A striking feature of the Sri Lankan industrial scene is the frequency of strikes. The recent strike at the Shell Gas Company is a grim reminder of the disruption which trade unions could cause not only to the particular enterprise but to economic activities throughout the country. Further, the nature and frequency of such strikes are a serious impediment to foreign and domestic investment. The fact that the strike occurred in one of the companies which recently invested in Sri Lanka, and a large multi-national at that, would send unfavourable signals to foreign investors.
Labour unrest is no doubt not second to security considerations in making Sri Lanka an unattractive place for foreign investment. Many of the attractive concessions foreign investors are given are negated by labour unrest in the country. Local investors too are vary about investing in large enterprises owing to the difficulties they encounter in controlling their labour.
No doubt trade unions’ right to strike is accepted in a democratic society. Yet trade unions must exercise that right with a great deal of responsibility. There are issues on which trade unions may legitimately resort to strike action. Wage demands and working conditions are no doubt such legitimate causes for disputes between management and labour which may lead to strike action. Even these must be avoided by mechanisms which enable a settlement without disruption of work.
The recent strike at the Gas Company was of a different nature. It related basically to an issue in labour discipline. This should have been settled by an independent inquiry under the auspices of the Labour Ministry under clearly laid out procedures for such settlement. It is not the fit and proper subject to be determined by trade union strength or arbitrary actions of employers. Both employers and employees must be bound by a compliance to laid out procedures for the settlement of such disputes. Those who violate these procedures should be effectively punished, may be by heavy fines. Trade unions which resort to such action must be made to pay for them. Else, irresponsible actions of this nature would not merely disrupt the particular enterprise but the entire economy.
Sri Lanka is once again getting a bad name for undisciplined labour and frequent labour unrest. Strikes are a frequent and regular occurrence in all types of activities. Universities, doctors and industrialists alike resort to strike action and take heavy tolls on the community’s life.
If the Sri Lankan economy is to achieve the levels of economic growth needed to resolve its problems of unemployment and poverty, then it is vital that this issue is taken up seriously by the government and the mechanisms for settlement of industrial disputes be strengthened. Without such a course of action Sri Lanka’s economic objectives are likely to be seriously frustrated.
The government must begin a dialogue with trade unions to work out systems of arbitration and settlement. Both trade unions and employers must accept laid down procedures. A government seriously intent on economic growth and enhancement of employment opportunities must make this a priority. It must not wait for the next strike to work this out. The Labour Minister must act now.
Expressing satisfaction on the Company’s per formance during a difficult year when business in general took a downturn, Janashakthi Life Insurance Company Chairman Nissanka Wijewardena says that while new insurance business growth was recorded at around 36% last year, his Company’s overall growth in premium was 122% which was higher than the growth rate of Life insurance business of other companies.
While the Company worked towards a break-even situation in 1996, he claims that due to the increase in business, (new and renewal), higher investment income with prudent expenditure control, the Company was able to show a modest profit of Rs 3.1 million for the year. “Having reached this position in the second year of business, subsequent years should show increasing levels of profit. This requires a reasonable rate of increase of new business and the rate of lapsation maintained at current levels. The indications are that these parameters could even be improved upon”, he adds in his annual review to the shareholders.
Commenting on the Company’s efforts to sell shares ‘over the counter’, he says that the results were not up to expectations with only a few parcels being traded. He feels that the vast improvement in the Company’s results in 1996 should create more interest in the shares. Discussions are being held with the Colombo Stock Exchange with a view to improving their marketability.
Describing 1996 as a momentous year, Managing Director R. J. de Silva says that the Company became a part of history in the field of insurance in Sri Lanka by making a profit in its second full year of operations.
According to his review, the total annualised premium on life policies issued in 1996 was Rs 98.5 million compared with Rs 72 million in the previous year and the total premium income was Rs 89.5 million, double the 1995 figure. “This figure less the reinsurance premium of Rs 6.7 million was more than adequate to meet the outflow on business acquisition cost, advertising cost and overhead expenditure all of which amounted to Rs 76.3 million. The surplus together with investment income, however, fell short of the additional reserve required to meet the liabilities of the fund as computed by the Actuary”, he adds.
Stating that the Company continued to provide an efficient service to policyholders with a quick turnaround on the issue of policies, Mr de Silva says that the Company continues with its endeavours to streamline its methods and administration procedures to ensure that Janashakthi Life provides leadership in these vital areas of customer relations.
Referring to lapsation, he says that lapsation is always the bug-bear of a life insurance company. “While Janashakthi Life has been able to safeguard its lapsation, it is still vigilant and seeks new ways and means of getting across to its policyholders to impress on them, the need to keep their policies alive. The lapsation ratio has improved considerably and it is hoped that it would be well below the expected industry norms in 1997”, he adds.
On marketing operations, he says that because of the uniqueness and the appeal of its policies, the Company was able to provide insurance protection to a cross-section of the population. In keeping with its objective of ‘lighting the lamp of insurance in every home’, the Company has widened its Area Development Office network. With 75 such offices operating in several parts of the country, the Company claims it has the largest number of branches among the insurance companies in Sri Lanka.
Describing these offices as the focal point for obtaining life insurance cover, he points out that the Company consciously went into rural areas in keeping with its objective of ensuring that every home in this country eventually will have life insurance.
Explaining the product development strategy, the Company says it was geared to designing policies to cater for several categories. These included a large section of the working population which could not afford the conventional policies, those who could barely afford life insurance and become casualties as a result of their inability to sustain regular payments, higher income groups whose real need is for protection rather than as a medium of savings, and those looking for an earlier receipt of the maturity benefits and an extension of protection to cover hospitalization in general and serious illnesses in particular. The need of the public for a policy with steadily increasing life cover to offset the effects of galloping inflation was also considered.
Janashakthi Life’s mission is to provide innovative customer oriented life insurance policies in accordance with individual needs and affordability, to be outstanding in its stability through prudent underwriting and investment, and optimise returns to the policyholders whilst ensuring a reasonable return to the shareholders.
The Bank of England is to adopt a new system of banking supervision, states a report in the London Financial Times by George Graham, banking correspondent. The new system allows criticism of the bank’s supervisory role in high-prolile banking crises such as had occured in the cases of Barings and the Bank of Credit and Commerce International.
The changes, says the report, will enable bank supervisors to have a more consistent framework for “judging whether a bank is running more risks or - or fewer controls than its competitors”.
The report goes on to say that Bank supervisors will examine how banks are managed and in this regard they will talk to senior managers. They will visit low risk banks less freqently while banks which “are living dangerously” could be required to increase their capital against the extra risks they are running. In the last resort a high-risk bank may have its licence withdrawn.
The new framework is, according to the report, the outcome of a review by Arthur Anderson, the consultants, who followed recommendations for the overhaul of the Bank of England’s supervision structure after the Barings collapse. The report quotes Michael Foot, head of the Bank of England’s banking supervision as saying “one of the problems in the past has been that we have tended to talk to too narrow a range of managers”.
Now the bank supervisors, says the report, will seek to meet the chief executive, other directors, and other bank managers, the chief financial officer and other heads of control functions, such as risk management, internal audit, information technology and human resources.
The report states that bankers are expected to welcome the new framework and quotes Peter Vipond of the British Bankers’ Association as saying “If these proposals lead to better supervision of material risks through a process which is less bureaucratic, they will carry industry support”.
Mr. Foot hopes, says the report,that the new system will ensure that all supervisors are measuring the bank in their charge by the same yardstick.
The recent trade fair promoting Malaysian products has been a tremendous success, its organisers say.
So much so that the authorities are considering inviting other countries in the region for similar promotions.
And, high on the invitation list are South Korea and Hong Kong, though some diplomatic problems are expected with the latter due to the handover to China by end June.........................
The bank that projected an image of the whole of Asia had its share of teething problems recently, what with the boss being dismissed, the dismissal being challenged in court and ending with his re-instatement.
All this created only negative publicity and the bank bosses are worried it would affect customer confidence in the bank.
So, an image-building publicity compaign is now on the cards..............
Now that Satellite has got the greenlight to hold the next SAARC summit here, the tourist trade was busy this week planning to create a mega event to boost the industry.
Among the events planned are a major trade fair, a tourism promotion drive and an international cricket tournament all of which are expected to prop up tourism.
But there is one snag. The boys in charge of security say they can offer no guarantees about the state of affairs, one year from now.....
But the hoteliers have been told to go ahead, anyway..................
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