Strikes, conflicts, governance and Sri Lanka’s setbacks

Listening to Sri Lanka’s leading economists at Dr Saman Kelegama’s book launch “Development under stress” recently one was taken through memory lane up to independence to examine why and how Sri Lanka rated only behind Japan in Asia at that time and latterly a pioneer in the liberalization in South Asia, failed while most Asian countries who were behind Sri Lanka moved up with higher per capita incomes.

Even the man in the street is now wise enough to explain this poor state of conflict, poverty and over politicization characterised by weak governance.

The present ethnic conflict perhaps an offshoot of economic issues has bled the economy for nearly half a century but this not the only cause for present state.

Strikes major threat to development
Strikes and work stoppages, apart from poor productivity, is a major factor in Sri Lanka’s failure.

Governments have lacked strong leadership to counter political threats coming out of these strikes.

Strikes in health, public transport, electricity, port and plantation sectors have now become a common factor in the agenda.
Victims are not the affluent nor politicians but the poorest of the poor.

Losses to the state on account of strikes are borne in great proportion by the poor.

The recent plantation strike is a shining example where plantation workers lost nearly half a month’s earnings while the country’s export sector suffered heavy losses more in the long run.

Lost opportunities
Consequent to the nationalization of the plantations in 1972 when the state became owners and managers of plantations we offered opportunities on a platter to emerging competitors in Africa and today, Kenya is one of Sri Lanka’s strongest competitors dominating in healthy UK and Pakistan markets.

The port strike in July almost threatened Sri Lanka’s position as a major transshipment centre in the East and nearly pushed some of the major liners out of Colombo. The adverse effects of lost opportunities are reflected in higher taxes, unemployment, social conflict, budget deficits etc.

Dispute resolution
For a moment we do not argue in favour of unfair industrial practices to tackle justifiable employee grievances. Workers rights must be respected, they must be paid a living wage but it is equally important that a just and fair conflict resolution mechanism is maintained and problems resolved through negotiations on a “give and take” or “win-win” basis with no losers. The plantation workers issue arose when three trade unions representing workers (led by some powerful politicians who are also responsible for governance in the country) demanded an increase in their minimum wage when they faced the Employers Federation of Ceylon representing the plantation companies.The collective bargaining process provides an ideal mechanism to iron out the differences and the threat of work stoppages is unwarranted. The daily wage comprises elements providing for basic wage, price supplement and a productivity linked price supplement. In addition they are also entitled to market linked variable price share supplement. Plantations need to spend heavily each year on field improvement as well as technological advancements to meet global competition. Most markets now demand highest priority for quality (such as HAACP now made mandatory for exports to Europe). It is the duty of the trade unions to make workers aware of these matters. The work stoppage cost the workers half a month’s pay and one wonders whether they could not have achieved the same result without this costly sacrifice. The plantation sector is of high national importance but it’s difficult to agree that politicians could make a contribution to settle the industrial disputes. It is best that negotiations be left to the two parties who are experts in their respective fields. Politicians should be left to resolve more burning issues stifling country’s growth. This is where good governance and strong leadership could contribute.

Fortunately due to the fact that a majority of the plantations are now owned by small holders strikes could not cripple the entire industry, but it did achieve in creating crop shortages and pushing the auction prices to unrealistic levels. If any customers were driven away by failed deliveries then that’s the opportunity lost forever for which Sri Lanka has gained a name.

Strong leadership vital
To emulate growth similar to our Asian counterparts our political leaders must demonstrate strong leadership and be unafraid to take tough decisions like what Lee Kuan Yew of Singapore (who wished to emulate Sri Lanka in the 50’s) and Dr Mahathir Mohamed of Malaysia did to provide peaceful, prosperous countries for the future generations. Behind every issue Sri Lanka faces today from health epidemics to the ongoing war, governance is a key factor and without getting it right we cannot expect miracles to enhance per capita incomes.