Industrialists worried over lack of political will for labour reforms

Country’s industrial sector expressed its concern over t he inadequate political will to amend the age-old labour laws stifling the progress of the sector, which has now narrowed to below one third of the economy.

According to the Industrial Association of Sri Lanka (IASL) outgoing President Pravir Samarasinghe, despite many submissions were made to bring reforms to labour laws, limited progress has been made to that effect.

“I must say these reforms that we have always proposed, actually will create a more enabling environment for more employment generation as well as to increase productivity.

However, in this area, limited progress has been made and I must say that inadequate political will leaves us with some of the older, outdated laws affecting our industrial sector,” Samarasinghe said at the industry body’s 23rd Annual General Meeting held last week.

During the last decade, Sri Lanka’s industrial sector contribution to the overall economy remained well below one third of the gross domestic product (GDP) despite showing some signs of recovery in 2011 (29.3 percent), 2012 (30.4 percent) and 2013 (31.1 percent).

But the services sector has always remained close to 60 percent of the GDP throughout the same period.

It was only recently the opposition and United National Party Leader Ranil Wickremesinghe said Sri Lanka had completely skipped the industrialization in favour of foreign employment and service sector.

In 2013, the factory subsector composed a major 17 percent of the total industrial sector but manufacturing grew by only 7 percent.

“So, it is important that suitable conditions are there to maintain industry competiveness and make sure the industry sector grows because we are firm believers that true value addition can be created only by actual production of tangible goods,” he remarked.

Among the reforms proposed by the association were the shortening the 5 ½-day working week with the same number of hours spread over the five-day working week with the consent of the workers and removing the restrictions for night work for women under the Shop & Office Employees Act. Samarasinghe stressed the significance of adopting reforms in order to embrace emerging industries and newer work arrangements in the sector. While almost one third of the 8.5 million labour force is employed in the country’s agricultural sector (which is just 10.8 percent of GDP), a clear measurement of the employment in the industry sector is still not available due to its wider reach of subsectors. Meanwhile, despite the rising foreign direct investments (FDIs), the IASL was concerned about the lower FDIs and investments into the industrial sector. Despite the FDIs in 1H14 were up 51 percent year-on-year to US $ 817 million, 60 percent was to the tourism sector. Industrial exports account for 75 percent of the total exports but the sub-sector grew only by 5 percent in 2013. “However, we are encouraged to see that during the first half of this year industrial exports have grown by 13.5 percent,” Samarasinghe added.