verification mechanism to ensure job opportunities are first offered for Sri Lankan’s, before hiring foreign workers.
Therefore, the foreign labour hiring policies needs to be carefully drafted so as not to destabilize the local labour market.