Financial Times

Lankan firms on recruitment freeze in ‘09

By Dilshani Samaraweera

Sri Lanka’s private sector is trying to retain existing workers but is freezing new recruitment in 2009, to ride out the global recession. Most companies are not generating new jobs this year and are not even filling up vacancies.

A recent survey of 135 member companies of the Employers Federation of Ceylon (EFC), is indicative of employer sentiments in Sri Lanka in 2009, in the face of global recession impacts on business. The EFC survey looks into ‘Manpower Restructuring Measures’taken by EFC member companies, in the manufacturing, services and import and export sectors.

“The survey shows that most employers prefer to retain workers rather than retrench. A majority of employers have opted to use other methods, rather than laying off,” EFC Director General, Ravi Peiris told the Sunday Times FT. However, on the downside, the survey findings show that a majority of companies (60%) have opted to freeze new recruitments in 2009. This means most formal sector companies will not hire new staffl this year and will not generate new jobs, unless essential. Companies will not even refill vacancies.

There is also a marked increase this year of employee shedding through Voluntary Retirement Schemes (VRS). In 2007-2008, out of the EFC member companies, 329 people accepted VRS and left their jobs. The numbers leaving through VRS, among the EFC members, almost doubled to 614 in 2008-2009. A majority of people leaving through VRS are at the bottom level of the employment ladder but executives and managers are also opting for VRS.

However, Sri Lanka’s strong employment termination laws are giving some protection to workers in the formal sector. The compensation cost of laying off workers under the Termination of Employment of Workmen Act (TEWA) is seen as extremely costly in cases of mass layoffs.

Therefore, most companies are opting to retain workers but are restructuring internal working arrangements to cut operating costs and increase productivity. The EFC only has four pending applications for retrenchment under the TEWA, out of its 524 members. Most companies (51%), also said they will not even offer VRS this year and 57% said they would use other measures, rather than lay-offs, to ride out the recession.

An estimated 70,000 people lost their jobs from around August 2008 to March - April 2009, as a result of lowering export demand and export market uncertainties, according to official figures.


 
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