Labour reforms in an election year

When Aldoris, the choon-paan karaya came down the road with his tuk-tuk blaring the popular Piyal Perera hit song, ‘Chande denna epa hora thakkadiyanta’ (Don’t give your vote to corrupt politicians), the trio had already gathered outside the gate.

“Mini marum apahu patan arang (The killings have started once again),” said Aldoris, while distributing hot-hot maalu paan.

“Okkoma hithuwa yukthiyen passey mini marum navathei kiyala, aanduwa porondu wuna-ne (Everyone thought this would stop with the Yukthiya operation as the government promised),” noted Kussi Amma Sera.

“Mae mini marum wena vidihata katawath arakshawa nae-ne geval vala ho parey yana kota (At the rate of these killings no one is safe in their homes or in the street),” added Mabel Rasthiyadu.

“Maeka loku prashnayak wenna yanney chandey davas wala (This will be a big issue during elections),” said Serapina.

As they ate maalu paan and drank plain tea, the phone at home rang. It was Ruwanputha, a young economist, calling on this Thursday morning.

“Hello……I was wondering what happened to the so-called labour reforms that the government initiated last year,” he said.

“There seems to have been prolonged discussions among government authorities, employers and trade unions. These discussions are yet to be concluded,” I said.

“Labour reforms are absolutely necessary because the current set of labour laws are archaic and not in line with international frameworks. It is also not conducive to attracting foreign investors,” he said.

“There needs to be a balance between the interests of employers and workers to ensure fair working conditions and decent work. I believe that if this happens investors would have no reason to doubt the labour reforms,” I said.

In an October 3, 2023 statement after a meeting which included the presence of the Prime Minister, the Employers Federation of Ceylon (EFC) Director General Vajira Ellepola, speaking on behalf of the private sector, referred to the importance of proceeding with labour law reforms which are critical for investment promotion.

“During the discussions, EFC’s DG reiterated that the private sector had made submissions to successive governments calling for labour law reforms. Despite the fact that such regimes have also declared their intention to reform the existing law, they lacked the political will and conviction to realise those reforms to benefit all stakeholders, he averred,” the statement issued by the EFC at that time, said.

The critical portion of this statement is whether the government has the political will to go ahead with far reaching reforms, a practice resorted to by many regimes but rarely concluded to the satisfaction of the private sector.

According to that statement, it was stated that current labour laws are essentially the same as what existed a few decades ago, regardless of substantial socioeconomic changes that have taken place in a highly competitive global environment. If Sri Lanka is to remain relevant in a highly competitive global market, labour law reforms are imperative for business growth which, in turn, will create resilient and sustainable organisations, the EFC DG had said.

On Wednesday, Mr. Ellepola told the Business Times that discussions were still ongoing with the authorities who had shared a second draft of the proposed new Employment Act. “We have submitted our comments on the second draft and I believe the process is before the Legal Draftsman,” he said.

He said there was a likelihood that the new draft may go before the Cabinet in the first quarter of this year but everything depends on whether the government will go ahead with such legislation during an election year.

Mr. Ellepola said such legislation should not be stymied by political considerations and should be for the benefit of the people and the country’s development. “A good labour law that works for the benefit of both the workers and the employers and thereby attract foreign investors is good for the country, whoever is in power,” he said.

He said many countries including India, Nepal and Bangladesh are changing labour laws to bring them in line with international practices and to woo investors.

According to the draft law reforms, the Industrial Dispute Act, the Termination Act, the Shop and Office Act and the Employment of Women and Children Act are likely to be abolished, trade unions say.

They point out that there will be no limit on night work while there are suggestions to resort to a 5-day week (currently it’s 5½ in some sectors).

Another bone of contention for the unions is that the proposed laws seek to control the trade unions by ensuring that a union should have a membership of at least 100 in order to be recognised.

An official of the Ministry of Labour said that the proposed reforms have undergone several changes after being scrutinised by the private sector associations and labour unions.

The private sector/EFC says the three main pillars of laws relate to the termination of employment, conditions of employment and laws relating to industrial/labour relations.

According to ministry sources, the key points in the proposed Employment Act include: To introduce legal provisions to prevent discrimination in employment or in the workplace; Removal of existing restrictions on the payment of gratuity; and Mandating an employer to provide a letter of appointment in writing to all employees containing terms and conditions of employment at the time of recruitment except for those employed in casual employment.

It also includes introducing a 5-day week and flexible working hours according to the needs of the employees: Relaxation of legal provisions in existing laws for night work of women employees subject to certain conditions; To introduce legal provisions on the rights and duties of employees who work from home; Inclusion of Domestic Work under the purview of the Labour Law; Introduce provisions that unfair labour practices by trade unions should also be prohibited by law in the same way that unfair labour practices by employers are currently prohibited by law; Increasing the minimum number of members required to form a trade union from 7 to a higher number; and Revision of the retirement age.

Labour reforms are a key component of the growth of a nation and its development particularly when the country is trying to attract foreign investment. A key element here is the Colombo Port City and its efforts to rival Singapore and Hong Kong as a regional investment centre where an investor-friendly labour regime is a prerequisite for investment.

It was time to wind up my column and on cue, Kussi

Amma Sera brought my second mug of tea while my thoughts were on whether or not the government would have the courage to go ahead with labour reforms, which can be testy during an election year.