Complexity of labour

Consider this: On one side, there is a shortage of labour, we are told by the pundits. On the other side, the youth unemployment rate is rising – more than 20 per cent compared to 4 per cent of total unemployment.

Add to this equation the shortage of workers in the garment sector – 30,000 vacancies in the free trade zones or 200,000 in all categories, according to the Board of Investment (BOI). Another minister recently claimed that there are 50,000 vacancies but no takers at BOI zones.

It gets more complex when, according to a World Bank enterprise survey in 2011, nearly 40 per cent of manufacturing units complained that there was a serious problem of skilled labour. In 2017 this figure, without any doubt, would be much higher.

Then there is a situation evolving of pressure on the government to come up with proper regulatory standards in anticipation of hundreds of outsiders walking into the labour force as imported labour under the proposed trade and services pacts with India and China. Wait? Isn’t there already dozens of workers from China working on Chinese-funded projects (on legal work permits) and India working (on tourist visas or business visas) in restaurants and agriculture farms?

The list of issues in the labour conundrum is endless with no immediate solutions as evidenced from a labour discussion in Colombo organized by the Sunday Times Business Club on Tuesday. Earlier this week, was faced with a dilemma:

she asked herself, scratching her head, while stirring the near-empty pot.

Maybe, she thought, maybe … labour which is a much-talked about topic these days with the furore over possible labour imports from India and China. Reality check; it is already happening.

This was on her mind when she attended Tuesday’s discussion. However, rather than be refreshed with knowledge and solutions, she found herself far more confused than before entering the grand Kingsbury hotel.

The fact that labour is a complex problem is stating the obvious. From mismatches between supply and demand, massive rigidities in the system, under-employment, and as one researcher said in a recent published article today’s millennials being unwilling to work on farms or factories and prefer cushy jobs - desk jobs, Sri Lanka’s labour crisis doesn’t have easy and simple solutions.

Clearly just like poverty, distortions in labour and unemployment provide excellent fodder for politicians to offer ‘dummies’ to an unsuspecting rural population (the mass base of voters who decide on who would form the central government or a local authority) by way of programmes to eliminate poverty and provide more jobs. Invariably at the end of the electoral term, the situation in both areas doesn’t get better.

Good examples are the cash-handouts to those living below the poverty line and housing for the poor. The World Bank, which has raised concerns for many years without success over proper targeting for cash-handouts, recently announced a project to ensure proper targeting of beneficiaries, many of whom had earlier moved out of poverty but continue to receive cash subsidies.

In the labour context, the government has promised one million job opportunities by 2020 through new industry and manufacturing units, kicking off with a series of new factory openings in January, some of which were controversial like the proposed Volkswagen facility at Kuliyapitiya and the tyre factory at Horana by a Sri Lankan businessman domiciled in Dubai.

But is there a shortage of jobs when there are, in fact, hundreds of vacancies in the manufacturing sector (BOI), on rice farms (paddy cultivation where many Indians are employed for seasonal work), on tea plantations, in the construction sector and also hotels and restaurants? Aren’t these serious contradictions in the labour debate?

Tuesday’s discussion also revealed that there are more than 400,000 jobs unfilled in the hotel, tourism and industrial sectors per annum. Another key data that emerged at the discussion was the dearth of skilled and unskilled workers and many going abroad.

The last issue points to policy inconsistencies, a common problem in Sri Lanka. For example more than 200,000 people go abroad every year to work mostly in West Asia. A few years back it was mainly unskilled labour including housemaids. However, in the past 18 months, the government has been discouraging domestic workers and other unskilled migration and instead brought in policies for more skilled migration with the hope that this would not only swell remittances but at the same time ensure that domestic workers are better prepared and more trained to handle complicated situations in a foreign home environment.

Earlier this week, new minimum wages for migrant workers were announced effective February 1 at US$450 for skilled and $350 for unskilled workers (generally in construction and domestic employment).

No one will complain if Sri Lankans get higher wages abroad. However, there is a ‘BUT’ in this policy. While on one side, there is an acute shortage of both skilled and unskilled workers here, another arm of government is promoting skilled and unskilled migration. This is just like that famous Rudyard Kipling saying: “East is East and West is West, and never the twain shall meet.” It’s another

kind of policy. If the argument is that the country needs both – a skilled workforce to meet current demands and skilled workers to send abroad at higher wages which boosts remittances -, then this should happen only once the domestic needs are met, before exporting skilled labour

Mechanization and labour imports are often pronounced as some of the ways to address the labour shortage. But as Prof. Athula Ranasinghe from the University of Colombo suggested at Tuesday’s discussion, there are many other things to consider as solutions for the labour shortage.

Our take on this is simple. Confusing signals emerging from different sectors like industry, services or academia on what ails labour suggests the need for a comprehensive public-private study on labour to provide an actual and more accurate assessment of the issues and (possible) solutions. What appears on the table now are piecemeal solutions based on immediate needs in some sectors particularly the phenomenal growth in services like IT and tourism, rather than a proper analysis of what direction Sri Lanka would take in the next 30 to 50 years, and based on those needs, policies for the education (key to labour needs) and employment sectors. For example, how many workers do we need in tourism or IT by 2050? Or for that matter will there be a shift to new sectors and one see demand in tourism and IT fizzle out, and thus prepare strategies to meet these challenges in 2050?

Do we really know the changes in Sri Lanka’s economy 20-30 years from now? The rapid transformation of the world economy with information technology and digitalisation as the core stunned the world and bewildered many thinkers, philosophers and country planners across the planet. Many countries scrambled to be up to date. Therefore what is the next stage of transformation and what impact would it have on Sri Lanka’s current thinking of growth on industry, garments, plantation crops, IT, tourism, etc and preparing education/employment and even health strategies accordingly?

One step in that direction is the phenomenal growth in new age entrepreneurs – the generation of start-ups which doesn’t wait for handouts, policy formulations or bank funding akin to traditional businesses.

While this sector is expected to take a giant leap in the future, in all the current discussions on labour or employment and strategic planning, start-ups are nowhere to be seen, heard or supported. This is another area where Sri Lanka will miss the bus.

Often, politics takes over everything in the name of eradicating poverty, providing full employment and ensuring a happy and contented population. A sure way of missing the bus of 'prosperity for all' just like the scramble to become the nation with the tallest Christmas tree in the world, a riddle that even Kussi Amma Sera's pot of destiny failed to unravel.