Job seekers at a job fair |
The Labour Ministry estimates 220 factory closures, mainly export oriented, and about 70,000 job losses from August 2008 to March - April 2009, as a result of the global economic slowdown.
“From around August 2008 to about March-April this year, 220 factory closures have been reported and around 70,000 lost jobs,” said the Additional Secretary to the Ministry of Labour, Ms Padmini Ratnayake, speaking at a symposium on the Global Recession and Strategic Options for Employers, organised by the Employers Federation of Ceylon and the International Labour Organisation, on Wednesday.
However, putting a number on job losses is difficult, because Sri Lanka does not have a proper system to collect such information.
An independent consultant, Dr Ramani Gunatilleke, noted that according to the BOI, between September 2008 and January 2009, 11 companies closed down resulting in 3,198 jobs being lost. Meanwhile, the Department of Labour recorded 55 closures that caused 18,000 job losses during the same period.
The official numbers on job losses may also be understated.
For instance, given the drop in orders, garment factories are not re-hiring when workers leave. Garment factories have a natural attrition rate of between 4%-6% per month and the policy of not re-hiring is automatically cutting down the work force, without having to officially terminate jobs. So these job losses are not adding onto the official figure. However, these workers, often rural residents, now need other jobs.
People leaving their jobs through VRS (Voluntary Retirement Schemes) may also not show up in official job loss numbers as companies don’t have to report this.
Many workers are also stopping work voluntarily because factories are cutting allowances and other facilities to reduce operating costs. Experts say, without these add-ons people simply “cannot afford to work” in Sri Lanka. These voluntary sheddings are also not included in the official number of job losses, because unlike terminations, companies don’t have to report these to the authorities.
“Businesses are reducing or eliminating allowances and facilities like food and travel. We know the minimum wage is not adequate. It is these allowances that make the take home wage attractive. So without them, people cannot afford to work for the kind of pay they get,” said Ms Gunatilleke.
The garment industry is seen to be the worst affected by slowing export demand. Other smaller scale exports such as leather, ceramics, gems and jewellery and tea, and services like tourism, shipping related activity and the construction sector, are also ffected. Rural and plantation populations are expected to bear the brunt of this downturn in business activity. “People in the rural and plantation sectors traditionally look to two avenues of support. That is, migration to urban areas and migration abroad. But now, both these avenues are closing up. So we can expect an increase in rural distress,” said Ms Gunatilleke. |
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